Although the price of crude oil has just dipped below $70 per barrel, with weaker demand in the US acting as a break, the energy market remains tight. The greater than expected needs of both China and India, coupled by a standoff with Iran and political uncertainties in the wider Middle East, mean this is destined to be the case for some time to come.

Against this backdrop uranium has gone up significantly,and is becoming an increasingly valuable commodity.

Russia, thanks to the decaying stocks of nuclear warheads, is in the advantageous position of possessing large quantities of the commodity for which it has little use. These warheads contained HEU (highly enriched uranium) that can be extracted to make LEU (low enriched uranium). It is this latter material that is utilisable, indeed in demand for commercial power plants.

Given Prime Minister Blair's recent public pronouncements on the future and importance of cultivating nuclear power for domestic energy needs, and similar noises being made on the other side of the Atlantic, with energy security being cited as a significant factor in government backing for such projects, it looks as if the price may well continue its upward trend.

The US has been an important market for Russia's unwanted uranium. Under agreements signed in the early part of the '90s, some 10,700 warheads have been dismantled, the resulting uranium being made suitable for civilian use.

After the collapse of the Soviet Union, concerns over the sudden rise in availability of uranium on the open market, and the effects this would have on the price of the commodity, resulted in the US enacting anti-dumping laws, and requiring that all sales of uranium be filtered through the USEC (United States Enrichment Corporation), based in Bethesda, Maryland.

Access to US markets is controlled by this clearing house, and Russia believes that its inability to negotiate direct with potential clients in the US artificially depresses the price it can command for the commodity.

As prices rise Russia (naturally) wants a piece of the pie.

Over the next week the head of the Russian Atomic Energy Agency, Sergi Kiriyenko, will be in the US to meet with US government officials and the USEC (United states Enrichment Corporation) -- tough talking is expected.

Kiriyenko wants a change in these arrangements. Sources close to Kiriyenko say whilst Russia would like to remain in the US market, they can easily find other outlets for their uranium -- a thinly veiled threat that they will cut the US out.

Arguably there is a need for a change, and it is entirely rational for Russia to pursue this (and clearly advantageous to her). Russia already enjoys great leverage in the international energy markets, as the rise of Gazprom attests. Though its recent use of the state-owned energy giant to influence events in Ukraine and elsewhere in the former Soviet Republics, make it suspect, and these negotiations over access to the US uranium market may prove tricky.

Let's hope that both sides in this potential dispute will proceed with flexibility and fairness in mind, and that negotiations between the US and Russia are not "used" as another means for talking up an already tight market at a time of geopolitical instability in the Middle East.

posted by Ziba Norman

Permanent link to this post: http://www.t-i.org.uk/blog/index.php?post=1148216697

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One year ago today in Andijan, in the north eastern part of Uzbekistan, where the country wedges itself like a spade into Kyrgistan, Islam Karimov's government fired on hundreds of unarmed demonstrators protesting against the regime's repressive policies and in solidarity with a group of businessmen who'd been imprisoned on charges of being part of islamic extremist groups.

Official reports say under 200 were killed, though NGOs working in the area say the number is perhaps fivefold higher than admitted by Uzbek government sources.

Although the reports from independent media witnesses suggest there were no religious overtones to the demonstrations, no chanting of "Allah Akbar", or similar, the government of Uzbekistan has consistently insisted the demonstrations were orchestrated by extremist forces working in Uzbekistan.

This is largely the line taken by the Kremlin, and Russian press, with China and Russia backing Karimov's actions saying they were "a necessary use of force to to fight extremism and separatism." Whilst the US has suspended financial aid and imposed visa restrictions on members of Karimov's elite.

Karimov has refused to allow an independent enquiry into the events of the 13th May 2005 massacre, and since then the repressive tendencies have grown stronger, with NGOs being kicked out, even UNHCR have left as of 17 April.

The Karimov regime have played the "Islam card" in the past, using this as justification for cracking down on opposition groups, and dragging their heals on democratic reform.

Prior to the events of last May, things were getting worse in Uzbekistan, after terrorist attacks in spring of 2004, much of the progress that was being made towards reform was halted. At roughly the same time relations with the US which hitherto had been growing warmer started to change.

Uzbekistan was, of course, one of the countries which supported military action in Afghanistan and Iraq. Until August 2005, it housed the K2 American airbase, and was pivotal for military operations in the region. After the events in Andijan, the US was given contractual notice to vacate these bases. Karimov believed the US presence to be corrosive and bore significant responsibility for unrest.

So how have these developments affected the region and what is the prognosis for the future?

As Uzbekistan turns away from Washington, it is looking increasingly towards Moscow,and it has been welcomed by Putin, who sees this as another opportunity to rebuild alliances of old that are important strategically, economically. Russian's concern for her internal security is also a factor, with Moscow preferring the status quo to unpredictable changes that she believes may strengthen extremist and nationalist forces that pose a threat.

Russia is doing herself no favours if she does not support movement towards more democratic forms of government in these regions. Attempts to keep the lid tightly clamped on these societies, and supporting governments like Karimov's may postpone the progression of events, but when confrontation does erupt it is likely may be far more violent and unpredictable.

Democratic and free market economic reforms are what is needed to underpin the establishment of stable societies -- by far the most pressing problems, though Moscow, despite now being in a position to influence events, looks in no mood to support much needed reform. In Uzbekistan and elsewhere in the region, failure to address these questions leaves a dangerous opening for extremism.

Authoritarian clampdowns, of the type that resulted in the massacre in Andijan, will only serve to strengthen the rise of fundamentalism so feared by both Moscow and Beijing, and will not make central Asia any safer.

posted by Ziba Norman

Permanent link to this post: http://www.t-i.org.uk/blog/index.php?post=1147707311

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