The War in Georgia - Not Just Another International Crisis

We have been writing for some time about the New Great Game in Central Asia and the Caucasus and about the connection between all the conflicts there and the Middle East. The common denominator is the world’s energy supplies and in particular oil and gas pipelines (1). The two wars in Chechenya in the 1990s, the Beslan massacre in September 2004, the local wars that broke out in 1993 in Georgia with South Ossetia, Abkhazia and other former autonomous regions of the USSR are all part of the same struggle as are the wars in Iraq and Afghanistan and the constant pressure on Iran to wind up its nuclear energy programme. However, whilst oil is the lubricant of imperialist conflict in this huge area the current crisis over Georgia represents a serious new departure in world affairs which involves wider imperialist issues.

The Continuing Crisis of Accumulation

The context in which we operate is still dominated by the end of the post-war boom which, if a convenient date is needed, happened 37 years ago this week (Friday, 13th August 1971). This was when the US government reneged on the Bretton Woods agreement of 1944. In that agreement, the US had agreed to maintain the parity of the dollar at 35 to every ounce of gold. This worked well for the US for the next two decades as it was the dominant economy on the world stage. However by the end of the 1960s “the greatest secular boom” in capitalist history was coming to an end. For Marxists this was no surprise since cyclical boom and bust are all part of the capitalist accumulation process when the overproduction of capital means the profitable outlets for its commodities dry up. As capitalism is a system dependent on constantly enlarged reproduction thus begins the period of the crisis of the cycle of accumulation. We have explained how this affected the US economy elsewhere , but the only way the US could avoid a total drain on its Treasury was to decouple the dollar from gold. Two years later, it devalued the dollar and thus inaugurated the regime of floating exchange rates which is still with us now.

For the US, this climb down was at first accompanied by disaster in Vietnam when the cost of war could no longer be met in the face of an obdurate enemy which was prepared not only to lose 2 million of its people to expel the US, but was receiving military aid from the US’s imperialist rival, the USSR. Around the world the US’s grip on its allies seemed to be slipping with Latin America a hotbed of guerrilla war. More seriously, it was no longer able to sustain central allies like the Shah of Iran, who was overthrown in 1979 by a popular revolt which ultimately brought the mullahs to power. But if the US was in trouble at this period, its imperialist rival was also suffering from the same problems of accumulation (although in a much more hidden form). The invasion of Czechoslovakia in 1968 was one sign that the centrally planned version of state capitalism was in much the same state as its Western rival. When Brezhnev launched the Soviet invasion of Afghanistan in 1979, it was partly a response to perceived US weakness but also a desperate effort of a stagnant economy to gain advantage at the expense of its enemy. It was to turn into the biggest post-war disaster of the USSR and ultimately led to its dismantling.

Russia after the USSR

The collapse of the USSR in 1991 was greeted with much relief and euphoria in the US ruling circles. Despite all the US’s problems of social meltdown and growing indebtedness, it had won the Cold War and now hoped for a peace dividend. A “New World Order” was proclaimed appropriate to the “end of history”. The USSR now disappeared to be replaced by a series of succession states into which the US poured money and the “democratic” propaganda of the West. Russia under the rule of Yeltsin did everything it could to accommodate the West in an effort to join it. When, in 1993, the Russian parliament refused to implement the IMF austerity plan he attacked it and set fire to it killing 500 people and injuring a thousand more. A grateful West praised him for his democratic credentials.

In 1994, he started a war with the Chechen separatists in order to win re-election. He won the election (thanks to massive manipulation of the media) but embarrassingly lost the war and had to agree to a humiliating ceasefire. By the time Yeltsin was ready to be removed by the Russian ruling class, 80% of Russia farms had gone bankrupt and 70,000 state factories had closed. However, Russia was now firmly aping the West. From having no millionaires in 1993, it could boast 17 billionaires (the so-called oligarchs) some of whom had been able to buy up the most productive of Russia’s assets for the price of a luxury house. At the other end of the scale, 74 million Russians were living below the poverty line. And did the West show any thanks for this adoption of its best practices? Not a bit. The USA blithely announced that NATO was to be expanded further East to include the former Warsaw Pact countries like the Czech Republic and Poland as well as former Soviet republics in the Baltic States, Estonia, Latvia and Lithuania. In short, it rubbed in just how far the Russian state had fallen from the might of the USSR. NATO had arrived at the old Russian borders.

Yeltsin’s rule ended in disaster exactly ten years ago this month when it was hit by a financial meltdown. Yeltsin froze the domestic debt market, tightened currency controls and allowed the rouble to fall in value. Millions of Russians lost their savings and Yeltsin suddenly found that his Western banking “friends” were no longer prepared to bail him out.

US Unilateralism

And whilst Russia was treading the road to bankruptcy its former Cold War adversary, the United States, was dictating its agenda to the world. The collapse of the former Eastern Bloc states enabled the US to establish bases all over the planet after 1991. The break-up of ex-Yugoslavia, for example, allowed the establishment of the biggest US military base in Europe in Bosnia. Posing as the defender of democracy and humanitarian assistance, the US demonstrated to its European former allies that the end of the Cold War would not mean the retreat of the US across the Atlantic. In fact, dealing with Europe in the new post-war context was one of US imperialism’s first successes. The European bourgeoisie remain divided about their own future and, whilst the US have not always been clear about what they wanted in Europe, a policy did emerge in the 1990s. The United States has always supported European unity. As the EU is the richest market in the world it helps the US if they are dealing with the same set of regulations and institutions. However preventing this union becoming politically serious, a rival power centre to the US, has increasingly become the priority. And they have largely succeeded. Those who wanted a European Union which was politically unified have been defeated. This is because the European Union has become wider (taking in pro-US ex-Eastern Bloc states like Poland) but not deeper. Europe remains a place where its citizens are increasingly subject to the same economic regulations and tax regimes but where there is no rival power centre to the United States. This was confirmed by the war over Kosovo where, in the face of European divisions (Germany supported the Kosovans, Britain and France until then the Serbians), the US operated under its NATO rather than its UN guise and sent in 10,000 troops to neighbouring Macedonia (many are still there). This meant that the Europeans were bullied into following the US agenda which also had another aim. We wrote at the time

"Kosovo might be a good distance from the oil fields of the Caucasus (where a ferocious commercial rivalry is going on) but what happens in Kosovo (Serbia is a traditional ally of Russia going back to the last century) will be a warning to Russia that NATO has the power to strike close to its territory... NATO has now demonstrated that if the alliance means anything in a post-Cold War Europe it is going to be the vanguard of US imperialism in Europe and Central Asia." (“NATO Bombings of Yugoslavia: War Against the Working Class” in Internationalist Communist 17 (March 1999

The Kosovan crisis also saw the US and British airforces setting a new precedent which showed the new rules for war were going to be different from the discreet and unwritten codes of the Cold War. The direct bombing of Belgrade to halt Serbian killings in Kosovo rather than send in troops on the ground demonstrated that the US and its allies were completely confident that Russia would not lift a finger to help its ally Serbia. And of course, last year the Kosovan crisis reached the point where the US unilaterally approved independence for Kosovo. It was not lost on the Russians that they could do the same in the former autonomous regions of Georgia. But this is to anticipate. The US was not finished yet.

Now the battle for oil and gas pipelines from Central Asia through the Caucasus region began in earnest. In 1998 the US Ambassador to the UN, Bill Richardson, bluntly stated US aims in the region

At stake is far more than the fate of the complex Caspian region itself. Rivalries being played out here will have a decisive impact in shaping the post communist world, and in determining how much influence the US will have over its development. This is about US energy security, which depends on diversifying our sources of oil and gas world-wide. It is also about preventing strategic inroads by those who don’t share our values. We are trying to move the newly independent countries toward the West. We would like to see them reliant on Western commercial and political interests rather than going another way. We’ve made a substantial political investment in the Caspian and its very important to us that both the pipeline map and the politics come out right. (3)

A year later the agreement to begin building the pipeline from Baku via Tiflis/Tbilisi to Ceyhan in Turkey was signed. This was a direct challenge to the Russian pipeline which went from Baku to Novorossiysk. The original version of this pipeline went through Chechenya but, when the Russians cut it and started building a new pipeline which would go through Daghestan, but not Chechenya, the Chechen Islamic fundamentalist rebels led by Shamil Basaev, armed and financed by the US’s ally Saudi Arabia, widened his jihad to the whole Caucasus region (4). This was all part of the process of surrounding Russia and trying to weaken its control of these strategic routes.

The accession of Bush to the US Presidency under the influence of the so-called neo-cons and their “Project for a New American Century” continued the encirclement of Russia in an even more aggressive and crass manner. The destruction of the World Trade Centre (5) gave it an extra boost since it enabled the Bush-Cheney administration to declare “a war on terror”. This was a suitably open-ended target to justify US troop deployment anywhere. When you add to it Bush’s assertion that “anybody who is not with the US is against it” you get the tenor of the policy which was to lead not only to the invasion of Afghanistan, but to the real target of the Bush administration, Iraq. Iraq was both the expression of the highest degree of post-Cold war hubris by the US and also of the deep underlying insecurities of the world’s first power.

Some simply see the invasion of Iraq as a war for oil. In reality the invasion of Iraq expresses a whole series of issues absolutely central to US imperialism. Behind it all lies the capitalist crisis. The devaluation of the dollar, as Secretary of the Treasury John Connally said to the world’s leading finance ministers in 1971 might be about our currency but it is your problem. As the dollar was the world’s leading trading currency all those states which held dollars (previously as “good as gold”) now held a depreciating asset. But if they tried to offload it they would further reduce their own assets. The solution was that it was better to stick with it and continue to accept the dollar as the currency of world trade. Thus the first so-called oil shock was when OPEC was formed and put the price of oil up to compensate for the fall in the dollar’s real value. If you read economic historians today they talk as if the oil price rise of 1973 was simply an OPEC whim which came from nowhere. It came from America. Ever since then the world has continued to use dollars for world trade and this trade has been dominated by the US. The US has been spending on the world’s commodities with no regard to its capacity to pay. The US Treasury has simply printed dollars and issued government bonds to cover its trade imbalance and the rest of the world has thus paid for US debts. As long as there was a Cold War, and as long as there was no obvious international rival to the dollar, then this happy relationship was undisturbed. The Cold War ended around 1986 but that was no problem since there was no alternative to shake the role of the dollar. And then in 1999 the euro came on the stage. The US had actually favoured its appearance since it was seen as another way of cutting the cost of its trade with Europe. At first everyone thought that the euro was a joke since its value plunged from the moment of its issue. However, the bourgeoisie like to invoke the law of unintended consequences and this now began to kick in. In 1999 Saddam Hussein decided that Iraq would be the first to trade oil in euros and not in dollars, and, as the euro began to rise in value in the early years of the new millennium, he made a 35% gain on trading Iraqi oil for medicines. As he was also funding the families of suicide bombers in the second Palestine intifada he was a thorn in the side of the US’s ally, Israel. Hence the lies about Iraq’s weapons of mass destruction, and thus the invasion of Iraq in 2003. Since then, as we have catalogued in many articles, the US has become mired in both Afghanistan and Iraq. And the more desperate the fight the weaker the US has looked. The frequently discussed attack on Iran has not taken place simply because the US has reached a situation of imperialist overreach and not because the White House did not consider it. All this has given the Russians the opportunity to restore some of the ground lost after the collapse of the Soviet Union.

The Return of Russian Imperialism

Putin began restoring Russian imperialist pride by bombing Grozny, capital of Chechenya, in 1999. The NATO bombing of Belgrade a few months earlier had given him the model. After all, why risk the lives of demoralised young Russian conscripts when you can terrorise an entire population from the air? And, when 9/11 came, he was the first to support the US calls for a “war on terrorism” since he now claimed that was precisely what Russia was carrying out against Islamic fundamentalism in Chechenya!

However, it was in the control of the supply of gas and oil that Russia was able to play its strongest card. When Western finance and manipulative know-how led to the success of the Orange and Rose Revolutions, in Ukraine and Georgia respectively in 2004, it was yet another set back for Russia. Even so, Putin very quickly made it clear that they needed to maintain good relations with Russia by demanding a market price for the gas they received from Russia. When they refused to pay Gazprom, the “privatised”, but really state-run, gas supplier, it cut off the supply - in the middle of a freezing winter. A new price was then negotiated but Russia had made its point. However both Ukraine (Crimea) and Georgia (Abkhazia and South Ossetia) have territorial disputes which makes them dangerous members of any alliance. Russia has played on this in various discussions with different EU states. To some extent they have gained an advantage since Germany, in particular, blocked the entry of both Georgia and Ukraine into NATO last year in Bucharest, (see article which follows). Russia has also signed an agreement with Germany to build a North European Gas Pipeline direct through the Baltic to Germany thus cutting out transit payments to Poland and Belarus (6). An indication of the split in the EU came when the current crisis blew up. The British sent their Foreign Minister to Georgia, but the German Chancellor Angela Merkel went to meet Putin at Sochi on the Black Sea first. This split also extends to the commercial sphere where Eon, the German energy company, has invested in Gazprom and joint ventures seem to be going smoothly, whilst the British Shell and BP ventures in Russia have hit serious problems. This largely because, as oil had become more profitable due to the last year’s price rises, the Russian shareholders in these joint ventures have demanded a renegotiation of the deal in order get their hands on the revenue. Shell has already capitulated but the British chairman of TNK-BP has been forced out of Russia (under threat of trial for breaking Russian labour laws) and is trying to run the company clandestinely.

The Russians have also made some headway in restoring their authority in Central Asia (where the US has had to abandon at least one base). Last year as well they joined with China and Iran in the Shanghai Cooperation Organisation which is aimed to counter US attempts to control the oil and gas of the Caspian Sea. At the same time, Russia has backed away from any support for sanctions against Iran and restarted the building of the Bushehr nuclear power station.

However, the invasion of Georgia from South Ossetia by the Russian Army represents a new departure. The Russian invasion on August 8th was undoubtedly provoked by the rocket attacks of the Georgian Army on Tskhinvali but there is no doubt that the Russians were ready. The US has a base in Georgia and has trained the Georgian Army. 2000 Georgian troops who made up the third largest contingent in Iraq were flown back in US transports to assist in the defence of Tbilisi. The Russian action is a calculated direct challenge to the US. The latter, boxed in by its commitments in Afghanistan and Iraq, is reduced to issuing pious statements. Even here, the Russians are responding aggressively. Russia has directly contradicted US calls for a full withdrawal and refuses any agreement which includes support for “the territorial integrity of Georgia”. Citing the Kosovo precedent, it argues that if South Ossetia and Abkhazia want to remain outside Georgia they are entitled to do so. Threats by Britain or the US that it will lead to Russia’s isolation, and ending of talks with the G7 or NATO or any other body, are met with reciprocal threats from the Russian side.

Already the US has taken further practical steps of a hostile character by not only signing this week a treaty placing “defensive missiles” in Poland, but also agreeing to supply Patriot missiles to counter the Russian threat to take them out. Previously, it had expressed reluctance to take this step but now the gloves are off. Russia and Belarus are meanwhile discussing the placement of a new range of missiles just across the border. Some members of the EU headed by Britain (who else?) are now talking up the chances of NATO membership for Ukraine and Georgia sooner rather than later but even in British ruling circles this is regarded as dangerously provocative.

The Real Significance of this Imperialist Crisis

This crisis is made all the more serious by the international financial meltdown and the turmoil it has created in the global economy. We should recall that for most of the Cold War the world economy was going through the fastest period of growth in history. The world was dominated by two super-powers (even if the USSR was the weaker of the two), both of whom were victors in a huge imperialist conflagration (which both entered in 1941). In these circumstances, the world was a more stable and secure place (even given the existence of nuclear weapons as perhaps the Cuban Missile Crisis ultimately proved). Today, the story is different. Not only is there a rising economic power in China with is own agenda (see article in this issue) but both Russia and the US have serious economic problems.

The USSR depends for 60% of its revenue on its oil and gas exports. It is almost as dependent on its European markets as they are on its supplies. Russia is much more susceptible to the crises and slumps of the world economy now that the rouble is a convertible currency. Moreover, its recovery from the massive crash of ten years ago has not been so miraculous. Production levels are still not yet at 1989 levels. Its inflation rate is soaring past 16% and this war is pushing it higher. In short Russia remains in a vulnerable position and this explains its determination to redefine international relations by re-asserting its control over its own backyard.

But is the US in any better shape to take a longer view of the situation? As we have written many times, the US is now trying to do by military means what it could effortlessly pull off by an economic hint here or there in the Cold War era. By the very definition of the “war on terror” they cannot get out of Iraq or Afghanistan until there is an established local power which will crush Islamic fundamentalist activity. As Afghanistan has never had such a central power in its entire history the chances of the US puppet Karzai doing this in present conditions are slim. The problem is that, in order to finance these occupations, the US has to print money which it must then pass on to the rest of world as its devalued dollar. If the rest of the world stops accepting the dollar (and the rouble is now priced against an almost equal weight of dollars and euros) as the main trading currency then the US is in even worse straits. Unless the US ruling class are prepared to make their own population pay a heavy price there is no alternative but for the US to maintain its military posture. We are undoubtedly living in more dangerous times.

The working class policy on this is clear on unequivocal. We do not judge one side or the other as being the greater or the lesser evil. All are equally imperialist. We have a different agenda entirely which is to fight for a decent living against the effects of the global capitalist crisis. This is something that the workers in Tskhinvali and Gori now know cannot be achieved under this brutal and murderous system. Our task is build solidarity with workers everywhere, and to unite our struggles to the point where we are capable of putting an end to global capitalism and its imperialist appetites. There is no quick fix but for the world’s workers it is the only solution.


(1) The article which follows deals with this more fully but see also Revolutionary Perspectives 16 “The War in Daghestan”, Revolutionary Perspectives 17, “The Caucasus - Imperialism’s New Battleground”, Revolutionary Perspectives 33, “Another Episode of the New Great Game in Central Asia and the Caucasus”, Revolutionary Perspectives 38, “Russia Struggles to Halt US Encirclement” and Revolutionary Perspectives 43, “Russian Imperialism on the March”.

(2) See, for example, “Re-reading Marx in the Light of the Sub-prime Crisis” in Revolutionary Perspectives 45.

(3) Quoted in “The Caucasus - Imperialism’s New Battleground” in Revolutionary Perspectives 17. The article gives a fuller account of the causes of the conflict in Chechenya. For those fixated by personalities it should be pointed out that everything we have written about so far in this article took place under the Clinton Administration. Imperialist interests remain the same for every power whoever is nominally in charge. The only difference is in the detail of how it is executed.

(4) This was the group which carried out the seizure of the school in Beslan (North Ossetia). See “The War in Daghestan” in Revolutionary Perspectives 16.

(5) The origins of this was in the first Gulf War when Iraq was driven out of Kuwait which it had invaded under the mistaken assumption that the US supported or was at least indifferent to Iraq getting some reward for its decade long war on Iran, undertaken at the behest of the CIA. US troops stationed in Saudi Arabia became the first victims of Al Qaeda.

(6) See Revolutionary Perspectives 38, “Russia Struggles to Halt US Encirclement”.

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