By Mamuka Tsereteli (8/25/2004 issue of the CACI Analyst)

BACKGROUND: Europe’s natural gas demand is projected to increase substantially in the future. Even under conservative scenarios the demand for importing natural gas to the EU will double from 200 billion cubic meters (bcm) a year in 2002 to 400 bcm per annum by 2030, with total demand raising from 400 bcm to up to 600 bcm in the same period. Russia will try to fill this gap with its own gas, as well as with the gas from Turkmenistan, with the worlds third largest gas reserves, and potentially from Kazakhstan, if those countries do not have alternative delivery options by that time.

By Jaba Devdariani (8/25/2004 issue of the CACI Analyst)

BACKGROUND: On August 19, in a first offensive military operation since the resumption of fire in South Ossetia, Georgian special forces captured the strategic heights from which Georgian villages were pounded during almost two weeks. Despite popular calls for a continued offensive, Georgian authorities decided to hand over the heights to the tripartite peacekeeping troops and withdraw the police and military detachments from South Ossetia. Simultaneously, President Saakashvili called upon the international community to assist in elaborating a new format of the peace process, which would allow for international presence during the political negotiations, and for increased international military monitoring on the ground.

By Stephen Blank (8/25/2004 issue of the CACI Analyst)

BACKGROUND: China’s increasing interest in Central Asia does not get a lot of analysis in the West. This is unfortunate because in terms of economic interest and military capability, China’s presence is steadily growing. In the last 12-18 months, it has finally begun to consummate energy deals with Kazakstan and Azerbaijan, and it has particularly asserted itself through the medium of the Shanghai Cooperative Organization or SCO.