Planet Gore

The EU & Gazprom

The Hudson Institute’s Zeyno Baran in the Journal today on Russia’s use of energy as a political weapon:

Along with a rapid military victory in Georgia, Vladimir Putin succeeded with another weapon in Russia’s effort to divide and conquer Europe: energy.
Despite claims of unity on the crisis in the Caucasus, energy is a clear dividing line on the Continent. Countries that have long-term gas partnerships with Russia — primarily the West Europeans — chose the “both sides are to blame” approach to the war in Georgia. Countries that are more eager to diversify their sources of energy supply away from Russia — most of the East and Central Europeans — evinced the necessary moral clarity about Moscow’s preplanned invasion.
We saw the same fault line at the NATO summit in April that failed to offer a membership action plan (MAP) to either Georgia or Ukraine, further emboldening Mr. Putin to provoke the Georgians into an unwinnable war. It is simply not possible for the European Union to be united in what Russia considers to be its “sphere of influence” unless the Kremlin’s gas leverage over the Continent is broken. Russia is Europe’s single largest supplier of natural gas. As there is no global market for gas, the construction of costly pipelines effectively locks consumers into lengthy contracts with producers. This means that Moscow can (and does) easily manipulate dependence into political and economic leverage.

Germany, for example, imports almost 40% of its gas from Russia — the most of any West European country — and plans to increase this figure to over 60% by 2020. Six East European countries are entirely dependent on Russia for their natural gas imports. Yet they are also the most vocal about the EU’s need to diversify away from Russia. That’s because they know Russia can turn off the taps in a second — as in Latvia in 2003, Lithuania in 2006 and the Czech Republic in 2008 — with little reaction from Brussels. Russia managed to divide the EU by being a reliable supplier to Western Europe, while continuing to treat Eastern Europe as its “backyard.”

Despite Russia’s repeated use of energy as a political weapon in Eastern Europe, Western Europeans keep repeating the mantra that Russia has been a reliable supplier to “Europe.” They also choose to ignore that natural-gas giant Gazprom serves as the Kremlin’s leading foreign-policy arm. The company is primarily state-owned, and many members of Gazprom’s leadership are current or former government officials. The Kremlin’s present occupant, Dmitry Medvedev, until recently was the chairman of Gazprom. His replacement there is former Prime Minister Viktor Zubkov.
The Russian plan is rather simple: Punish countries that refuse to come under its influence by building new gas pipelines that bypass them, while rewarding countries and political leaders that cooperate with Russia with lucrative energy deals. Maintaining a monopoly over the transport of Caspian gas to Europe is essential for Moscow to ensure that all those countries that have submitted to a Russian “partnership” will acquiesce to the return of the former Soviet space to the Kremlin’s control.
Mr. Putin has visited each of the relevant European countries to persuade them to join his energy projects. Nord Stream is one such example. When completed in 2011, that pipeline will connect Russia and Germany through the Baltic Sea, skirting Poland and the Baltic states.
Just last week, while Finnish Foreign Minister Alexander Stubb was shuttling between Moscow and Tbilisi in his capacity as chairman of the OSCE, Nord Stream announced the hiring of former Finnish Prime Minister Paavo Lipponen.
Moscow also tried to hire former Italian Premier Romano Prodi as chairman of a second gas pipeline, South Stream. Mr. Prodi turned down the job, but his successor Silvio Berlusconi is a longtime Putin ally who supports designating South Stream as a “European project.” Once officially accepted by Brussels, South Stream may even get EU funding. Not surprisingly, the Berlusconi government has reacted to the Russian invasion of Georgia with moral equivocation.
The future of South Stream — which will connect Russia and Bulgaria via the Black Sea, isolating Ukraine — will bear heavily on the prospects of a truly European project, the Nabucco pipeline.
Mr. Putin came up with South Stream to keep Nabucco from being built. Scheduled to be completed by 2013, Nabucco would transport Azerbaijani and Central Asian gas to Europe. The two pipelines would follow roughly the same route, ending in Austria, but Nabucco would bypass Russian control. So, over the past year Mr. Putin has cut bilateral deals with each country along the route, undermining Nabucco’s viability. Moscow has also been much more active than Europe in courting the Caspian rim countries that have the gas each pipeline needs. If South Stream is built first, it will pull all available Caspian gas supplies with it. Nabucco could still be built to carry Middle Eastern gas, but Russia will have ensured continued control over Caspian gas reaching Europe.
And because Nabucco is being privately funded, its investors would likely walk away if its gas sourcing is shaky. State-owned Gazprom, though, is willing to finance a project even if it isn’t commercially viable — so long as it supports the Kremlin’s strategic goals. No Nabucco means no gas diversification for East Europe, which will continue to be subjected to Russia’s power plays while Moscow caters to their West European brethren.
France took a Russia-first position at the NATO summit and, despite President Nicolas Sarkozy’s strong trans-Atlantic position, brokered a cease-fire between Russia and Georgia that was very much in the Kremlin’s interest. But Mr. Sarkozy now seems to have understood that he was played. German Chancellor Angela Merkel, too, is finally giving clear support for Georgia’s NATO membership as Russia’s occupation of the country is in its third week. . . .
The EU correctly points out that Russia needs European energy consumers just as much as Europe needs Russian energy suppliers. Moscow, though, has managed to turn this mutual dependence into one-sided leverage. It’s time to reverse this trend.
Ultimately, it all comes down to political will in Western Europe — and the longer Russian tanks remain in Georgia, the clearer it becomes that such will is lacking.


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