Blame Both Sides in Russia-EU Energy Spat

As long as the European Union cannot come up with a long-term coherent strategy, Moscow is not totally at fault in the natural gas line dispute

by Kristy Ironside

"Energy security" has become a buzzword that cuts across a number of related issues, ranging from economic development and environmental concerns to domestic and geopolitical stability.

At a basic level, rising petroleum costs hammer home the reality that Europe faces an imminent energy security challenge. The European Union, however, has yet to devise a coherent long-term energy strategy, and East-West tensions hinder its ability to speak on the issue with a unified voice.

While many Western European countries are not necessarily opposed to forging deals with Russia, the region's largest supplier of oil and natural gas, new EU members are wary of dealing with their dominant neighbor. At the second annual Energy Forum, held in Prague in early November, Anita Orban of the International Center for Democratic Transition in Budapest said the Baltic region and Eastern European countries have different energy security concerns than those of Western Europe because they face a larger threat of being cut off.

Russia supplies about 25 percent of the EU's petroleum needs, and many new member states are reliant upon Russia for the vast majority of their natural gas. Russia's Gazprom is the sole provider to Estonia, Latvia, Lithuania, and Slovakia. It is also the dominant supplier to big markets like Hungary, Poland, and the Czech Republic.

Russia has been accused of exploiting Europe's energy dependency as a political tool. Its status as a reliable energy provider has been called into question increasingly since the infamous price dispute between Russia and Ukraine in January 2006 and subsequent supply disruptions to the EU -- moves seen by many analysts as punishments for the Ukrainian government's pro-European leanings.

But Vyacheslav Kulagin, deputy director of Moscow's Center for International Energy Markets Studies, denied that Russia has used the threat of cutting off energy supplies to bully its neighbors. He emphasized that no contracts have been breached on Russia's side of the border. "What other guarantee does Europe need?" Kulagin asked.

Russian Duma deputy Igor Dines warned that the radicalization of political rhetoric due to high energy costs was "a dangerous tendency" and that opening up old wounds was counterproductive to everybody's interests.

Europe's energy anxiety stems from the fact that the primary pipelines for Russian oil and gas run through Ukraine and Belarus, former Soviet states that, until recently, enjoyed discounted energy prices. Russia's heavy-handed attempts to make the countries pay full market rates resulted in energy crises that threatened Europe-bound deliveries. Oldrich Cerny of the Prague-based Forum 2000 Foundation pointed to more than 50 such interruptions since 1991, half of which have occurred since Vladimir Putin became the Russian president in 2000.

STRUCTURING A STRATEGY

Speakers at the energy forum consistently returned to the need for increased dialogue and "diversification" of energy pipelines as the twin components of any strategy for securing energy resources. The creation of a common external energy policy and an internal energy market was touted as the solution to Europe's energy vulnerability.

"Instead of focusing on a common policy, our attention has been diverted to polemics between us," said Fraser Cameron, director of the EU-Russia Center, a Brussels think tank. Cameron called for the need to "de-emotionalize" the idea that the "big, bad Russian bear" will turn off the tap, because the EU is in a strong bargaining position as Russia's chief energy consumer.

But Vaclav Bartuska, the Czech Republic's energy security ambassador-at-large, was circumspect, pointing out that Eastern countries would be the first to suffer if the tap is turned off. Bartuska believes that diversification of energy routes is the best long-term strategy.

"Alternatives to Russian energy do exist, but is the public ready to pay for them?" he asked.

Planned diversification projects, including the Nord and South Stream pipelines, would bypass Eastern European transit countries and ensure supplies of natural gas from Russia to Germany and Italy, respectively.