It was major news at last week’s summit of EU leaders that German Chancellor Angela Merkel turned about on her previous opposition to EU funding for the Nabucco pipeline to bring Caspian and possibly Middle Eastern natural gas to Europe.
That which should have be most striking up to this point, however, was an EU leader’s strenuous undermining of a project designated a European strategic priority by the EU Commission. A 200 million Euro drop in the ocean of funding may have been secured for Nabucco’s construction, but the underlying intra-EU obstacles to its realisation remain as strong as ever.
A question frequently and facetiously asked in Washington about EU energy security is why the Union’s regulators slapped anti-monopoly measures against Microsoft’s bundling of its production and retail operations, but not against Russia’s Kremlin-controlled energy company Gazprom for its similar, and more sinister, bundling of natural gas production and distribution throughout Europe. Those informed enough to ask this question usually know the answer too: powerful member-state interests block the EU Commission from carrying out its enforcement duties. It goes without saying that EU unity and transatlantic leverage vis-à-vis Moscow suffers.
Vienna has determined that its interests lie in facilitating an ever greater role for Gazprom at Baumgarten, Central Europe’s mammoth natural gas distribution hub. In lean times – even in the energy industry – the only company making major investments in the facility is Gazprom, because its priorities are determined by Russian foreign policy, not business objectives. Rome actively lobbies for the realisation of the Gazprom-controlled South Stream gas pipeline from Russia to southeastern Europe: a plan without the necessary commercial components, designed specifically to undermine Western-oriented projects such as the Nabucco pipeline.
It is perhaps not surprising that ENI, Italy’s energy champion, is slated to play a major role in South Stream’s development. Berlin has long prized its special relationship with Moscow over ties to fellow EU member states when it comes to issues of energy. It is almost redundant to point out that former German chancellor Gerhard Schroeder now heads up the Gazprom-controlled Nord Stream consortium, engaged in the development of the eponymous exclusive gas pipeline project from Russia to Germany, which deliberately avoids Poland and the Baltic countries.Despite the Commission’s backing of Nabucco, German decision-makers had until now chosen to either turn a cold shoulder, or most recently pointedly undermine the project that would allow European consumers to diversify away from overdependence on Russian resources.
Even as the Obama administration prioritizes the “resetting” of relations with Russia, the fact remains that the EU cannot achieve much-needed unity on issues of energy security due to Gazprom’s policy of bundling its operations, and drawing up bilateral deals with key member states. This not only means other members are vulnerable to gas supply cut-offs, such as that experienced by Bulgaria in January, but leaves the Union as a whole woefully unprepared for Russian gas export deficits, slated by World Bank economists for as early as 2012. Reset relations may change the Atlantic community’s approach to Moscow, but it will not alter fundamental issues of contention. It would be unrealistic to fault European leaders for attempting to secure energy supplies and lucrative contracts for their member state citizens and companies.
But, it is equally naïve to actively work against the broader strategic goals of the EU and the Atlantic community when it comes to the long-term energy security of the European continent.What if Gazprom-controlled pipelines end up bereft of gas supplies due to rising domestic demand and lack of internal infrastructure investment in Russia? What if it turns out that Gazprom has as much respect for its investment contracts as it does for EU market regulations?What if the reset in relations doesn’t pan out? Who will Vienna, Rome and Berlin reach out to then? EU seed funding for Nabucco is one small step towards greater security of energy supplies for many European consumers, but it does not go far in addressing counter-EU interests working overtime within the Union.
Alexandros Petersen is Dinu Patriciu Fellow for Transatlantic Energy Security and associate director of the Eurasia Energy Center at the Atlantic Council. This article was previously published as “Moscow’s Inside Men (and Women)” in New Europe.