In Part 1, we had a general overview of the Caucasus, including considering the methods Moscow has historically used to pacify the region. In Part 2 we considered how Islamic terrorists were targeting the region of Kabardino-Balkaria, a region near Sochi; significant, because Sochi is an important Russian resort city and will be hosting the 2014 Winter Olympics in February, and Russia was hoping the influx of tourism to the region would help the economies not just of Sochi but of surrounding areas as well.
In Part 3 we took a long look at how Putin was pacifying Chechnya, mainly by supporting the clan of Razman Kadyrov. With Moscow's backing, Kadyrov's clan has provided a degree of stability and pacification of Chechnya, but at a cost: corruption which leads all the way to Moscow. Moscow funds, supplies and supports Kadyrov, and, in return, Kadyrov keeps Moscow from having to send troops to Chechnya for a third war (there have been two since the Soviet Union collapsed). However, the cost runs deeper: with government essentially an extension of Kadyrov who, in turn, delivers nearly unanimous support for Putin in federal elections, the people have nowhere to turn with grievances, except to Islamic extremists. There are Chechens who support Russia against the extremists, but who would rather not support the corruption of Kadyrov (or of Putin, for that matter). Meanwhile, Moscow has cultivated other clans in Chechnya which could replace Kadyrov - a sign of Putin hedging his bet.
In Part 4 we saw how the Islamic insurgency in the entire region basically cooperates with an eye to establishing a regional caliphate. The center of the regional insurgency seemed to be Dagestan. Then, in Part 5, we considered allegations that Putin and Kadyrov were involved in trafficking narcotics - something other regional actors also do, including the Islamic terrorists, who find heroin money useful to fund their jihad.
With the Sochi 2014 Winter Olympics nearly upon us, it is perhaps time to update this series.
One issue that has been on the burner for years is economic development of the region. When I use the term "the region", I am referring to the Northern Caucasus, which is that part of the Caucasus in the Russian Federation. In fact, apart from the geographical Northern Caucasus, there is also the North Caucasus Economic Region, a geographical entity which includes fertile agricultural areas around the Kuban River, as well as the resort city of Sochi.
This region is distinct from the sovereign nations of Georgia, Armenia and Azerbaijan, which are sovereign nations that used to be republics in the former USSR. However, it is worth considering what is going on across the international borders from the Russian Federation's North Caucasus in these latter nations.
Regarding economic development of the North Caucasus, Russia has worked to improve the tourist industry in the area, as mentioned earlier in this series, especially with an eye to the 2014 Winter Olympics in Russia's tourist resort town of Sochi. However, as far back as 2011, plans were being devised to make the North Caucasus into a Russian version of Silicon Valley. From Silicon Valley planned for Russia's North Caucasus, August 25, 2011:
As mentioned at the beginning of this post, Russia pays a price for peace in Chechnya, and Russians are tired of paying it. However, should the Caucasus become financially independent, then that dramatically diminishes the need for ties that local rulers such as Kadyrov have with Moscow.
Later that year, as Putin campaigned for the presidency in the March, 2012, election, he promised no cuts to the funding for economic development in the Caucasus - amid cries of "Stop Feeding the Caucasus", a slogan that was gaining popularity with Russians. From Putin says no cuts in North Caucasus funding, December 20, 2011:
Skipping down:
Promise economic development, then let the local pro-Moscow (pro-Putin) strongmen spend it to consolidate power?
An interesting and readable summary/overview is provided by Ariel Cohen, Ph. D., in an article entitled A Threat to the West: The Rise of Islamist Insurgency in the Northern Caucasus and Russia's Inadequate Response, from March 26, 2012:
As explained in the article, spillover threatens important US allies, as well as important trade routes, especially energy trade routes, that skirt Russia's southern border through Armenia, Azerbaijan and Georgia.
Well, fast-forward to 2013. The investment in the North Caucasus as a possible rival to Silicon Valley has begun. From New energy opportunities in Russia thanks to photovoltaics, May 23, 2013 (see original for links that I did not reproduce):
Similarly, in Dagestan, a California-based company called Plug & Play has begun operations in the capital, helping develop businesses in the republic. From Plug & Play Tech Center opens in Dagestan, October 22, 2013:
The question that comes to mind, though, is how much foreign investment and foreign tourism can the region expect, given the now-deteriorating security situation? From Failed North Caucasus Policy , July 22, 2013:
Meanwhile, across the international borders, Armenia is working to become the Silicon Valley of the Caucasus. From Armenia can become Silicon Valley of the Caucasus, December 20, 2012:
(See also Armenia could become Silicon Valley of the Caucasus – Adam Schiff.)
Why indeed would foreign workers - whose expertise would be needed for anything more than just production of raw materials - and foreign capital be sent to Russia's North Caucasus, when across the international border (indeed, with a country in between) is the potential for greater development of true high-tech industry in a country that is safe from Islamic terrorism and free of the Moscow-backed corruption?
It will be interesting to see how the Winter Olympics go in Sochi, and what happens in other places, such as Dagestan and Kabardino-Balkaria.
In Part 3 we took a long look at how Putin was pacifying Chechnya, mainly by supporting the clan of Razman Kadyrov. With Moscow's backing, Kadyrov's clan has provided a degree of stability and pacification of Chechnya, but at a cost: corruption which leads all the way to Moscow. Moscow funds, supplies and supports Kadyrov, and, in return, Kadyrov keeps Moscow from having to send troops to Chechnya for a third war (there have been two since the Soviet Union collapsed). However, the cost runs deeper: with government essentially an extension of Kadyrov who, in turn, delivers nearly unanimous support for Putin in federal elections, the people have nowhere to turn with grievances, except to Islamic extremists. There are Chechens who support Russia against the extremists, but who would rather not support the corruption of Kadyrov (or of Putin, for that matter). Meanwhile, Moscow has cultivated other clans in Chechnya which could replace Kadyrov - a sign of Putin hedging his bet.
In Part 4 we saw how the Islamic insurgency in the entire region basically cooperates with an eye to establishing a regional caliphate. The center of the regional insurgency seemed to be Dagestan. Then, in Part 5, we considered allegations that Putin and Kadyrov were involved in trafficking narcotics - something other regional actors also do, including the Islamic terrorists, who find heroin money useful to fund their jihad.
With the Sochi 2014 Winter Olympics nearly upon us, it is perhaps time to update this series.
One issue that has been on the burner for years is economic development of the region. When I use the term "the region", I am referring to the Northern Caucasus, which is that part of the Caucasus in the Russian Federation. In fact, apart from the geographical Northern Caucasus, there is also the North Caucasus Economic Region, a geographical entity which includes fertile agricultural areas around the Kuban River, as well as the resort city of Sochi.
This region is distinct from the sovereign nations of Georgia, Armenia and Azerbaijan, which are sovereign nations that used to be republics in the former USSR. However, it is worth considering what is going on across the international borders from the Russian Federation's North Caucasus in these latter nations.
Regarding economic development of the North Caucasus, Russia has worked to improve the tourist industry in the area, as mentioned earlier in this series, especially with an eye to the 2014 Winter Olympics in Russia's tourist resort town of Sochi. However, as far back as 2011, plans were being devised to make the North Caucasus into a Russian version of Silicon Valley. From Silicon Valley planned for Russia's North Caucasus, August 25, 2011:
Plans have been put forward to create a Caucasian Silicon Valley, at a cost of 32 billion rubles ($1.1 billion) as part of on-going efforts to generate opportunities in the troubled Russian region.
[snip]
Silicon dreams
While the US Silicon Valley is a world leader in computing and IT advances, the Russian version will focus on making the raw materials.
In Stavropol Region factories will produce polycrystalline silicon, monocrystalline silicon is planned in Kabardino-Balkaria, multicrystalline silicon will come from Karachay-Cherkessia while North Ossetia will manufacture photovoltaic cells and Dagestan will work on solar modules, RIA Novosti reported.
The idea seems to come closer to Ramzan Kadyrov's stated commitment to make Chechnya financially independent by developing a manufacturing base.
As mentioned at the beginning of this post, Russia pays a price for peace in Chechnya, and Russians are tired of paying it. However, should the Caucasus become financially independent, then that dramatically diminishes the need for ties that local rulers such as Kadyrov have with Moscow.
Later that year, as Putin campaigned for the presidency in the March, 2012, election, he promised no cuts to the funding for economic development in the Caucasus - amid cries of "Stop Feeding the Caucasus", a slogan that was gaining popularity with Russians. From Putin says no cuts in North Caucasus funding, December 20, 2011:
A "Stop Feeding Caucasus" slogan is gaining popularity among Russians, stunned with images of new mosques and shiny buildings in the Chechen capital Grozny, destroyed in heavy fighting between the separatists and the Russian army in the 1990s.
The slogan was also picked up by some nationalist-minded opposition leaders like lawyer Alexei Navalny who is serving a 15-day jail sentence for disrupting public order during mass protests in Moscow after the Dec. 4 election.
Putin said that a reduction in investment would bring more migrants from North Caucasus into the large Russian cities "along with all the problems it causes" in a clear reference to last year's nationalist riots next to the Kremlin.
"What will we do then? Kick them all out? But where will they go? They will join the insurgency," Putin said, according to a transcript of the meeting posted on the government's website. "And the fratricidal war will carry on."
Skipping down:
Critics argue that money flowing into North Caucasus is stolen by corrupt officials. In his blog in March 2011 Navalny attacked an official from Dagestan who ordered a car worth $265,000 using public money, questioning why a minister of a poor region drive such an expensive vehicle.
[snip]
Official results showed Putin's United Russia party had received 99.5 percent of the vote in Chechnya, run by Putin loyalist Ramzan Kadyrov - a result which made the opposition cry foul. Other republics also backed United Russia.
Kadyrov, who hosted a glitzy opening ceremony for a skyscraper complex that was attended by Hollywood stars and coincided with his 35th birthday, said he was receiving money from Allah.
Promise economic development, then let the local pro-Moscow (pro-Putin) strongmen spend it to consolidate power?
An interesting and readable summary/overview is provided by Ariel Cohen, Ph. D., in an article entitled A Threat to the West: The Rise of Islamist Insurgency in the Northern Caucasus and Russia's Inadequate Response, from March 26, 2012:
Russia's Northern Caucasus is turning into one of the most volatile, lawless regions in the world and a hotbed for international terrorist activity in spite of decades of Russian military operations and repeated assurances from the Russian government that peace has been achieved. As Russia continues to lose control of the region, it is becoming a significant base for Islamist terrorist organizations and organized crime and may ignite an even greater terrorist campaign inside Russia and beyond.
[snip]
To alleviate the hostilities, the Russian government has implemented many economic and developmental programs and provided billions of dollars in aid to the North Caucasus in the past few years. Russian officials have invested to curb the appeal of radical Islam among the youth, but the area's overall economic and social prospects remain grim due to the ongoing security crisis caused by heavy-handed security policy and the pervasive corruption and mismanagement of the Russian government.
Thus, Russia's entire counterinsurgency strategy is in question. Its primary goal is "to make the local population less afraid of the law enforcement than the insurgents,"[2] but the overly violent Russian approach has often produced the polar opposite. Since the dissolution of the Soviet Union in 1991, the North Caucasus has experienced two major wars and numerous skirmishes, resulting in hundreds of thousands of casualties and internally displaced persons, while the fear of terrorism has spread throughout Russia.
Spreading ungovernability in the Northern Caucasus facilitates the emergence of Islamist safe havens, complete with terrorist training facilities, religious indoctrination centers, and hubs of organized crime. This should be a cause for concern for the United States.
[snip]
U.S. policymakers should be concerned that the North Caucasus may devolve into an anarchic haven for Islamist terrorism and criminality. Security of America's friends and allies, prevention of a terrorist safe haven in the ungovernable North Caucasus, and ensuring the free flow of energy resources are high priorities for the U.S. in this volatile region. Such a threat should not be allowed to develop.
The interests of the United States and its allies could suffer from Russia's failure to respond appropriately to Islamist extremism. Washington needs to develop a strategy to respond to potential "spillover" from Islamist insurgency in the North Caucasus. The U.S. and its allies need to monitor the region for early signs of danger in order to respond appropriately. A modest investment in intelligence, diplomacy, and capacity-building with U.S. friends and allies could help to mitigate the rising Islamist threat and the effects of misguided Russian policies.
As explained in the article, spillover threatens important US allies, as well as important trade routes, especially energy trade routes, that skirt Russia's southern border through Armenia, Azerbaijan and Georgia.
Well, fast-forward to 2013. The investment in the North Caucasus as a possible rival to Silicon Valley has begun. From New energy opportunities in Russia thanks to photovoltaics, May 23, 2013 (see original for links that I did not reproduce):
According to Tomasz Slusarz (CEO of Solar PV Consulting), Russia will consolidate its dominant position in the global energy market, above all, thanks to photovoltaic power.
Russia is one of the leading oil and gas producers and exporters in the world, but this has not stopped the government’s ambitions in the search for clean energy supplies. For this reason, and for some time, they have begun investing in alternative energy sources, including photovoltaics.
[snip]
The sun is certainly not lacking in Russia where there is a potential of about 1,870 TWh of radiation and an economic potential of 101 GWh per year. The sunniest regions are those in the south, particularly the Northern Caucasus...
[snip]
In fact, investments have been made by multi-billion dollar giants such as Renova and Lukoil both for the accomplishment of photovoltaic parks in order to encourage the creation of a national industrial sector.
A few weeks ago, they set the bases for the birth of a "Silicon Valley" in the Northern Caucasus, a joint venture between the local government and private companies to promote a project with the goal of producing polycrystalline silicon photovoltaic cells and modules.
Similarly, in Dagestan, a California-based company called Plug & Play has begun operations in the capital, helping develop businesses in the republic. From Plug & Play Tech Center opens in Dagestan, October 22, 2013:
Plug & Play, a Silicon Valley-based global business incubator, has opened a new affiliate center in Makhachkala, the capital of Dagestan – a praiseworthy initiative in a region in Russia’s Northern Caucasus more often in the news for political conflicts and religious extremism than for IT innovations.
As East-West Digital News, the international resource on Russian digital industries, reported earlier this month, the Plug & Play Dagestan Center is located on the Dagestan State Technological University’s campus and plans to support 10-15 startups simultaneously. These projects receive a working space, mentors, legal advice, help with the search for funding, and the opportunity to present their projects to investors after six months.
[snip]
Plug & Play, which presents itself as “Silicon Valley in a Box”, claims that its incubated startups it has have raised more than $1 billion since 2006.
The question that comes to mind, though, is how much foreign investment and foreign tourism can the region expect, given the now-deteriorating security situation? From Failed North Caucasus Policy , July 22, 2013:
Events of the last few months have created the strong impression that something serious is brewing in the North Caucasus. Fighting in Chechnya has intensified, as has the conflict over its border with Ingushetia. Meanwhile, militants continue to kill policemen in Dagestan, and Chechen warlord Doku Umarov has threatened to detonate a bomb during the Winter Olympics in Sochi.
The problem is not that the Kremlin has recently committed a fatal mistake of some sort. Rather, we are witnessing the cumulative effect of a series of many small past mistakes resulting from the lack of a coherent strategy. Now, the authorities must deal with the consequences.
[snip]
Russia's withdrawal from the North Caucasus is effectively already underway in the form of a large-scale departure from the region of ethnic Russians. Meanwhile, several republics in the region no longer subject themselves to Russian legal or political norms, although formally they remain under Moscow's authority.
In Kabardino-Balkaria and Dagestan, Moscow rejected its usual approach of buying loyalty from the ethnic clan elites, attempting instead to achieve stability through the use of siloviki. But by relying on siloviki brought in from outside the region, Moscow's presence begins to resemble more of an occupying force. That model of rule is inherently unstable, and it is unclear just what price Moscow will end up paying for it in the near future. For example, it is clear that the dismantling of strongman and former Makhachkala mayor Said Amirov in Dagestan will sharply increase the risk of serious instability there.
Meanwhile, across the international borders, Armenia is working to become the Silicon Valley of the Caucasus. From Armenia can become Silicon Valley of the Caucasus, December 20, 2012:
On December 8, Armenian Prime Minister Tigran Sargsyan met with the President of the California Institute of Technology Jean Lou Chameau, the Aysor.am reported.
According to the press service of the government, the Prime Minister presented the ongoing in the country education reform, as well as the process of international accreditation of Armenian universities. They discussed the prospects of bilateral cooperation and the development of information technology in Armenia.
The U.S. Congressman Adam Schiff, who attended the meeting, said that Armenia had the potential to become the Silicon Valley of the Caucasus.
(See also Armenia could become Silicon Valley of the Caucasus – Adam Schiff.)
Why indeed would foreign workers - whose expertise would be needed for anything more than just production of raw materials - and foreign capital be sent to Russia's North Caucasus, when across the international border (indeed, with a country in between) is the potential for greater development of true high-tech industry in a country that is safe from Islamic terrorism and free of the Moscow-backed corruption?
It will be interesting to see how the Winter Olympics go in Sochi, and what happens in other places, such as Dagestan and Kabardino-Balkaria.
