For those interested, a report (not the recent one but very up to the point) from one of the most reliable public-access sources. As a professional report it is unemotional and was prepared by independent institution.
www.isn.ethz.ch/news/sw/details.cfm?ID=12971German-Russian pipeline plans upset neighbors
Germany and Russia have agreed to build a pipeline for national gas that observers believe is primarily politically motivated. The projected pipeline route would bypass the neighboring new EU members, and many fear the plans, if realized, will disrupt efforts to pursue a coherent pan-European energy policy.
By Federico Bordonaro for ISN Security Watch (28/09/05)
On 23 September 2005, Walter Jürgen Schmidt, the new German ambassador to Russia, declared that the new Russo-German gas pipeline across the Baltic Sea is not intended to undermine any of the already existing pipelines. The North European Gas Pipeline (NGP) will allow the world's largest gas reserves to be conveyed directly to the western European market via a new 1,200-km off-shore route. Russia’s natural gas monopoly Gazprom and the German corporations BASF (chemicals) and EON (power and gas) signed the agreement to build the new pipeline in Berlin on 8 September in the presence of Russia’s President Vladimir Putin and Germany’s Chancellor Gerhard Schröder.
Significantly, Ambassador Schmidt’s first comments after his appointment referred to the NGP. In September, both Poland and Lithuania had publicly expressed their worries about this ambitious Russo-German project, the most notable and concrete outcome of the April 2005 agreements between Schröder and Putin.
For instance, on 7 September, Polish President Alexander Kwasniewski had complained that the Russo-German agreement had been made without consulting Poland or the rest of the EU, and said the project partners had intentionally bypassed Polish territory. As Polish Prime Minister Marek Belka said on 8 Sept–ember during the 15th Economic Forum in Krynica, Warsaw is "not very happy about this situation. For us, it poses a huge problem that we will have to monitor."
Part of the problem is that Poland and the Baltic states currently receive transit fees from Russia's state-owned energy giant Gazprom for allowing its pipelines to cross their territory on their way to the western European market. Moreover, Poland fears a loss of leverage as a European energy hub if the new pipeline bypasses its territory, and is worried that Moscow could threaten to block the supply of energy to Poland and other European states.
Energy security concerns in Europe
The energy sector is a key element in the new trade and strategic partnership agreements between Russia and Germany. This enhanced cooperation comes at a time of global concern about oil and natural gas production and provisioning, due to a series of concurrent stress factors affecting the fossil fuels markets. The rise of China and India as major economic powers has fuelled a demand that can already hardly be satisfied and is expected to increase in the future, while producers have repeatedly warned that their capability to increase production is limited.
In such a context, the EU must formulate an energy security strategy aimed at guaranteeing its short- and medium-term growth and stability, while at the same time promoting scientific research to quickly implement viable energetic alternatives such as hydrogen, sun, wind and bio-fuels. On 12 September, the Brussels daily Le Soir reported that a group of EU deputies had announced the creation of a broad platform with the object of stimulating research and investment in hydrogen energy capabilities.
However, observers and experts agree that transition to non-fossil energies will not be rapid or easy. EU countries are thus forced to secure their energy supply for the next decade by launching new cooperation policies. The permanent instability in the Middle East only adds to this sense of urgency. Russia and the former Warsaw Pact regions will play a vital role in providing Europe’s future energy, thanks to strategic oil and gas pipelines conveying Russian and Caspian resources to the West.
Russia has the world's largest known natural gas reserves and one-eighth of the world's oil reserves. In the past few years, its expanding energy exports have been the mainstay of its fast economic growth. Once the Russo-German pipeline project is completed, Russia’s influence in Europe will increase, according to economist Igor Tomberg, quoted by Russia’s RIA-Novosti press agency on 15 September.
New pipeline, new nerves in the East
This macro-regional context of growing interdependence between Western and Eastern Europe, intersects with national and regional geopolitical ambitions and rivalries. In particular, Poland and Russia, not for the first time in their history, are experiencing troubled mutual relations. Warsaw is emerging as the most "Atlanticist" (i.e., pro-US) of the EU’s new former Communist members. Its regional strategy is at odds both politically and economically with Russian interests, as Poland would like to see Belarus follow in Ukraine’s footsteps and embark on a path of pro-Western political evolution, eventually paving the way for Minsk's integration into NATO and the EU. Moscow, on the contrary, sees Belarus as its last bulwark in Eastern Europe, and openly backs the rule of Belarusian President Aleksandar Lukashenka.
No surprise then, that a strong Russo-German partnership is not perceived by Warsaw and its Baltic allies as a development friendly to the EU’s Eastern and Central European newcomers.
Former Lithuanian prime minister Vytautas Landsbergis said the Baltic pipeline project agreement was eminently political, although disguised as an industrial and economic deal. "The new Russian-German alliance, which is today called an 'energy alliance', is a plan to change the political map of Europe," Landsbergis said on 8 September. Lithuanian Economy Minister Kestutis Dauksys added that the deal could undermine the Baltic state's energy security.
Talking to the press on 13 September, Russian Defense Minister Sergei Ivanov bluntly put the question in terms of "Russian national interests". As RIA-Novosti reports, Ivanov said he was aware of the concerns of Poland and the Baltic states, but added that Russian interests were "a bit different".
These harsh words came close on the heels of an already turbulent period in Eastern European diplomatic relations. Last July, Poland and Belarus engaged in a tense dispute in which Lukashenka accused Poland of destabilizing his country by supporting opposition movements, and of deliberately reducing bilateral relations. Warsaw replied by expelling a Belarusian diplomat and publicly labeling Minsk’s government “undemocratic”.
In addition, on 19 August, Poland’s and Lithuania’s prime ministers met with their Ukrainian and Georgian counterparts in Crimea to discuss an alliance between the four countries, with a view to forming a pro-Western geopolitical space from the Baltic to the Black Sea aimed at promoting liberal values, supranational and pan-European security policies, a pro-EU turn in Ukraine’s neighbor Moldova, and common energy projects. Warsaw’s more pro-Western power brokers have been trying for some years to accelerate the Odessa-Brody pipeline project (and its extension up to Gdansk). Such a pipeline would allow Caspian (and especially Kazakh) oil to be transported to Northern, Central, and Western Europe via the Black Sea (Georgia, Ukraine), Ukraine, and Poland. The implementation of this project would be extremely costly, but it is highly valued by pro-Western politicians in Poland and Lithuania, as it would make these states less dependent on Russia, whose territory would be by-passed by its route.
Once again, energy security and political interests seem to go hand in hand in the new Eastern European political landscape, where Russia is struggling to retain as much influence as possible.
Geopolitical interests trump financial worries
Dr. Edgardo Curcio, president of the Italian Association for Energy Economics and former financial planning manager of Italy’s state hydrocarbon company ENI, told ISN-Security Watch this week that the NGP would be extremely expensive, especially when compared to competing on-shore projects that distribute the transported gas to the many different states they pass through. Moreover, Curcio said, the EU energy market was now witnessing a phase of sharp competition, as efforts are being made everywhere in Europe to re-structure the distribution of liquefied natural gas.
The Russo-German project therefore appears to have a lot of support for geopolitical reasons, since its financial costs will be higher than those of alternative routes. "The most important implications of the NGP for Europe's energy market are of a political nature", Curcio explained to ISN Security Watch, "because it is the result of a bilateral agreement, with no substantial ties to the previous European cooperation strategy in the enlarged EU." Other EU member states "will be by-passed, and therefore damaged, by the Russo-German project", Curcio concluded.
Prospects for Europe
Germany’s present unsettled political situation following the recent election stalemate might lead observers to wonder how a possible government under Schröder’s challenger Angela Merkel would handle the situation. It is no secret that Merkel is not keen on Berlin increasing its energy dependence on Russia, as she explicitly told a group of business and public-sector leaders and academics in October 2004. However, the NGP project is now on track, and to suddenly interrupt it because of a change of government is unthinkable.
Furthermore, the EU Commission indirectly supported the NGP, or at any rate did not try to actively prevent the Russo-German venture. EC spokeswoman Françoise Le Bail declared that Russia lacked developed energy infrastructures, so anything that was done to ease this problem could be called a good cause. However, as Curcio highlighted during his interview with ISN Security Watch, the EU cannot ignore the fact that Germany, one of its members, has concluded an independent deal with Russia to launch a delicate energy project that has a wide range of implications for many EU member states.
At a time of disillusionment for integrationists, given the French and Dutch “no” votes against the EU Constitutional Treaty last summer and the EU states’ divergent views on Turkey’s membership, such unilateral moves raise legitimate questions about the future of Europe’s political construction.
Federico Bordonaro, based in Italy, is an analyst of international relations and geopolitics with the Power and Interest News Report (PINR) and Strategic-Road.com. He is an expert on the new structure of the international system after the Cold War, the European integration process, security and defense issues, and political realism.
