Vladimir Putin's (arrogant?) initiatives. Institutional questions and financial reform are at the centre of the talks at this week's European Council. The energy issue, however, if the heads of state and government find the time and have the political determination to discuss it, is the main focus from two points of view: EU supply security and relations with Russia.
This column has taken a principled position in support of a partnership between the EU and Russia being as far-reaching and effective as possible (EUROPE 9910) and there is no point returning to this point. Certain attitudes displayed by the Kremlin, however, are not making things any easier. Here are two of the most recent examples:
a) Vladimir Putin's announcement of his decision to delay Russia joining the WTO as a single country and for it to join as a customs union between Russia, Kazakhstan and Belarus (EUROPE 9918). A few days prior to this announcement, the European commissioner for trade, Catherine Ashton, and the Russian development minister, Elvira Nabioullina, agreed to speed up bilateral negotiations (the EU's agreement on Russia's accession conditions was a key point) in an effort to conclude them by the end of the year. It looked like Ms Nabioullina was unaware of Mr Putin's initiative because the customs union between the three countries will not be put into practice until 2011. Mr Putin's announcement is clearly a hostile response to the EU's “Eastern partnership”, against which the Kremlin had already spoken out and of which Belarus is already a member;
b) Mr Putin's own warnings about the risk of further cuts in Russian gas supplies to the EU via the Ukraine if Kiev does not entirely respect its financial commitments. The Russian prime minister did not just highlight this risk - he explicitly called on the EU to help the Ukrainians meet their commitments. The European Commission has taken these warnings seriously. Following a telephone conversation with Mr Putin, President Barroso sent a mission to Kiev to clarify the situation and requested the European Council discuss the issue on the basis of the report he will make to it this week (EUROPE 9914).
Complicated context. Several elements complicate matters: 1) in a letter to Mr Barroso, Vladimir Putin openly suggested that the EU financially support Ukraine through a loan or (EUROPE 9911) by setting up an “international financial pool” in which the European financial institutions, such as the EIB would be involved and in which Russia itself would be prepared to participate. Financial guarantees would be submitted by Russian banks involved in this pool. According to some sources, the amount needed would be around $5bn and Russia would be prepared to provide half of it (at a maximum) in advance; 2) Moscow still has serious misgivings about the EU programme to modernise and expand Ukrainian transport installations for transporting Russian gas to Europe, and believes that nothing can be done in this respect without its participation as supplier; 3) Kiev still receives Russian gas at preferential prices but this facility is due to disappear next year.
Nabucco problems continue. The Ukrainian gas pipeline is just one element of the colossal gas pipeline network, in addition to the other pipelines and ways of transporting the EU's supplies of oil and natural gas. This column produced an overall outline of this in EUROPE 9909. Countries involved in it include: a large number of EU member states and Balkan accession candidate countries, Turkey, Iraq (in which Kurdistan has begun to provide oil supplies to Europe via the Turkish port of Ceyhan), Iran, Caspian and Black Sea countries, as well as Georgia. The difficulties in the Nabucco project are far from having been resolved and according to ENI's (Italy) CEO, who is leading the South Stream project with Gazprom: “Nabucco will never be completed”. Legal, financial and partly political problems (Turkey's demand to use part of the transported gas) have not been overcome and a number of observers believe that the date for signing the inter-governmental agreements at the end of June or beginning of July on Nabucco is unrealistic. Declarations made by the European commissioner for energy, Andris Piebalgs (EUROPE 9918), which contain reassurances, have not managed to reduce these concerns.
It is clear that the dossiers are complex and deeply enmeshed and government leaders will not be able to discuss them in detail, but an overview appeared useful to me.
(F.R./transl.rh)