As claims flooded in of “Russian support” for Bernie Sanders, some members of Congress were more concerned about the democratic deficit elsewhere. In recent weeks, the former Soviet republic of Georgia has received a series of open letters from US lawmakers warning that its fledgling democracy is in danger — as is an American oil and gas company operating there, Frontera Resources. But there’s something a bit odd going on — for every single congressman who mentioned Frontera by name has, in fact, received money from the company.
Among the half-dozen “rent-a-congressmen,” the Texas Republican Pete Olson went furthest in using his platform to push the lobbyists’ agenda. As the House of Representatives discussed bills related to Iran on January 28, Congressman Olson made a comical (and completely off-topic) speech on Georgia. He compared its ruling party’s leader, Bidzina Ivanishvili, to Oscar the Grouch on the grounds that “they are both puppets that have trashed their own house.” He went on to accuse the omnipotent Vladimir Putin of undermining Frontera — a firm which, he said, has created great jobs in Georgia. There are ninety-two workers fired by the company who would beg to differ — they’re missing between eleven and fourteen months in pay from the last couple of years.
As per usual, members of Congress are conflating the state of Georgian democracy with unfettered capitalism — or rather, with US business interests doing whatever the hell they like. This kind of interference is hardly new. But rather more novel is the specific US foothold in Georgia, the result of the Caspian Policy brokered by the Clinton administration. Pinning its failures to “Russian interference” just looks like desperation — expressed by congressmen paid handsomely to stand up for corporate interests.
The real issue here isn’t about failing Georgian democracy, at least in the way that these congressmen talk about it. It’s about how US businesses rely on state power to spread their model of “free enterprise” in the former USSR — and how a private oil and gas firm built on Clinton’s interventions in the Caucasus came to be presented as the “victim” of Russian meddling.
The Caspian Oil Pipeline
Seeing all things Georgian as a microcosm of a great strategic contest with Russia is hardly new. Bill White, a deputy secretary of energy under Clinton, was the architect of the “tough on Russia” policy. He can be credited with making the Caspian region a national security issue for the United States — an “achievement” of the Clinton administration supported by its successors.
This national security policy promised that the American government would come to the aid of oil companies if Russia interfered. How to secure American support in the region for years and decades to come? By building an oil pipeline through the Caucasus, stretching from Baku, Azerbaijan to Ceyhan, Turkey.
Indeed, White’s interest in Georgia was hardly just a matter of “public service.” For having pushed this line in office, he set up Frontera Resources, an oil and gas company that would be protected through his own policies in the Caucasus. At the nexus of state and corporate power, Frontera is today run by Steve Nicandros, whose father was chairman of the multinational oil and gas company Conoco.
Through his role in the Clinton administration, White made contacts in the region that would help him set up the firm. He went on to become the mayor of Houston even while remaining on Frontera’s board. Indeed, the last time anyone investigated his ventures in the Caucasus was during the 2010 Texas gubernatorial race. Rick Perry, who ultimately won the election, refused to debate White unless he released his tax returns from his time in the Clinton administration and as chair of the Texas Democratic Party. The Perry campaign went after White’s investments — one of which was Frontera — and claimed that during Hurricanes Rita and Katrina he had diverted taxpayer money toward a company he had a personal interest in.
Yet White was unabashed in connecting his private business interests to high-minded patriotic ideals. As he put it, “I had an interest in the former Soviet Union before I went into government, during government, and after government. I thought it was critically important that the United States and the whole West try to teach good models of free enterprise over there.” Indeed, Frontera had many government contacts: its initial investors and advisers included a former CIA director and a former treasury secretary.
But today Frontera has overreached — and faces expulsion from Georgia. The contract between the firm and the government is confidential and its details can’t be confirmed. But Georgian authorities have cited a list of reasons for breaking ties. They say that the territory under licensing is too large and encompasses lands not meant to be used for extraction; that not all the promised investment has been realized; that most drilling still occurs in Soviet-era wells and there are no new ones; and that the parties are in dispute over the claimed amount of oil and gas deposits and those actually commercialized. The clash also involves both ecological concerns and controversy over poor labor relations. The government has now submitted its grievances to international arbitration in Stockholm, paying millions in legal fees — a heavy burden on this small country’s budget.
While Frontera’s ambition to reach new heights was undercut by its own questionable business practices, ninety-two Georgian workers face unemployment — and they say they are missing a full year’s pay. In a tiny and destitute country with high unemployment, especially in outlying regions, these workers and their families are left without any future job prospects — and no social safety net to bail them out.
Frontera’s dramas aren’t all that surprising — indeed, this has been described as a troubled enterprise for well over a decade. Operating in Georgia since 1997, the firm has long sold itself to investors as what Dallas Morning News described as “one gushing well away from success.” Except that gushing well came not in the form of oil, but as shares on the stock market.
White personally was saved from his bad investments in 2005, as Frontera was put up for public trading. This raised $88.7 million for the company and allowed him to sell his shares for high prices — recuperating his investment even while many investors lost everything. It looks like Steve Nicandros was trying to recapture that spirit when he claimed that groundbreaking deposits had been discovered — and that all that was needed to begin commercializing them, he insisted, was sufficient investment and the application of new technology. This financial scheme is called “pump and dump” — an attempt to raise stock prices through exaggerated claims.
Stock prices went up for a while, but there was insufficient evidence for the grand promises being made — and the edifice eventually began to crumble. Last year Frontera Resources was removed from the Alternative Investment Market (AIM), a submarket of the London Stock Exchange. The company has been mired in a series of lawsuits from its own lawyers, investors, and governments. According to the American Chamber of Commerce in Georgia, Frontera hasn’t been a member since the beginning of 2019. Workers ranging from geologists to field-workers claim the company hasn’t been able to pay their salaries for the last two years.
When asked why they continued working there anyway, they replied that given the company’s deep connection to US officials there was no way it wouldn’t be able to pull off the miracle it promised. None of the workers believed this was the end of Frontera. After all, this firm had shown an amazing ability to hold on to the oil and gas fields in the country — outmaneuvering every Georgian government — until it was summarily fired in fall 2019. Some even described lavish Texan country clubs packed with US government figures, which they had visited during work trips. One said, “I’ve only had my fill of caviar twice in my life: during the Soviet Union when it was everywhere and in those country clubs.”
Why couldn’t Frontera Resources strike gold? Its initial business plan focused on Azerbaijan and Georgia. Azerbaijan was the real cash cow with actual “gushing wells,” but that country’s government couldn’t reach an agreement on the division of revenues and soon Frontera was limited to Georgia alone. Simply put, Georgian production levels aren’t enough to rake in exorbitant profits. There may be more deposits, but the investment required isn’t worth it for many financiers; it could prove fruitless, whereas they want to bet on a sure thing. Trying to overcome this problem, Frontera resorted to all kinds of tricks, fiddling shares prices by disseminating overly optimistic but factually sparse statements and attracting investors by posing as a vendor of America’s favorite export, “freedom.”
This same business plan, based on selling freedom (and energy independence) from Russia, had already been taken to Moldova — with disastrous results. In that ex-Soviet republic, Frontera got a fifty-year license to explore hydrocarbons in 2017 despite the protests coming from NGOs and experts. In 2019, their contract was suspended since Frontera had not honored the agreement by carrying out any activity. Frontera had claimed there would be significant discoveries of gas in Moldova despite the common knowledge that the deposits are at best lackluster. In the same fashion, any doubt or protest against Frontera during these two years was considered “fake news” and tied to Moscow.
Frontera’s hired congressmen are Republicans — and more or less obscure figures. But it was the Clinton administration that set the stage for American oligarchs and carpetbaggers to enter into the post-Soviet world. They promised an idealized vision of the West and freedom from Russia, only to take advantage of the weakened population and the confused ruling class and complete deregulation in order to turn a profit. Both US parties are complicit in enabling this exploitation. It’s no accident that Joe Biden’s son Hunter is involved in the energy business in Ukraine — he is one of dozens and dozens of politically connected businessmen like Bill White, who sought to profit from the energy sector, all the while cloaking themselves as freedom fighters in the great contest of “the West versus Russia.”
The Democrats have fully embraced the bogeyman of Russian interference. They use this as a blanket means of explaining everything they don’t like — from American capitalism’s unpredictable manager Trump, to the social-democratic hopeful Bernie Sanders. At the end of the day, small-time congressmen being bought and paid by Frontera isn’t the main issue — and the problem goes deeper than companies writing checks during elections. For these lobbyists wouldn’t go far if the entire political environment in Washington wasn’t so open to their adventures abroad. The real problem is that there is no discussion in either party about how anti-Russian rhetoric has been used over the last three decades to turn poverty-stricken post-Soviet regions into sources of corporate plunder.
The Georgian government — weak, fractured, and politically dependent on Western goodwill — is badly bruised by the denunciations to which it has been subjected in the US Senate. Fearing more retaliation, it has backed off from pursuing Frontera in the Georgian courts — a move which would have given it temporary control over company management and the ability to hire back the fired workers. This is an egregious example of political blackmail, as a company widely acknowledged to be fraudulent continues to be forced upon Georgia.
While US officials emptily complain of “Russian interference,” the government and the population in Georgia is completely stripped of their own sovereignty. It seems that Georgians can’t make basic decisions without parts of the US government having their say first. In the name of stopping Russian intervention, the Americans grant themselves the right to intervene; in the name of protecting democracy, they stop Georgians having any say over what a foreign firm does on its soil.