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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: one_less who wrote (227513)	4/17/2007 4:14:02 PM
From: Wharf Rat	Read Replies (1) \| Respond to of 281500

Russia resumes its power in Europe with natural gas Updated on: 17.04.2007, 10:18 Author: The Economist Russian President Vladimir Putin must be feeling smug. His strategy of using his country's vast natural resources to restore the greatness lost after the break-up of the Soviet Union seems to be paying off. If power is measured by the fear instilled in others -- as many Russians believe -- he is certainly winning. In today's Russia, energy is the tool of influence. To use it, the Kremlin needs three things: control over Russian energy reserves and production, control over the pipelines across its territory and that of its neighbors, and hard-to-break long-term contracts with European customers. All three are in place. For all the talk of a common strategy toward Russia, the European Union is divided and stuck for an answer. Gazprom, Russia's energy giant, cherished by Putin as a "powerful lever of economic and political influence in the world," has long-term supply contracts with most European countries. The E.U. reckons that half its natural-gas imports now come from Russia. Newer E.U. members, such as Hungary and the Czech Republic, are almost entirely dependent on Russian gas. Moreover, a pipeline network that Russia inherited from the Soviet Union gives it control over gas imported from Central Asia. The E.U. has few ideas for how to deal with its chief energy supplier. "We know we should do something about Russia, but we don't know what," one Brussels official said. "In the E.U. we negotiate on the rules, whereas Russia wants to do deals." The deals are coming thick and fast. Last month, Russia secured one to build an oil pipeline from Bulgaria to Greece that will bypass the Bosporus. Symbolically, it will be the first Russian-controlled pipeline on E.U. territory. Oil can at least be bought from elsewhere. The bigger worry is about the E.U.'s dependence on Russian gas. The flow of natural gas depends on control of pipelines, as European consumers were reminded when Russia switched off the gas supply to Ukraine last year and Ukraine started to steal Russian gas that was destined for the E.U. Russia's pipeline routes encircle the E.U. from the north and south. Divide and conquer Russia and Germany have teamed up to build a gas pipeline under the Baltic Sea, bypassing Ukraine and Poland. A study by Sweden's Defense Research Agency concluded that it will divide the E.U. and increase dependence on Russia by letting the Kremlin turn off gas supplies to Ukraine, Poland and Belarus without affecting "more important" customers. The pipeline will increase the flow of gas to Germany and hook in countries that do not yet consume much Russian gas, including the Netherlands and Britain. In the south, Russia has a pipeline across the Black Sea that supplies gas to Turkey. Russia wants to extend the pipeline to Hungary. That would compete directly with Europe's own plan to build a pipeline called Nabucco from Turkey to Austria. Nabucco has been one of the E.U.'s few concerted responses to Russian domination of its gas supplies: it would transport gas from Central Asia and bypass Russia altogether. But it is now creating more friction than unity. As well as controlling pipelines, Gazprom has been buying up pieces of Europe's gas infrastructure. It is also muscling its way into electricity, oil and liquefied natural gas projects. "It is not enough for us to meet 25 percent of global gas consumption. We want to be the biggest energy company in the world," Alexander Medvedev, Gazprom's deputy head, has said of his company's ambition. Most European governments have been careful not to alienate Russia. As long as Gazprom plays by the rules, they say, it should be allowed to invest in their markets. Russia, in contrast, has a big problem with foreign companies owning, let alone controlling, any of its natural resources. It has bullied Royal Dutch Shell into ceding control of the Sakhalin-2 project in the far east of the country; it has blocked BP's plan to develop a gas field in eastern Siberia, and it has kept foreign companies out of the development of the giant Shtokman field in the Barents Sea. In the same spirit, the Kremlin has flatly ruled out ratifying the E.U.'s energy-charter treaty, which would require it to open up its gas pipelines to other countries and other suppliers. The Russians have made a mockery of a joint declaration on energy issued at the G8 summit they chaired in St. Petersburg last July. The declaration called for more honesty, competition and transparency. Yet just two days later, Putin enshrined into law Gazprom's monopoly position as the sole exporter of gas. international.ibox.bg