Gas & gangsters

Energy is the key to Europe's new relationship with Russia - and supposedly Moscow's weapon of choic

Scoops and shocks are thin on the ground in Moscow these days. As events of 2 March should confirm, elections are hardly nail-biting affairs, and nobody expects journalists to publish revelations about Vladimir Putin or his anointed successor, Dmitry Medvedev, dallying with a lobbyist. So when police grabbed 61-year-old Sergei Schneider on Moscow's fashionable Arbat Street and bundled him into an awaiting Black Maria on 24 January, they also shook newsrooms across the Russian capital out of their torpor.

They weren't the only ones to register their surprise - eyes popped in law enforcement and intelligence agencies throughout Europe and North America when they learned that "Schneider" was none other than Semyon Mogilevich, one of the FBI's most-wanted on charges of money-laundering and racketeering. In the past few years, Mogilevich is suspected of acting as a pivotal figure in Russia's gas industry.

Getting gas out of the ground in central Asia or Russia to the homes of central and western Europe is an expensive and complicated business. And as capitalism emerged in Russia during the 1990s, it needed people to grease the wheels of mineral commerce. The big industry players needed energetic and persuasive fixers in order to ensure that they were paid their cut away from the prying eyes of any tax authorities or their competitors. Two companies, ETG and RosUkrEnergo, were consecutively given exclusive rights to negotiate transit deals for Russian gas travelling through Ukraine. They were widely considered the most notorious vehicles for this lucrative sideline to Russian organised crime's impressively diverse portfolio.

Details started to emerge in 2005 after the Orange Revolution brought Yulia Tymoshenko to power as Ukraine's prime minister. She ordered her then security minister to open a criminal investigation into these companies and specifically into Mogilevich's involvement with them. Later, the same minister asserted that Moscow connived in the successful movement to bring down Tymoshenko's government in order to prevent details about ETG and Mogilevich from being made public. Tymoshenko herself was threatened with arrest in Moscow on corruption charges.

Three years later, things have changed. Four weeks after Mogilevich's arrest in January, Tymoshenko pitched up in Moscow (charges and arrest threat long since forgotten) and announced that Ukraine had overcome its long-standing problems with Gazprom, Russia's state-backed energy behemoth, and negotiated payment of its outstanding debt to the company. Two days later she was happy to comment on Mogilevich's arrest: "As far as gas transit from Uzbekistan, Tajikistan and other countries is concerned, we don't need any shadowy intermediaries," she said. "There will be transparency in our government and society. It also concerns energy policy."

Winner takes all

The ghostly presence of figures like Mogilevich around the gas industry has reinforced the impression that Gazprom and Putin are playing fast and loose with its energy resources. This has bolstered the thesis, which has become fashionable very quickly, that Russia and the west have returned to the days of a winner-takes-all ideological competition. Indeed, the past few months has seen publication of two books devoted to the subject, most recently The New Cold War, by the Economist correspondent Edward Lucas. The blame for this development is invariably placed firmly on Moscow's shoulders.

Perhaps after the uncertainties of the 1990s and the Twin Towers, there is a hankering to get back to the grand chess game between the White House and the Kremlin, with Europe as the battleground. Nevertheless, the warnings of those who subscribe to the thesis are stark: Putin's Russia is bent on stifling all domestic opposition and restoring the omnipotence of the KGB. But special attention is paid particularly to how Russia intends to use its gas supplies to western Europe as a weapon. A week ago, Matthew Bryza, the US deputy assistant secretary of state, spelled out western concerns, warning against the creation of monopolies in the energy industry. "We especially don't like them when they threaten at least the economic security of our most important allies," he said in an explicit attack on Gazprom, the energy company that symbolises the revival of Russian might.

The cold wind blowing in from Moscow is especially chilly by the time it hits London. The murder of Alexander Litvinenko, with its tit-for-tat expulsions, and the closure of British Council offices in St Petersburg and Ekaterinburg, suggest the Russians are revisiting the sinister romanticism of the Cold War.

Of course, Russia has a very different perspective on this. It suddenly has very powerful American radar systems being placed close to its border (and also hosted by Britain) under Washington's missile defence system; and it awaits in vain the extradition of Boris Berezovsky. Moscow first requested the extradition of this Russian billionaire and prominent Putin opponent on charges of corruption, money-laundering and racketeering in 2003. At first the Home Office refused Berezovsky's application for asylum but several months later Whitehall changed its mind. The only reason that a number of senior sources in Washington and London can give for this turnabout is that Berezovsky has enjoyed a close relationship with British intelligence. That angers the Russians, and goes a long way to explaining why Andrei Lugovoi, Scotland Yard's number-one suspect in the Litvinenko murder, continues to enjoy the full protection of the Russian state. However, the arrest of Mogilevich in order to smooth the path of the Ukrainian gas deal suggests a pragmatism on Russia's part that is often overlooked in Britain. In important respects, the fate of Mogilevich is much more significant than Lugovoi's.

Co-operation, not confrontation

Elsewhere in the European Union, a different picture is emerging where the emphasis in relations with Moscow is placed on co-operation, not confrontation. Germany's economic links with Russia are expanding with the explicit backing of Chancellor Angela Merkel. Nicolas Sarkozy started his presidency by securing a huge deal for Total to develop the Shtokman gas field in the Barents Sea in a deal with Gazprom that Putin personally approved.

Energy is the key to the new relationship with Russia and supposedly Moscow's weapon of choice in its plan for European domination. Yet this assumption ignores a more fundamental reality: the European Union currently consumes 480 billion cubic meters (bcm) of gas a year and that is set to rise to about 600bcm by 2020; Russia can provide most of that need either with its own gas or by transporting Turkmen and Kazakh gas. There is no better customer for Russia than the European Union. Gazprom is also developing its markets in Japan and China but the EU remains by far the most lucrative and reliable consumer. Why would the Russians seek to promote a conflict with its best revenue stream? The converse is true - given that the alternative supplies to the EU come from Iran or elsewhere in the Middle East, there is no better supplier for the EU than Russia.

Such is the fear of Russia's dominance of the EU gas market that, for several years, a European consortium has been attempting to diversify its gas suppliers. To lessen the dependency on Russian gas, and with American support, the EU came up with Nabucco, a gas pipeline that would bring supplies from Kazakhstan, Turkmenistan, Azerbaijan and Iran across Turkey and into the Balkans. But last summer President Putin managed to scupper this by persuading the Kazakhs and Turkmens, without difficulty, to sell their gas to Gaz prom instead, knocking the stuffing out of the Nabucco plan overnight. American sanctions on Iran did the rest.

Already signed up

More recently, Bulgaria and Serbia have signed up to Gaz prom's alternative to Nabucco called South Stream which will bring 30bcm of gas from Russia under the Black Sea. But before the new cold warriors raise the alarm, it is worth remembering that this is not a Russian monopoly - ENI, the Italian energy giant, owns 50 per cent of South Stream while Austria's OMV and Hungary's MOL have recently signed deals with Gazprom despite their involvement in Nabucco.

Ironically, Nabucco looks as though it might be saved by the intervention of Gazprom. The Russian firm has said it will consider diverting some of its gas away from South Stream and into Nabucco - after all it all makes money.

To the north, Germany and its former chancellor, Gerhard Schröder, are enthusiastic participants in the Nord Stream project that will bring gas to Germany direct from Russia across the Baltic Sea. Schröder, who actually chairs the consortium building the pipeline, dismissed the objections of Poland and Ukraine who detected a Russo-German plot (familiar from their histories) to squeeze the two countries out of the lucrative transit market. Brussels is trying desperately to fashion a coherent pan-EU policy on gas supply to head off disputes within the Union over access to Russian gas. But so far the needs of individual countries, whether large like Germany and Italy or small like Bulgaria and Hungary, have been decisive in determining the course of pipeline politics.

The new Russia knows how to exploit internal European squabbles to its advantage. In the old days, the Soviet Union was run by a gerontocracy clinging to the ideology of communist state power. These days the young energy advisers around Putin have Harvard MBAs and perfect English - they are not driven by ideology, but by money and market share.

The resurgent Russian state and its repressive mechanisms are distasteful and a matter of real concern. It is important to remember that while we in the west made hay in the 1990s, the Russians faced chaos and economic misery. Their introduction to capitalism, inspired by oligarchs like Berezovsky, was deeply unhappy, and it is essential to take this into account when assessing Putin's growing authoritarianism. This may not yet amount to the rule of law but for most Russians it is an improvement on the rule of gangsters that preceded it.

Clearly the deployment of missile defence and the recog nition of Kosovo confer a sense of Cold War panic on proceedings, but that should not obscure the fact that gas and oil are the substances underpinning Europe's relationship with Moscow. If this mutual dependency were handled properly (a big if), both sides should benefit in equal measure. The relationship between Russia and the west is driven not by the old Cold War ideologies but by the carving up of profits. If, however, we start guiding our policies by the new Cold War thesis, this may become a self-fulfilling prophecy. Present circumstances would look benign by comparison.

This article first appeared in the 03 March 2008 issue of the New Statesman, Gas gangsters

ARIS MESSINIS/AFP/GETTY IMAGES
Show Hide image

Tearing down the "caliphate": on the frontline against Islamic State in Mosul

Truck bombs and drone warfare in the fight to take back Iraq’s second city from Islamic State.

The battle to retake west Mosul began, for me, rattling around in an armoured Humvee with two Abaases. “I’m Abaas One. He’s Abaas Two,” the driver, Abaas Almsebawy, said in English with a broad smile, pointing to the gunner on top.

“I have killed two Da’esh,” Abaas Two said, using an Arabic acronym for the so-called Islamic State (IS). “Well, one for sure. The other one crawled away but he was bleeding badly. I was told he died.”

Abaas One was jealous of his gunner’s luck. He was shot twice by IS in the city of Ramadi, in central Iraq; he still had a bullet lodged in his back. “The doctor said it is my gift from Da’esh,” he told me and laughed.

Over the sound of gunfire and mortars, the two Abaases called out to each other, giving directions, spotting targets. The cry of “Abaaaaas!” was constantly in the air. One from Babylon, the other from Baghdad, they stretched out on a felt blanket inside the armoured vehicle during lulls in the fighting and fell asleep, oblivious to its discomforts and the IS mortars landing outside.

They had been involved in the fighting in the east of the city, which it had taken 100 days to recapture, in hard, street-by-street clashes and through an onslaught of IS car and truck bombs. Yet the battle to retake the west, which began on Sunday 19 February and is being led by Iraq’s Emergency Response Division (ERD) and counterterrorism forces, has proved different – and faster.

Abaas One, the driver, was exhilarated. As Iraqi army helicopters flew overhead and the air force strafed villages with machine-gun fire and rockets, he rolled on, part of an armoured assault on a front that stretched for miles. His Humvee was built for this kind of terrain, moving at speed across the desert towards villages, the airport and eventually the city of Mosul.

Something else was different about this battle, too. These men were not technically soldiers: they were policemen. Abaas One went into battle in a hooded top and a leather jacket. Stuck outside manning his gun, Abaas Two, like a fighter from another age, wore a greatcoat, small, circular spectacles and a woolly hat. One lean and broad-shouldered, the other bulky and round-faced, they were a contrast but a good fit.

The Abaases were part of Iraq’s elite ERD, which has led the charge into the west of the city, just as the country’s heralded “Golden Division”, the counterterrorism unit, had pushed into the east. The ERD, part of the ministry of interior, is the less experienced junior brother of the battle-hardened Golden Division but it was determined that west Mosul would be its prize. It made swift progress and, as it took back village after village from IS, troops posed for selfies with enemy corpses on the roadside.

The closer to Mosul you were, the more charred bodies you would see, lying along the route. Two in a ditch, killed by a mortar, and two on the road, the motorcycle they were travelling on cut in half by an air strike.

In command of the 1st Brigade was Colonel Falah al-Wabdan. In Ramadi in 2015, he and his men had been cut off and surrounded by IS forces and had escaped only when more troops came to their rescue.

As he stood on the ruins of a former palace that had belonged to one of Saddam Hussein’s brothers, he had a view of all of Mosul. “I will be very glad when I see my forces move forward,” he said. “Also [when I see that] my soldiers are all safe. And I will be even happier when we have killed IS. These people [IS] are like a disease in the body, and we are now removing it, day after day.”

From there, the Iraqi forces took the town of Abu Saif, and then, in a six-hour battle, what was left of Mosul’s airport. Its runways were in ruins and its terminal buildings reduced to rubble. Yet that was the last open ground before they reached the city. By the end of the week, Colonel Falah’s forces had breached the IS defences. Now they were heading into the dense and narrow streets of the city’s old town. Meanwhile, the elite Golden Division was the secondary force, having earlier been bogged down in heavy fighting.

The competition between the two rival divisions had helped to accelerate the advance. The ERD, however, had a secret weapon. “We need to ask your men to hold off, sir. We have helicopters in the air,” the US special forces officer told an Iraqi lieutenant colonel on the rooftop as the assault on Abu Saif was in full force.

The Iraqi mortar team in the orchard and olive grove below held fire. Then the mighty thud of coalition air strikes could be heard and, just two miles away, a huge, grey cloud rose above the town.

 

***

It is Iraqis who are doing most of the fighting and the dying in the battle against IS, but since the Pentagon relaxed its rules of engagement late last year more Americans are at or near the front lines. They are calling in air strikes and laying down fire from their MRAP (“mine-resistant ambush-protected”) vehicles. They are not in uniform but, despite being a covert force, they are conspicuous and still wear the Stars and Stripes on their helmets. When journalists, especially cameramen, approach, they turn their backs.

In and around Mosul, it is more common now to get stuck in a traffic jam of US vehicles: either artillery or route-clearance teams. The Pentagon will soon respond to President Donald Trump’s call for a new plan – an intensification of US efforts against IS – but on the ground around this city, the Americans are already much more engaged in the fight against the militants.

British special forces were also in the area, in small numbers. Unlike their American counterparts, they went unseen.

Also seemingly absent in the early part of the offensive were civilians. It was three days before I met one: a shepherd, Ali Sultan Ali, who told me that he had only stayed behind because he could not get his flock to safety, as a nearby bridge had been destroyed.

As his sheep grazed, Ali explained: “They continued to attack this area, and now we are three days sitting in our homes, unable to go out because of attack and mortars . . . All the people, they have left this area one after another. They went to the east of the city of Mosul and they rented houses there because there are too many attacks here.”

Almost 60,000 people have fled west Mosul. In this area, with its population of three-quarters of a million, the battle has the potential to become a humanitarian crisis. Camps for internally displaced people still have capacity, but they are filling up.

IS, with anywhere between 500 and a few thousand fighters inside Mosul, is again using the local population as cover. But coalition air strikes may be taking a heavy toll on civilians, too. Officially, the US-led force claims that 21 civilians have died as a result of its bombs since November, but an independent monitoring group, Airwars, suggests that as many as 370 have been killed by Western aircraft since the start of March.

After the airport was recaptured, the columns of desperate people heading south began to thicken. The children among them usually held a white flag – perhaps a clever distraction thought up by terrified parents for their long walk to safety. Near the airport, I met a man who was too distraught to give his name. He told me that his brother’s family – six people – had been killed in an air strike. With his eyes red from crying and a blanket over his shoulders, he stood by the roadside, pleading. “For God’s sake,” he said. “We need you to help us. We need a shovel to get the dead bodies out of the building, because there are still two bodies under that building.”

But the battle was reaching a new pitch around him, so he left for a camp to look for his brother, the only remaining member of his family, he told me.

When the ERD finally made it inside the city, the first thing I noticed was the fresh laundry hanging in the yard of a family house. Then I heard a huge explosion as an IS truck bomb slammed into one of the Iraqi Abrams tanks.

The tank trundled on regardless and, by nightfall, the ERD had a tiny foothold inside the city: the al-Josak neighbourhood.

 

***

 

Islamic State is steadily losing Mosul and in Iraq, at least, the end of the so-called caliphate is in sight. In Abu Saif, state forces found the corpses of foreign fighters and, hiding, an IS operative who was still alive.

“He’s Russian,” one officer told me, but the man might have been from one of the central Asian republics. There were dead Syrians on the battlefield, too, men from Deir az-Zour; and for the tens of thousands of foreign fighters who joined IS, Syria will likely be a last refuge.

There may be another reason for the faster pace of the assault in west Mosul. The Iraqi forces, having fought IS in Ramadi, Fallujah and east Mosul, are getting better at dealing with the militant group’s tactics.

Truck bombs took a huge toll on their men in eastern Mosul. It is hard to describe the force unleashed when one of these detonates near you. In an early assault on one village, IS sent out four truck bombs and one of them exploded a few hundred metres from where I was standing. The shock wave ripped around the building and shards of engine went flying over our heads. My mouth was full of dirt. The debris was scattered for what seemed like miles around – yet no one died.

The suicide attack driver may have been taken out by an Iraqi soldier firing a rocket-propelled grenade (RPG). Whenever they advance now, men stand ready with RPGs, specifically to tackle the threat of car bombs. And they are becoming better at “hasty defence”. An armoured bulldozer is always in the lead. When a new street is taken, defensive berms made of mud or rubble are built to halt any speeding car bombs.

The IS fighters are crafty. Iraqi forces took me to a house on a captured street. Its yard was covered and the front wall was gone. Parked in the front room was what looked like an ambulance. Hidden from surveillance aircraft, this was another truck bomb.

“It’s still live. I wouldn’t go any further,” a major warned me. Even the bomb disposal team said that it was too dangerous to touch. It was later destroyed from a very safe distance.

Although the group violently suppresses modernity, IS fighters are innovators. They have no air force but they can get their hands on drones, which are commercially available, and they have “weaponised” them. If the battle for east Mosul was the attack of the car bombs, the battle for the west began as a drone war.

For the men on the ground, IS drones are enormously disconcerting. During a gun battle in west Mosul, I stopped to speak to some troops taking cover behind a wall. As I asked a final question, the captain I was talking to cupped his ear and leaned forward because of a sudden eruption of gunfire. Then, just to my right, I felt a shock wave of a detonation that seemed to come from nowhere.

A member of the BBC team was hit, receiving a small blast injury to the arm. When we got back to the Humvee, the driver explained that there had been a drone above us. The gunfire was from Iraqi troops trying to bring it down. The detonation had not come from nowhere; it had come from directly overhead. As we drove out of there, I noticed that the gunner had closed the hatch. We were protected inside, but he was outside manning his weapon, looking for more drones.

“They drop MK19 40mm grenades from the drones to stop the movements forward. All the time, they will use four to five drones to attack one location,” Captain Ali Razak Nama of the federal police explained. “As you know, we can’t always see these drones with our eyes, but if we do see them we can attack the drones with our rifles. [But] when we go into the battle, we are not looking at the skies. We are looking ahead of us for car bombs, suicide attackers, IEDs or snipers.”

A unit of the Golden Division was hit 70 times in a single day by wave upon wave of IS drones. The operator managed to drop a grenade inside a Humvee from above; all four men inside, members of a bomb disposal unit, were killed. Dozens more were injured that day.

The sound of a drone, even one of their own, is enough to make the Iraqi forces hit the dirt and scramble under a vehicle. They are difficult to bring down. I once watched as snipers and heavy machine-gunners opened fire on some drones; they managed to strike one but still it flew on.

The IS fighters control them from motorcycles in an attempt to prevent the operators being tracked and killed. They switch frequencies in the hope that they will not be jammed. Yet as a coalition commander told me: “The enemy aren’t going to win by dropping grenades from the sky. So it is certainly not a game-changer.” Iraqi and coalition forces now appear to be having success in countering the threat. Just how, they will not say, but in recent days there has been a “very significant” drop in their use.

 

***

 

Mosul has been the biggest battle for Iraqi forces against Islamic State, but commander after commander said that others had been tougher. In Ramadi and in Fallujah, IS had a better grip. In Mosul, the local people have been quicker to turn away from the militants.

In the eastern part of the city, the bazaars are busy again and children have returned to school. Girls are receiving education for the first time in nearly three years, since IS captured the city. The so-called caliphate was declared on 29 June 2014 and, four days later the new “caliph” and IS leader, Abu Bakr al-Baghdadi, made his first and only filmed appearance, delivering a sermon at the city’s al-Nuri Mosque. Iraqi forces are now in sight of the mosque, with its Ottoman-era leaning minaret.

Mosul is Iraq’s second-largest city and has a cosmopolitan heritage, but Islamists had influence here for many years before IS arrived. As one Mosulawi told me, after neglect by the Iraqi capital, “There is discontent with Baghdad, not support for Isis.”

Al-Baghdadi is believed to have fled the city already. According to US and Iraqi commanders, he is hiding out in the desert. Shia militiamen and Iraqi army forces are attempting to seal off escape routes to the west, into Syria. Yet senior commanders accept that in a city Mosul’s size, it will be impossible to close all escape routes. Capturing al-Baghdadi is not a priority, they say.

There is also an acknowledgement that neither his death nor the loss of Mosul will be the end of Islamic State. But in Iraq, at least, it will destroy the caliphate.

Quentin Sommerville is the BBC’s Middle East correspondent

This article first appeared in the 16 March 2017 issue of the New Statesman, Brexit and the break-up of Britain