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The Past, Present and Future of Russian Energy Strategy – Stratfor

The  Past, Present and Future of Russian Energy Strategy is republished with  permission of Stratfor.”

Read more:  The Past, Present and Future of Russian Energy Strategy | Stratfor

By Lauren Goodrich and Marc Lanthemann

The future of Russia’s ability to remain a global energy supplier and the  strength the Russian energy sector gives the Kremlin are increasingly in  question. After a decade of robust energy exports and revenues, Russia is  cutting natural gas prices to Europe while revenue projections for its energy  behemoth, Gazprom, are declining starting this year.

Russia holds the world’s largest proven reserves of natural gas and  continually alternates with Saudi Arabia as the top oil producer. The country  supplies a third of Europe’s oil and natural gas and is starting to export more  to the energy-hungry  East Asian markets. The energy sector is far more than a commercial asset  for Moscow; it has been one  of the pillars of Russia’s stabilization and increasing strength for more  than a century. The Kremlin has designated energy security as the primary issue  for Russia’s national security, especially since recent changes in global and  domestic trends have cast doubts on the energy sector’s continuing strength.

Throughout Russian history, the country’s energy sector periodically has  strengthened and weakened. Managing this cycle has been a centerpiece of  Russia’s domestic and foreign policy since czarist times. This historical burden  now rests on Vladimir Putin’s regime.

Russia’s Imperatives and the Energy Factor

Russia is an  inherently vulnerable country, surrounded by other great powers and  possessing no easily defensible borders. In addition, Russia is a massive,  mostly inhospitable territory populated by diverse ethnic groups that  historically have been at odds with Moscow’s centralized authority. This leaves  Russia with a clear set of imperatives to hold together as a country and  establish itself as a regional power. First, Russia must consolidate its society  under one authority. Second, it must expand its power across its immediate  neighborhood to create buffers against other powers. (The creation of the Soviet  Union is the clearest example of this imperative in action.) Finally, it must  leverage its natural resources to achieve a balance with the great powers beyond  its periphery.

Russia has used a variety of tools throughout history to achieve these  imperatives, ranging from agricultural exports to pure military  conquest and intimidation. Starting in the late 1800s, Russia added energy to  the list of vital commodities it could use to achieve its central strategic  goals. By the 1950s, Russia’s energy sector had become one of the major pillars  of its economic and political strength.

The revenues from oil and natural gas exports show how the energy sector  empowered the Kremlin to consolidate the country. Energy export  revenues for the Russian Empire began flowing into government coffers  in the late 1800s, with oil export revenues making up 7 percent of the export  earnings. These revenues rose to 14 percent in the late 1920s during the early  stages of the Soviet Union, and by the 1950s accounted for half of Soviet export  earnings. Currently, energy revenues make up half of the  government’s budget. This capital influx was and continues to be  instrumental in helping Russia build the military and industrial basis needed to  maintain its status as a regional — if not global — power. However, as the  Russian governments became dependent on energy, the revenues also became a large  vulnerability.

Beyond export revenues, the energy sector has contributed to the creation of  a domestically stable and industrialized state. Russia’s  domestic energy consumption is very high due to extremely cold weather for  most of the year, but despite inefficiencies within the energy sector  and the cost of producing energy, the country’s domestic reserves have  enabled Moscow to provide its citizens and the industries that employ them with  low energy prices.

The energy sector also contributes to Russia’s ability to expand its  influence to its immediate neighbors. Moscow’s use of energy as leverage in the  buffer states differs from country to country and ranges from controlling  regional energy production (as it previously did in the Azerbaijani and Kazakh  oil fields) to subsidizing cheap energy supplies to the countries and  controlling the energy transport infrastructure. Russia has used similar  strategies to shape relationships beyond the former Soviet states. For instance,  Russia is one of Europe’s two main energy suppliers and is the only European  supplier with large reserves of oil and natural gas and historically cheap  prices. Russia’s physical connectivity with Europe and ability to undercut any  competitor have served as the basis of many of Moscow’s relationships in  Europe.

Evolution of Russian Energy Strategies

Energy’s usefulness as a means of achieving Russia’s three main imperatives  has altered over time because Russia has had to change its strategies depending  on shifts in domestic or international circumstances. Moscow’s strength lies in  its flexibility in managing its energy sector.

The importance of Russian energy was established in the late 1800s, when the  monarchy saw great potential for the Russian Empire if it could develop this  sector on a large scale. However, the empire had neither the technology nor the  capital to start up an indigenous energy industry. As a solution, the monarchy  eased its foreign investment restrictions, inviting European and U.S. firms to  develop the Baku and Volga oil fields. This brought about a brief period of  warmer relations between the Russian Empire and many Western partners,  particularly the United Kingdom, France and the United States. All parties soon  realized that the only way to make the Russian oil business profitable despite  the high costs associated with the country’s harsh and vast geography was to  transform Russia into a massive producer. By the turn of the century, the  Russian Empire was producing 31 percent of global oil exports.

As the importance of the Russian Empire’s energy sector grew, it became clear  that Russia’s internal stability greatly affected the sector. The Bolsheviks  used the energy sector in their attempts to overthrow the monarchy in the early  1900s. The oil-producing regions were one of the primary hubs in which the  Bolsheviks operated because energy was one of the few sectors with organized  workers. In addition, the Bolsheviks used the oil rail networks to distribute  propaganda across the country and abroad. In 1904, when the Russian Empire  cracked down on an uprising in St.  Petersburg, mostly Bolshevik protesters set the Baku oil fields  on fire. This cut Russia’s oil exports by two-thirds, forcing Moscow and the  foreign markets to realize oil exports’ great vulnerability to Russian domestic  stability.

Russia’s modern energy strategies began forming after World War II.  With the Soviet Union left standing as one of two global hegemons towering over  a divided Europe, Moscow saw no barriers to achieving dominance in the global  energy field. Between the 1950s and 1960s, Soviet oil output had doubled, making  the Soviet Union once again the second-largest oil producer in the world and  primary supplier to both Eastern and Western Europe. Revenues from oil  exports started to make up nearly half of Soviet export income.

Because the Soviet Union was producing oil en masse and the Soviet  system kept labor costs low, Russia was able to sell its oil at prices  almost 50 percent lower than oil from the Middle East. The subsidization of  oil to the Soviet bloc and then to Western European countries helped Moscow  undercut Western regimes and strengthen its position in its own periphery  — a strategy that the CIA dubbed the Soviet Economic Offensive. For the  Soviets, this was not about making money (although they were making money) as  much as it was about shaping a sphere of influence and undermining the West.  This strategy came at a cost, since Moscow was not bringing in as much revenue  as it could and was producing oil inefficiently, rapidly depleting its  fields.

In the 1970s, the price of oil skyrocketed due to a series of crises mostly  in the Middle East. At the same time, Russia was already feeling the strain of  sustaining the massive Soviet Union. Soviet leader Leonid Brezhnev’s regime was  left with a choice: use the high global prices as a reason to raise prices in  Eastern Europe and benefit the Soviet economy, or continue subsidizing the  Eastern bloc in order to keep it beholden to Moscow and not push it to start  thinking about other energy sources. It was a choice between two  imperatives: Soviet national stability and holding the buffer zone. In the end,  Moscow chose to protect its own interests and in 1975 raised the price of  oil for its customers, allowing for further increases based on global  market prices. By 1976, oil prices in the Eastern bloc had nearly doubled,  remaining below global prices but rising high enough to force some countries in  the bloc to take out loans.

The Soviet focus on maintaining high energy revenues continued through the  mid-1980s, when these revenues accounted for nearly all of the Soviet Union’s  hard currency inflows. But the Soviets were dealt a double blow in the mid-1980s  when the price of oil collapsed and the West imposed an embargo on Soviet oil,  prompting Saudi Arabia to flood the oil markets. Moreover, the Soviet Union was  falling far behind the West in technology, particularly in energy and  agriculture. In response, starting in 1985, the Soviet Union moved closer to a  market-based energy economy, raising prices for the Eastern bloc, requiring hard  currencies for payment and allowing foreign firms to re-enter the energy  sector.

But Russian strategy shifts were not deep and timely enough to prevent the  collapse of the Soviet Union. In the decade following the fall of the Soviet  bloc, the Russian energy industry was in disarray. The energy liberalization  that started under Mikhail Gorbachev in the 1980s was taken to an extreme under  Boris Yeltsin in the 1990s. As a result, production fell by half and the Russian  energy sector was divided between foreign groups and the emerging Russian  oligarch class.

This changed under Vladimir Putin in 2000. One of the first items on Putin’s  agenda to help stabilize the country was to consolidate the energy sector under  state control. This meant radically reversing the liberal policies from the two  decades before. The government effectively nationalized the majority of the  energy sector under three state behemoths: Gazprom,  Rosneft and Transneft. The Kremlin became more aggressive in negotiating supply  contracts with the former Soviet states and Europe, locking them into large  volumes at extraordinarily high prices because these customers had no  alternative energy supplies. The Kremlin also began cutting energy supplies to  certain markets — blaming troublesome transit states such as Ukraine — in  order to shape other political negotiations.

Though Moscow’s energy strategy became fairly aggressive, it helped bring  about a stronger and more stable Russia. Russian energy revenues soared due to  high global oil prices and the high natural gas prices it charged in Europe.  Russia had excess funds to pump into its political, social, economic and  military sectors. Energy politics also helped Russia leverage its influence in  its former backyard and forced Europe to step back from countering Russia’s  resurgence. Of course, the financial crises that swept Europe and Russia in  2008 reminded Russia of its need for its biggest energy clients when oil prices  dropped and demand began declining.

Challenges to Maintaining Russian Energy

Russia’s top concern is its vulnerability to fluctuations in the price of  energy. With half of the Russian budget coming from energy revenues (of that, 80  percent is from oil and 20 percent comes from natural gas), the government could  be crippled should energy prices fall. The Kremlin has already decreased its  budget projections for oil prices to $93 per barrel instead of $119 — though  even at that price, the government is playing a game of chance. Stratfor is not  in the business of forecasting oil prices, but historical patterns show that  major international crises and fluctuations in global consumption and production  patterns repeatedly have had sufficient impact on oil prices and on Moscow’s  revenues to destabilize the country.

Natural gas export revenues are also currently in question. With alternative  natural gas supplies coming online for Russia’s  largest consumer, Europe, the Kremlin has been forced to lower its prices in  recent months. This year, Gazprom expects to give European consumers  $4.7 billion — approximately 10 percent of Gazprom’s net revenues — in rebates  due to price cuts.

In its current configuration, Russia’s energy sector is under strain. The  consolidation of the sector mostly under two large state firms had many benefits  for the Kremlin, but after a decade of consolidation the disadvantages are  piling up. With little competition for Russia’s natural gas giant, Gazprom, the  firm is lagging in technology and is considered unfriendly to outside  investment. Russia’s oil giant, Rosneft, recently began evolving into a  larger monopoly like Gazprom, which could lead it to fall into a similar trap.  With future energy projects in Russia requiring more advanced technology (due to  their location and environment) and more capital, both Gazprom and Rosneft need  modernization and foreign investment.

Corruption is also a major factor, with varying estimates of 20 to 40 percent  of Gazprom’s revenues lost to either corrupt or inefficient practices. Rosneft  has similar problems. This loss would be sustainable with Moscow’s previous high  energy revenues, but it will not be sustainable in the future should energy  prices fall or the maintenance and expansion of the energy sector become more  expensive. The Kremlin is probing Gazprom, although with a culture of corruption  rampant throughout Russian history there is little the Kremlin will be able to  do to eliminate wrongdoing within the natural gas firm.

Moreover, Europe’s dependence on Russian energy is decreasing. The natural  gas shortages experienced throughout Europe during the Russian-Ukrainian  crises of 2006 and 2009 were a stark reminder of how vulnerable  European nations were because of their dependence on Russian natural gas  exports. Both unilaterally and through the European Union, European countries  began developing strategies that would allow them to mitigate not only Europe’s  vulnerability to disputes between Moscow and intermediary transit states, but  also its general dependence on energy from Russia.

The accelerated development of new and updated liquefied  natural gas import facilities is one such effort. This will give certain  countries — Lithuania and Poland, most notably — the ability to import natural  gas from suppliers around the globe and bypass Russia’s traditional lever:  physical connectivity. This is particularly significant in light of the  accelerated development of several unconventional natural gas plays in the  world, particularly the shale reserves in the United States. The development of  a pipeline project that would bring non-Russian Caspian natural gas to the  European market is another attempt — albeit less successful so far — to  decrease European dependence on Russian natural gas.

Additionally, a set of EU-wide policies, including the Third  Energy Package, has begun giving EU member nations the political and legal  tools to mitigate Gazprom’s dominance in their respective natural gas supply  chains. This common framework also allows European nations to present a more  unified front in challenging certain business practices they believe are  monopolistic — the latest example being the EU Commission probe into Gazprom’s  pricing strategy in Central Europe. This, coupled with the EU-funded efforts to  physically interconnect the natural gas grids of EU members in Central Europe,  has made it increasingly difficult for Russia to use natural gas pricing as a  foreign policy tool. This is a major change in the way Moscow has dealt with the  region for the past decade, when it rewarded closer ties with Russia with low  gas prices (as with Belarus) and increased rates for those who defied it (the  Baltics).

Finally, Russia faces the simple yet grave possibility that the escalating  financial and political crisis in Europe will continue to reduce the Continent’s  energy consumption, or at least preclude any growth in consumption in the next  decade.

Russia’s Next Move

The Putin administration is well aware of the challenges facing the Russian  energy sector. Russia’s attempts in the past decade to shift away from  dependence on energy exports by focusing on industrial development have not been  particularly successful and keep the country tied to the fate of its energy  sector. Russia’s strategy of using its energy exports as both a foreign  policy tool and a revenue generator is contradictory at times: To use energy in  foreign policy, Moscow must be able to lower or raise prices and threaten to cut  off supplies, which is anathema to the revenue-generating aspect.

Global and regional circumstances have changed to the point that Moscow has  had to prioritize one of the two uses of its energy industry — and it has  unequivocally decided to maintain its revenue-generating capability. The Kremlin  has begun crafting a set of policies designed to adjust the country to the  changes that will come in the next two decades.

First, Russia is addressing the very damaging uncertainty surrounding its  relationship with key transit states that traditionally allowed it to export  energy to Europe. The construction of the Ust-Luga oil terminal on the Baltic  Sea allows Russia to largely bypass the Belarus pipeline system and ship  crude and oil products directly to its consumers. Similarly, the construction of  the Nord Stream natural gas pipeline under the Baltic Sea — and eventually its  southern counterpart, South  Stream, through the Black Sea — will allow Russian natural gas to bypass  the Ukrainian and Belarusian transit systems if necessary. These two  pipelines primarily will ensure natural gas deliveries to the major European  consumer markets in Germany and Italy, with which Russia seeks to maintain  long-term strategic partnerships.

By allowing Russia to guarantee deliveries to its major European customers,  the bypass systems ensure Moscow’s vital energy revenues. This strategy of  future energy export flexibility will also progressively reduce the leverage  Minsk and Kiev can exert in warding off Moscow’s attempts at consolidating  Belarus and Kiev as vassal buffer states — one of the few foreign policy goals  Moscow is still intent on pursuing through energy strategy.

Moreover, Moscow has adapted its energy strategy with European customers amid  growing diversification and liberalization efforts. Gazprom has begun expanding  the natural gas discounts formerly reserved for strategic partners such as  Germany or Italy. The Kremlin knows that its only hope of maintaining natural  gas revenues in the face of a potential global shale boom is to lock its  customers into price-competitive, long-term contracts. Moscow will continue  showing that it can offer European consumers guaranteed high volumes and  low-cost deliveries that producers relying on liquefied natural gas shipping for  transport can seldom afford.

Finally, Russia is focusing significant attention and funds on developing  connections to the growing East Asian energy markets, diversifying its export  portfolio should challenges in the European market continue intensifying. One  aspect common to all the strategies Russia is set to pursue for the next decade  is the high capital needed to complete them; the Eastern  Siberia-Pacific Ocean oil pipeline alone is set to cost nearly $15  billion. Despite the effects of the financial crisis in 2009, Russia still has  vast capital reserves earmarked for these large-scale projects, but these funds  are not infinite.

The Kremlin appears keenly aware of the challenges that Russia will face in  the next two decades as another energy cycle draws to an end. Unlike  Brezhnev and Gorbachev, Putin has proven capable of enacting effective  policy and strategy changes in the Russian energy sphere. While Russia’s  dependence on high oil prices continues to worry Moscow, Putin has so far  managed to respond proactively to the other external shifts in energy  consumption and production patterns — particularly those affecting the European  natural gas market. However, the long-term sustainability of the model  Russia is moving toward remains doubtful.

Read more:  The Past, Present and Future of Russian Energy Strategy | Stratfor

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The Unspectacular, Unsophisticated Algerian Hostage Crisis – Stratfor

The  Unspectacular, Unsophisticated Algerian Hostage Crisis is republished with  permission of Stratfor.”

Read more:  The Unspectacular, Unsophisticated Algerian Hostage Crisis | Stratfor

By Scott Stewart Vice  President of Analysis, Stratfor

The recent jihadist attack on the Tigantourine natural gas facility near In  Amenas, Algeria, and the subsequent hostage situation there have prompted some  knee-jerk discussions among media punditry. From these discussions came the  belief that the incident was spectacular, sophisticated and above all  unprecedented. A closer examination shows quite the opposite.

Indeed, very little of the incident was without precedent. Mokhtar  Belmokhtar, who orchestrated the attack, has employed similar tactics and a  similar scale of force before, and frequently he has deployed forces far from  his group’s core territory in northern Mali. Large-scale raids, often meant to  take hostages, have been conducted across far expanses of the Sahel. What was  unprecedented was the target. Energy and extraction sites have been attacked in  the past, but never before was an Algerian natural gas facility selected for  such an assault.

A closer look at the operation also reveals Belmokhtar’s true intentions. The  objective of the attack was not to kill hostages but to kidnap foreign workers  for ransom — an objective in keeping with many of Belmokhtar’s previous forays.  But in the end, his operation was a failure. His group killed several hostages  but did not destroy the facility or successfully transport hostages away from  the site. He lost several men and weapons, and just as important, he appears to  have also lost the millions of dollars he could have gained through ransoming  his captives.

Offering Perspective

Until recently, Belmokhtar  and his group, the Mulathameen Brigade, or the “Masked Ones,” which donned  the name “Those Who Sign in Blood” for the Tigantourine operation, were  associated with al Qaeda in the Islamic Maghreb. Prior to their association with  al Qaeda in the Islamic Maghreb, they were a part of Algeria’s Salafist Group  for Preaching and Combat, which operated in the Sahel. As part of these groups,  Belmokhtar led many kidnapping raids and other operations throughout the region,  and these past examples offer perspective for examining the Tigantourine  operation and for attempting to forecast the groups’ future activities.

In April 2003, Belmokhtar was one of the leaders of the Salafist Group for  Preaching and Combat operation that took 32 European tourists hostage in the  Hoggar Mountains near Illizi, Algeria, which is roughly 257 kilometers (160  miles) southwest of the Tigantourine facility. Seventeen hostages were freed  after an Algerian military raid, and the rest were released in August 2003 —  save for one woman, who died of sunstroke.

 

Prior to 2006, when the  Salafist Group for Preaching and Combat essentially became al Qaeda in the  Islamic Maghreb, kidnappings and attempted kidnappings occurred roughly once  a year. But after 2006, the operational tempo of kidnappings  in the Sahel quickened, with about three to five operations conducted per  year. According to U.S. Treasury Department Undersecretary for Terrorism and  Financial Intelligence David Cohen, al Qaeda earned approximately $120 million  in ransoms from 2004 to 2012. Cohen added that al Qaeda in the Islamic Maghreb  had become the most proficient kidnapping unit of all al Qaeda’s franchise  groups.

Examples of al Qaeda in the Islamic Maghreb’s proficiency abound. In  September 2010, the group took seven hostages from a uranium mine in Arlit,  Niger, and kidnapped four European tourists in Mali in January 2009. More  recently, it kidnapped three aid workers in Tindouf, Algeria, in October  2011.

Typically the group prefers to kidnap more than one person. Having multiple  hostages allows the captors to kill one or more of them to ratchet up pressure  for the ransom of the others. Guarding multiple hostages requires more  resources, but Belmokhtar has plenty of human resources, and the additional  ransom makes guarding them worth the extra effort.

Holding multiple hostages also enables the kidnappers to make political  statements — often connected to outrageous demands. In the Tigantourine attack,  much attention was paid to the militants’ demands to the U.S. government to  release Sheikh Omar Abdel Rahman, also known as “The  Blind Sheikh,” and Aafia  Siddiqui, a Pakistani neuroscientist convicted of terrorism  charges. But again, such demands are not unprecedented. Edwin Dyer, one of the  four European tourists kidnapped in January 2009, was beheaded in June 2009  after the British government refused al Qaeda in the Islamic Maghreb’s demand to  release imprisoned jihadist cleric Abu Qatada. The group again demanded the  release of Abu Qatada in April 2012 in exchange for British-South African  citizen Stephen Malcolm, who was kidnapped in Timbuktu, Mali, in November 2011.  Certainly the militants had no realistic expectation that the British would meet  their demands; the demands and Dyer’s subsequent execution were meant as  political statements, not realistic objectives.

Botched Missions

Tactically, how the Tigantourine attack transpired remains unclear. What we  do know is that the amount of militants used in the attack is not unprecedented.  While serving as a unit leader for the Salafist Group for Preaching and Combat  in 2005, Belmokhtar led a group of 150 militants in a raid on a military outpost  in Lemgheiti, Mauritania, that left 15 Mauritanian soldiers dead and another 17  wounded.

According to a Jan. 21 statement made by Algerian Prime Minister Abdelmalek  Sellal on Jan. 21, it appears that Belmokhtar’s Tigantourine operation was  a two-pronged attack. One team appears to have been tasked with intercepting a  bus taking Western employees from the facility to the airport. Militants  reportedly used vehicles marked as oil company security or as belonging to the  Algerian government. Sellal noted that the objective of the operation was to  take a group of the hostages out of the country, presumably transporting them to  northern Mali’s Kidal region, where in recent years al Qaeda in the Islamic  Maghreb has held its foreign hostages.

Notably, the Tigantourine facility is located only about 32 kilometers from  the Libyan border. The attackers probably took advantage of the chaos in Libya  to gather weapons and prepare for the attack and then came across the border  from Libya to conduct the attack. They could have covered very quickly the  distance from the Libyan border to the facility, and this likely provided them  an element of tactical surprise.

The second prong of the attack was directed against the facility itself.  Heavily armed attackers surprised the security forces at the facility and  subdued them by concentrating their forces and using overwhelming firepower.  Algerian forces recovered from the assailants a recoilless rifle,  rocket-propelled grenade launchers and several medium and light machine guns. We  are currently unsure if this group was tasked with taking additional hostages at  the facility and fleeing with them, staging a  drawn-out hostage drama, as in Beslan, or sabotaging the facility and  fleeing. Such an operation may have meant to divert attention from the group of  militants that was transporting hostages out of the country. Having a group of  hostages in custody outside Algeria could have helped them extract the second  team from the facility.

In any case, the first unit apparently failed to achieve its objective, and  it does not appear that the militants were able to take hostages from the bus  and quickly transport them out of the country. (Currently, not all of the  hostages are accounted for, but they are most likely among the unidentified  dead. It will take time for forensics teams to identify them.) Moreover, on the  second day helicopter gunships thwarted the escape efforts of some militants,  who had used foreign hostages as human shields.

Some reports indicate that the attackers set explosive charges around the  plant and attempted to destroy it Jan. 19, an action that apparently triggered  the final assault to neutralize the militants at the facility. We have not seen  photos of any demolition charges or any other indication that the attackers  employed any sort of sophisticated improvised explosive devices in the  operation. If the attackers went to the trouble to bring large quantities of  explosives with them on the raid, they likely did so intending to use the  explosives to damage the plant or to facilitate a drawn-out hostage drama — or  both. The militants wouldn’t need large quantities of explosives to seize  hostages, and they would not have spent the money to buy them or the effort to  transport them unless they are critical to their mission.

But tactically, both missions — stopping a vehicle to kidnap foreigners and  storming a facility — are within the demonstrated capabilities of Sahel-based  jihadist militants. In addition to numerous vehicular ambushes al Qaeda in the  Islamic Maghreb has conducted to steal cargo or grab hostages, it has also  raided hotels, homes and clinics to seize hostages. Perhaps the attack most  similar to Tigantourine was the September 2010 raid on the Areva uranium mining  facility near Arlit, Niger. The facility was more than 320 kilometers from the  Malian border and more than 160 kilometers from the border with Algeria. The  militants demonstrated their ability to operate hundreds of kilometers from  their bases in northern Mali, successfully storm a facility and return to  northern Mali with Western hostages. These militant groups have also staged  large-scale raids on military bases across the Sahel.

Several indicators suggest the Tigantourine operation was intended to seize  hostages, not kill hostages. According to a June 2007 classified cable released  by Wikileaks, the U.S. Embassy in Algiers said that Belmokhtar had criticized al  Qaeda in the Islamic Maghreb’s suicide operations that mean to kill civilians.  Moreover, the attackers did not immediately begin to shoot foreigners as they  did during the November 2008 Mumbai  attack and the June  2004 attack against foreign energy workers in Yanbu, Saudi Arabia. They  failed to hold these hostages for any period of time, and by all accounts they  failed to take Western hostages back to northern Mali. This amounts to a  significant loss for Belmokhtar.

Avoiding Complacency at Energy Sites

Despite a long history of militant activity in Algeria, energy facilities had  largely escaped unscathed — until last week. When al Qaeda in the Islamic  Maghreb began to conduct  large vehicle bombings in Algiers and roadside bombing attacks against buses  carrying foreign energy workers in or near the capital, energy companies  countered the threat by flying workers directly into airports near energy  facilities like the one in In Amenas.

This lack of attacks led to some complacency on the part of Algerian  officials and security forces at Tigantourine. But in the wake of the recent  attack, security at such facilities will be increased, and any sense of  complacency will disappear — at least for a while. And because militants prefer  to hit softer targets, we are unlikely to see follow-on attacks at similar  facilities in the region in the immediate future. It may also take Belmokhtar  some time to replace the leaders and materiel unexpectedly lost in the  attack.

However, with targets in the region becoming scarcer and harder to attack,  these groups will likely continue to extend their range of operations for new  kidnapping victims. Doing so would not only replace the resources they lost in  the attack but would also circumvent the French and African military offensive  in Mali, where their traditional smuggling activities will be disrupted.

Another lingering concern is the presence of large  quantities of shoulder-fired surface-to-air missiles in the region. If  Belmokhtar or other militants decide to attack Westerners working at energy  facilities in the region instead of merely kidnapping them, and if increased  security prevents them from other direct assaults, like Tigantourine, these  militants could attack aircraft used to ferry Westerners to airports near these  remote sites.

As Mali becomes a more difficult environment in which to operate, these  groups likely will retreat, at least initially, to Mali’s  Kidal region and possibly Niger’s Air region. Once those areas face the  French-backed African intervention forces, a retreat farther back into southern  Libya is likely, due to the vacuum of authority there and the close links they  have with Libyan militants.

Contrary to what has been widely discussed, the Tigantourine attack fit well  within the range and capability of Sahel-based jihadist militants like those of  Belmokhtar’s group. Thus the attack was more of a reminder of the region’s  chronic problems and less a startling new threat. Militancy and banditry were  fixtures in the Sahel well before the jihadist ideology entered the region. This  history — combined with the vacuum of authority in the region brought on by the  Malian coup and the overthrow  of Gadhafi, the prospect of millions of dollars in ransom and the large  quantities of available weapons — means we will see more kidnappings and other  attacks in the years to come.

Editor’s Note: A comprehensive assessment on al Qaeda in  the Islamic Maghreb can be found here.

Read more:  The Unspectacular, Unsophisticated Algerian Hostage Crisis | Stratfor

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