Armenian power protests point to wider discontent

The #ElectricYerevan campaign is lighting up Armenia.

The protests, which began following a decision on June 17 by the country’s Russian-owned utility company to raise electricity prices, attracted about 10,000 people on to the streets of the capital. All such movements have their local dynamics and motivations, but slumps in Russia and the global oil market are reverberating throughout the region.

Wider political and economic discontent across central Asia may not play out like Ukraine’s Maidan or the Arab uprisings. The Yerevan protesters say their goal is simply to reverse the price increase, but anger over the corruption and arrogance of Electric Networks of Armenia and its Russian managers has played a part.

Some of the Middle East’s salient issues are also found in the Caucasus and central Asia: oil and gas as the foundation of the economy; sometimes violent Islamist movements and ethnic separatists; frustrated civil society and youth.

Central Asia produces about 3 per cent of the world’s oil, almost 5 per cent of its gas, and 45 per cent of its uranium, with particular importance for the economies of China, Turkey and Iran. Falling oil and gas prices damage the Russian economy, with spillover to its neighbours, and those of the petro-states Azerbaijan, Kazakhstan and Turkmenistan.

Nursultan Nazarbayev, the Kazakh president, is 74, and Uzbekistan’s Islam Karimov is 77, with both reported to have health problems; both have ruled their countries for their entire independent existence, and in both cases there are signs of struggle over the succession.

But there are three ways that events in central Asia may affect energy quite differently from those in the Middle East.

The first way is transit and interconnections. Central Asia, mostly Turkmenistan, supplies 15 per cent of China’s gas, while 1 million barrels per day of crude oil can flow through the BTC pipeline from Azerbaijan via Georgia to Turkey.

These figures could rise, given Turkmenistan’s enormous gas resources. Envoys from Beijing and Brussels, as well as more speculatively Islamabad and New Delhi, have all trekked to Ashgabat in hopes of diversifying their supplies.

Interdependence brings its own disputes, with concerns from Uzbekistan over water supplies from Tajikistan and Kyrgyzstan, and their plans to build dams for electricity exports to Afghanistan and Pakistan. Last year, Uzbekistan cut gas exports to Kyrgyzstan, apparently over the water issue. Water shortages are exacerbated by climate change and outdated irrigation methods.

Other such disputes include the frozen war between Azerbaijan and Armenia over the territory of Nagorno-Karabakh, and the long-running disagreement over borders in the Caspian Sea that stymies a pipeline from Turkmenistan to Azerbaijan.

The second way is the impact of economic contagion. Armenia’s protests were catalysed by the collapse in its currency, the dram, in line with that of the rouble, because of sanctions and falling oil prices – 21 per cent of Armenia’s GDP, and 52 per cent of Tajikistan’s, comes from remittances from overseas workers, mostly in Russia. Armenian remittances have fallen by a third, as Russia’s slump has wider repercussions.

The third way is great-power rivalry. Russia and China have not seriously attempted to challenge US dominance in the Middle East. But the US is only a secondary player in Central Asia, Russia’s “near abroad”, with the population of Kazakhstan being 22 per cent ethnic Russians. China’s regional plans of economic outreach could lead to major infrastructure investments and development, but also bring the risk of social and environmental upheaval, and the creation of massive, immovable, vulnerable assets.

As the Yerevan protesters rejected the president Serzh Sarkisian’s concessions on Saturday, the course of the Armenian protests is yet to be seen. But the issues have not gone away – the flow of discontent down the electricity cables, pipelines and rivers of central Asia may yet disturb the region’s energy industry.

Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis.

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