Paradigm Change Needed in EU-Russia Energy Relations

Paradigm Change Needed in EU-Russia Energy Relations

The last few weeks have been disappointing ones for European diplomacy and energy politics, to say the least. At the beginning of April, Russia began construction of the Nord Stream pipeline, which will bring up to 55 billion cubic meters a year of additional Russian gas to Germany, bypassing non-EU transit countries as well as the Baltic republics and Poland. Moscow also began floating proposals for a joint-venture between Gazprom and Ukraine's Naftogaz, raising the real possibility of Russian participation in the troublesome Ukrainian pipeline network.

Although the EU initially opposed the two Russian initiatives, Brussels ultimately expressed acceptance. Its energy commissioner, Günther Oettinger, attended the ceremonial inauguration of the Nord Stream works, and called the proposed Gazprom-Naftogaz merger -- which would likely rule out EU participation in Ukraine's energy sector reform -- a purely bilateral matter. Further, the South Stream project, a costly Russian-Italian joint venture in direct competition with the EU-sponsored Nabucco pipeline, was revived in April by Austrian and Romanian governmental approvals.

Even Nabucco's halting progress is now seen as a mere "concession" of Russian diplomacy. The resolution of a gas-pricing dispute between Turkey and Azerbaijan, which paves the way to supply the pipeline, was in fact finalized only after President Dmitry Medvedev's trip to Ankara -- during which Russia and Turkey also established a major economic cooperation program and signed a deal for the construction of Turkey's first nuclear plant. As a result, even if Nabucco ultimately does reduce Europe's dependence on Russian gas, Moscow's grip on the Eurasian energy network would still be tight by virtue of its close relations with a vital transit country such as Turkey.

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