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In his inaugural address, President Obama observed that, "Each day brings further evidence that the way we use energy strengthens our adversaries". Tell it to Europe, Mr. President.

Russia has for the time being resumed delivering gas to Europe. The latest crisis, with dramatic visuals from freezing Bulgarians, is out of the headlines, but the issue is gaining importance day everyday. Europe's future will be shaped, if not determined, by how soon Western politicians realize the need for a sound, non-ideological energy policy. All talk of-and lofty ideas about-a common foreign policy is but smoke and mirrors if Europe cannot generate with a common energy policy. Energy policy is foreign policy, and it has been for some years. Those who think they can separate foreign- and energy- policy fool themselves.

Russia, with barely rational (or plausible) pretenses regarding its dealing with Ukraine, cuts off EU countries from essential gas supplies for political reasons. Moscow's leadership is adept at arguing ‘market forces' drive its actions, but even if it were less disingenuous, those arguments relate only to the Ukraine. That countries like Bulgaria, with low reserves, experience real suffering as a result is blamed on Kiev, as if Moscow were not the source of the gas-flow stoppage and as if Europe's coldest January in years had not been deliberately chosen for this showdown.

The causes for interrupting gas service are manifold, and the Ukraine paying market prices for the Russian share of its gas-on paper a perfectly sound proposition, even if it is politically motivated-is the least of them. Russia wants control of the pipelines, just as they managed to do in Belarus. Russia wants to discredit the Ukraine as unreliable in energy matters, thus forcing the Germans' hand to finally get the "Nordstream" pipeline built through the Baltic Sea, a pet project of Vladimir Putin and Nordstream Chair Gerhard Schroeder, also backed by Chancellor Merkel.

Russia certainly does not want the Nabucco pipeline built; it transects the Caucasus but bypasses Russia itself, piping gas from the Caspian Sea. Lest we forget, Russia target-bombing just missed the Baku-Tblisi-Ceyhan pipeline in Georgia last August, sending a decisive message. Indeed scaring Europe off using Georgia as a pipeline route became a key Russian objective in the Georgian conflict. Bullying works, and as Russia grapples with plummeting oil and gas prices that threaten its economic viability, it is its cheapest foreign policy tool.

Russia may see this as their last hope for ensuring German dependence (and much of Europe's) on Russian gas. Threats to energy supply are Russia's greatest source of leverage over European (and NATO, EU) policy decisions, even if the price for gas drops further. In the latter case, a guaranteed buyer adds much needed stability and reduces the risk of further price pressure from competition. Ironically, lower gas prices also help Russia maintain its energy monopoly over Germany as cheap gas makes other, domestic and alternative energy sources too expensive to be attractive. Thus, Germany will fall further from the goal of a diverse, risk-sensible energy mix.

Germany's goal of a 20% ‘alternative' energy mix is illusory, environmentally unsound (the destructive power of wind parks is still underestimated, and the huge, Greenpeace-backed, Weser hydropower plant in Bremen threatens to filter the European eel permanently out of the ecosystem), and economically irresponsible in a recession. One cannot seriously debate putting a few dozen Euros back into the pockets of the consumers via tax-cuts or rebate schemes, while taking hundreds right back out through politically motivated hikes in energy prices. The much touted "green dividend" from ecological technologies is more of a "broken window" fallacy-wreck the existing energy infrastructure to manufacture Green Jobs. Alas, ça ce ne voit pas.

As a first measure, Europe should commit to the building of the Nabucco pipeline to introduce competition from Central Asia. The US should support Europe in this, but Secretary of State Hillary Clinton sends mixed signals, asking for "perfect understanding" among all parties before proceeding. Whether this is a wink to the Schroeder-Putin forces is unclear, but Schroeder was close to her husband and unequivocally endorsed Hillary's presidential bid.

Whatever the US does, Europe must diversify ite energy resources much further and cut supply deals with as many non-Russian sources as possible. Following France in making nuclear energy an important part of the energy mix and a means to achieve Europe's ambitious carbon emission goals, could be a good start. With low gas prices that could and should have Russia on the defensive, now would be a good time to act.

Jens F. Laurson is Editor- in Chief of the International Affairs Forum. George A. Pieler is a Senior Fellow with the Institute for Policy Innovation.

Related materials from the Atlantic Community:

• Sonja Davidovic: Actions Speak Louder Than Words
• Andreas Umland: The EU is helping Moscow's Neo-Imperialists
• Jan Rovensky: Bumpy Road Ahead For Czech EU Presidency

February 13, 2009

Marek Swierczynski, journalist at TVN24, Diamond Contributor (1102)

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How determined Europe will be to follow these remarks in time of a crisis, which full picture has not yet emerged? I fear that the deeper the EU slides into recession, the louder calls will be heard to deal with the economy first and push aside other issues as less important. That could meadn appeasing Russia into a "gas peace" even on unhealthy conditions. That could also mean scaling down or halting crucial infrastructure investments like the Nabucco pipeline. When more and more governments line up for loans at the European Investment Bank and the EBRD just to keep their economies running, there could simply be no money to finance costly energy security projects. In countries that announced plans to go nuclear in energy, the public will not be happy about spendings in 10-digit sums when their local employees go bust. Those less aware of the climate impact will also ridicule any green investments as too costly in relation to any yields. So, this is a bad time both for energy security and climate protection. One that requires guts among the leaders and awareness among the public. The EU and the US should reinforce its goals on both issues, but adjust them to the current conditions, without downgrading their importance.

Tags: | Crisis | energy security | EU |

February 14, 2009

Vitalii Martyniuk, Ukrainian Center for Independent Political Research , Silver Contributor (33)

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The main political and economical goal of Russia became direct and/or concealed purchase by Russian energy companies assets on the territory of EU, involvement of Gasprom in gas network of EU member states, realization of political motivated pipeline projects. Mechanism is the corruptioning of bureaucracy and politicum in Brussel and capitals of leading EU countries (Germany, Italy, France, Benelux countries) with the aim to achieve invisible preferences and concessions on the territory of EU, as well as blocking of unwanted for Russia’s decisions.
The main effort of Russia is to put under own systematic control main energy connectors of EU and distribution networks. This effort is swept under the carpet of private interests several Russian companies to purchase someone or other assets in EU counties according to their corporate business plans.
The situation after the Ukrainian-Russian gas conflict is marked with the EU and Russia’s painstaking efforts to develop and implement new gas supply projects, which mostly bypass Ukraine and might decrease its transit opportunities. Russia strives to create additional gas transit channels thus increasing dependence of the EU on Russian energies and divert its attention from alternative projects o¬n the diversification of gas supply routes, whereas the EU intends to enhance security of gas supply via Ukraine simultaneously reducing its dependence upon this channel. In the near future, Ukraine will remain the main corridor for gas supply from Russia to the EU and therefore deserves special attention of the Community.
All European programs, including gas supply from Africa and the Middle East, the construction of hydrocarbon terminals and, of course, the Nabucco project, will not be able to completely substitute the existing source of natural gas, i.e. Russia, in the near future and the largest gas transit corridor, i.e. Ukraine. That is why The EU should pay more attention to this way of gas supply and not just monitor the situation but try to help settling problems with transit of Russian (and Central Asian) gas via Ukraine to the EU member-states.

Tags: | energy security | gas | EU | Ukraine | Russia | |

February 15, 2009

Sonja Davidovic, Castalia, Gold Contributor (116)

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There are several indicators that Europe has started getting more serious about energy: numerous high-level visits to the Caucasus, the launching of a new cooperation arrangement with the countries in the region in form of the Eastern Partnership including the prospect of EU membership (although the fulfillment of the Copenhagen criteria will certainly take a long while...) and the fact that energy security is the main priority under the Czech EU Presidency.

Obviously, the construction of Nabucco would be the best proof of Europe's seriousness about its energy security. Despite the political commitment of the participating governments voiced at the Nabucco Summit in Budapest in late January, there are issues that endanger the success of the project. There are concerns that the producing countries will not be able to provide the targeted 30 billion cubic meters of gas, at least not until later in the operational phase. Next to Azerbaijan that would provide 8 billion from its field Shah Deniz field, Iraq could contribute another 8 billion and Turkeministan pledged 10 billion. Yet, it will take time until the gas fields in Iraq are fully developed. It will also take time and additional resources to build the Trans-Caspian Pipeline that would take gas from Turkmenistan to Azerbaijan and meet Nabucco in eastern Turkey. Althouhg Europe and Turkey support the construction of the Trans-Caspian pipeline, the main problem here is that the Caspian countries do not agree on the delineation of their nautical borders.

As Marek already pointed out, securing financing for the project is a another big problem. The cost, originally estimated at 4 billion euros, will probably double. We should bear in mind that one mile of a gas pipeline costs 1 million dollars i.e. a lot more than the equivalent of an oil pipeline. There are reports that the European Investment Bank expressed interest in the project and is prepared to finance up to 25% of Nabucco's cost, a commitment of more than 2 billion euros. There is a general need of more financial commitment, not only because Nabucco will help Europe diversify its gas supplies, but also because it will contribute to the integration of the European gas market and it will push other infrastructure investment in the Caucasus. And maybe, just maybe, Nabucco will facilitate the development of a coherent European energy strategy.

The capital cost of an LNG system is approximately 4 billion dollars. Maybe it is commerically more profitable to have the gas shipped via pipelines to a LNG production plant in Turkey and transport to one of the regasification terminals in Europe e.g. the Livorno or Adriatic (Rovigo) terminal in Italy.

I would refrain from underestimating the potential of renewable energy. At the moment the technology is too costly and it cannot replace the use of fossil fuels. However, President Obama has made the development of renewable energy sources a cornerstone of his policies. Joint European-American investments in R&D and growing commercial ties between American and European businesses will help introduce technological innovation and substantially lower the cost for the technology in the long-term.

February 15, 2009

Bernhard Lucke, University of Erlangen-Nuremberg, Platinum Contributor (531)

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I cannot agree that alternative energies have no chance. If energy would be produced where it is consumed, that could dramatically decrease the need for central power plants and fossil resources. The main mistake of planners is thinking in the old ways of central distribution systems, and by calculating needs according to currents network and consumption patterns.

It is the networks and patterns which have to be changed, the rate of re-use which has to be increased, and the general efficiency which has be rise dramatically. All this IS possible. Only the will and ability for visionary thinking are lacking, and so we get deeper and deeper into the swamps of inefficient, fossil resource use strategies. In fact, the living style of the US (and the west in general) is nearly a paradigm for an exemplary waste of resources, which is unfortunately exported to the rest of the world.

In a way, the financial crisis seems symptomatic for this unsustainable style of resource use, and collapse will be the most likely result on the long run, if we do not manage to re-structure our consumption patterns according to the example of ecosystems.

February 16, 2009

Markus Drake, atlantic-community.org, Gold Contributor (80)

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So the Nordstream pipeline is somehow extremely political, but "Nabucco" is a non-political energy supply measure? (Oh, were the quotation marks supposed to go the other way? Sorry..)

Be wary of such claims, always.

Still, sure, as most commentators have pointed out, building Nabucco is a good thing, also politically. Engagement with Turkey, the Kaukasus, the Middle East and the Balkans is (when added up?) as important as that with Russia.

As for the eels and birds being hurt by the renewable energies... Please. That such arguments come from the mouths or keyboards of foreign policy experts of international esteem only lessens the worth of the rest of your arguments, especially when in the next sentence talking of nuclear power.

Have you ever seen a strip mine? They mine uranium, as well as coal, with that method, you know.

February 16, 2009

Sonja Davidovic, Castalia, Gold Contributor (116)

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Gentlemen,

it is absolutely vital to de-politicize the energy debate.
Certainly, we all have different normative takes on one pipeline or another, but I am afraid that a debate of that kind will not help us generate any solutions or recommendations on how to deal with European energy security.

Instead of looking at the problem through a heavily-loaded political prism, Europe should base its decisions on corporate strategies. The taxpayers as shareholders of a corporation - the state - have the right to demand the most profitable use of their money by the executive board - the government. It is competition, not monopoly, that ensures the lowest prices i.e. the best return on investment. Secondly, buying gas from other suppliers should not be considered as a move directed against Russia, but as a way of mitigating against the risk of supplier non-performace or default and potential cost-overruns as a result of that.

Should Russia be upset about Nabucco? Should the owner of the grocery store that I usually go to get angry if I buy some of my groceries at another store? Or should I have the right to choose where I buy my things and at what price?

My personal opinion is that LNG is the best way to begin a sober assessment of energy supplies based on commercial fundamentals rather than on poitical blame games. Regasification terminals in Italy, Croatia or Greece would allow Europe to purchase its gas in Qatar, Malaysia, Nigeria and even Russia at the most competitive price. The current steel prices and the cost accompanying operations in an environment of high political risk suggest that LNG would probably win the race against gas pipelines.

It would be really interesting to calculate the profitability of international LNG supplies to Europe and compare it with that of gas shipped through pipelines. If anybody has facts and figures, please pass it on.

February 19, 2009

Andrey Chubyk, Centre for Global Studies “Strategy XXI”, Silver Contributor (64)

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Dear ladies and gentlemen,
it is a great pleasure to see your proposals for USA, EU and so on, but from my point of view the right time is only for one-country decision making. I mean if every country will make one long-term decision what to do further and will do it officially, then on the common energy market we will see similar cases, which could become further without great troubles to one strong community.
Now EU has a chance to demonstrate for Central Asia countries and Caucasus interest in cooperation. Tajikistan is looking for help in building hydroelectric power stations and needs some financial and technical support, because its Russian colleages want to cut 51% share in return for helping.
Germany is also looking to start with so-called CCS-technologies and A.Merkel already mentioned it as one of important things for future energy secure strengthening. Nevertheless it needs a lot of money, nearly 5 bln for one cogeneration plant. Instead of helping and supporting, Germany receives reminders about its clima-program ang goals as well as derision of current politics.
Everything the honest ladies and gentlemen have mentioned, could be done in several years if not decades, but we should keep in mind, that next winter could be also quite cold and gas deficite of Gasprom could create new crisises, even with other players, because with Ukraine there is no sense to speak about prices, thefts or others because of the highest on the European price Ukraine has now according to signed agreements. Maybe it would be better, if we will do own best for calling our governments to make firstly political agreements and then go to economical things...

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