The brief crisis over the supply of Russian gas passing through Ukraine may come to be seen as a blessing if it has sufficiently awakened of EU authorities, right up to the highest levels, to the fact that it is absolutely imperative to put in place a common energy policy, even if this is not provided for in the current Treaties! The first immediately visible effect was Wednesday's meeting of the “Gas Coordination Group” which had never met before and whose existence had almost been forgotten. All Member States are represented, the Commission presides and its workings have been determined and in future it will meet regularly. The second effect was European Commissioner for Energy Andris Piebalgs' confirmation that, at the Spring Council, the Commission will present the comprehensive report that Heads of Government called for at the Hampton Court informal Summit last October. On 4 November (bulletin 9061), I devoted this column to the “energy” aspect of that informal Summit, and stressed that the results could represent a turning point in EU policy in this area. I also highlighted the differences of opinion among Member States as well as, on the following day, Mr Piebalgs' intentions (which have partly been translated into Commission documents), and I alluded to the “delicate political problems” raised by certain aspects of cooperation with Russia. On Wednesday, the Commissioner confirmed that the March document would cover every aspect: the European internal energy market, (where there are still many gaps and competition is far from being transparent), relations with counties which supply both oil and gas, the state of play on renewable energy schemes (some delays are obvious) and energy savings (where there is great room for improvement) and consideration of nuclear power.
But the documents, no matter how worthy they are in themselves, are not enough. The essential element in progressing towards an effective European policy is the political will of Member States. Without this, no progress can be made because there is nothing in the Treaties about this subject and, while the draft Constitutional Treaty contains some improvements, it has stalled. While awaiting developments, here are a few remarks on the events of the last few days.
1. Energy supplies as a political weapon. It would be naïve to be surprised at Russia's use for political ends of its position as a major supplier of oil and gas to the industrial world in general and to the European Union in particular. The political significance of Mr Putin's moves have been pointed out by all the commentators: the aim is quite simply, by using its role as an energy supplier, to make Russia a major player on the world stage at the very moment that Russia is about to assume the G8 Presidency. There is no point in labouring this point that has been front page news in the international press, except to point out that the use of energy sources for political ends is not new. Europe has already had the unpleasant experience at the time of the Middle East conflict when oil suppliers held it to ransom. Now it is Europe that has to be sufficiently strong and firm to require Russia to respect agreements. The President of the EU Energy Council, Martin Bartenstein, stressed on Wednesday that hitherto Russia had been a trustworthy partner and that the EU hoped it would remain so. It is in Russia's own interests to show that it respects its commitments. Aiming, as it does, to become itself a distributor of some of its gas in a number of EU countries, to target the American market, to free itself from some of the constraints of having its gas pass through other countries on its way to Europe, Russia has every interest in inspiring confidence both on reliability of supply and on price (see following point).
2. Price of Russian gas (and oil). In his press conference on Wednesday, Mr Piebalgs was clear: relations between Russia and Ukraine will not influence the price of Russian gas, set by long term contracts, sot recent events will have no effect for European consumers. Everyone has said that it was the price of oil that immediately rose when the Russo-Ukrainian dispute was announced. It is the lack of transparency in the oil market that allows this recurring speculation which benefits the oil kings to the detriment of the world and, in particular, European economies. When will those in charge politically have the courage to mount a vigorous attack on oil speculation, which consistently manipulates prices as soon as it is given the opportunity?
3. Baltic Sea gas pipeline and Gerhardt Schröder's (and Poland's) position. The new avalanche of accusations against the former German Chancellor over his role in the strategy on gas exports from Russia and for his subsequent acceptance of the Chairmanship leaves me somewhat perplexed; It seem to me that some accusers are like dogs with a political bone. It must not be forgotten how much Europe needs Russian gas to widen its sources of supply, and anyway, it is not a proposed gas pipeline , that will not be operational for about ten years, that could have determined the Russian attitude towards Ukraine. A massive piece of work that will, at colossal cost, cross the whole of the Baltic Sea to bring Russian gas to Germany is not built to exert political pressure, but to operate.
At any rate, recent events have not changed the situation that was decided by last autumn's agreement between Germany and Russia on the construction of the work. I am not unaware of the heated reactions that this agreement provoked in Poland. I have raised the subject because they must not be ignored, since Poland is a member of the Union. The press went as far as to raise the events of the last War and recalled the pact between Hitler and Stalin to divide Poland. Without going so far, a number of Polish politicians have stressed that currently a large part of the Russian gas supplied to Germany passes along a pipeline that crosses Poland, but in the future Poland could be by-passed, and Russia could even cut off its gas supply without endangering its relations with the great powers like Germany. These same authorities say, too, that the Russo-German agreement, concluded without consulting Warsaw, is detrimental to Poland's energy independence, and therefore to its very independence. These considerations predate the latest events: it seems to me, therefore, somewhat illogical to link the two.
It seems obvious to me that the response to Polish worries lies in the definition and application of a real common European energy policy. Poland, alone, would not carry enough weight to stand up to Russia, with the weight of the whole of the EU it would be different. It is in this sense that the Polish authorities would be better fighting rather than defending nationalist positions. And this is a remark of a general nature, and not just on energy.
4. Europe's interest: speaking and negotiating as a single unit. The size and ambition of the Russian plans are not a secret, there are plenty of clues. The plan to export liquefied gas by boat to the United States is progressing rapidly, with the aim of capturing 10% of the American market by 2010. Plans for gas pipelines to Asia are moving quickly in the direction of China, India, Iran, Pakistan, Vietnam and, potentially, Japan. Negotiations with Italy for the direct distribution of a certain percentage of Russian gas imported into the country are ongoing. Gasprom's purchase of an oil company from Mr Abramovich (for a reputed 13 billion dollars!) demonstrates its oil ambitions.
In the face this power and wealth, based on almost limitless reserves of gas and oil (even if exploitation becomes progressively more expensive), the EU must present itself as a single unit. It is obvious. Steps have already been taken towards enhanced cooperation, as demonstrated by the meeting last October of the EU-Russia Permanent Partnership Council on Energy (see bulletin 9041). The EU and Russia depend on one another: Europe needs Russian resources, Russia needs the European market and the financial and technological support of Europe. Let us recall what Vladimir Putin said following the last EU-Russia summit, in London last October. He stressed that his country had “always increased its oil production and supported the world economy by helping to restrain prices. Without Russia's help, energy prices would be considerably higher”. And he laid great emphasis on cooperation: Moscow permits European involvement in gas production in Russia, Europeans permit Russian involvement in energy distribution in Europe. Let us not be naïve: in business of this kind, everyone looks after himself and, if there is cooperation, it is because there is a need; But it is clear that if cooperation grows, so do common interests.
The important thing is that Europe does not make the error of only developing the “cooperation” aspect of its energy policy, and that it feels required to make parallel progress on all fronts: energy savings, the internal market, renewable energy, environmental issues and so on. Let us have confidence in the European Commission to maintain the link.
(F.R.)