Global Economics

EU Leaders Seek Less Reliance on Moscow


The European Commission and EU foreign policy chief Javier Solana are proposing to EU leaders to work toward an overall energy deal with Moscow, but their new joint paper on external energy policy also says it is vital to promote pipelines bypassing Russia.

The paper called "An external policy to serve Europe's energy interests" drafted by commission officials and the cabinet of Mr Solana, is set to be discussed by EU leaders during their 15-16 June summit

The idea of a common EU external policy has gained fresh impetus since January when a Russian gas supply cut dramatically exposed the union's energy reliance on third countries' goodwill.

The commission-Solana paper puts continued hope on Moscow as an energy partner, proposing that the the EU "works towards a comprehensive agreement with Russia covering all energy products."

The deal should be part of a general revamp of political ties with the Russians, with the current Partnership and Cooperation Agreement between Brussels and Moscow open for re-negotiation from 2007 onwards.

The EU currently imports around a quarter of its gas and oil from Russia, with Russian president Vladimir Putin recently threatening that Moscow could easily shift energy supplies to Asia.

But EU officials said the bloc nevertheless has "leverage" on Moscow. They indicated the EU is "probably the most reliable consumer" adding "the money that flows back to Russia is absolutely crucial to them."

BYPASSING RUSSIA. The officials also highlighted that the Russians need "enormous amounts of investment" to modernise and expand its energy infrastructure.

"They not only need capital, they also need technology," suggesting EU firms could provide Russia with the necessary know-how if the Kremlin granted equal market access to EU companies.

The policy paper also stresses the need for "diversifying geographical origin and transit routes", promoting energy supply routes which largely bypass Russia.

"There are a number of new gas projects which have either been decided or are in an advanced stage of planning (North Africa, Middle East, Caspian region, Russia and Norway)," the paper reads.

The document characterises the development oil pipelines from the Caspian region and Central Asia directly to the EU as "vital."

AZERBAIJAN AND ALGERIA. The paper concludes that "all instruments" at the EU's disposal should be used to "speed up the completion of these infrastructure projects."

Instruments suggested include political dialogue, trade and competition policy and financial grants and loans from the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD)

One EU official said "If we manage to double gas imports from Algeria from 10 percent now to 20 percent in the future, the amount would be comparable to that of Russia."

He also mentioned "enormous" gas reserves in Azerbaijan, Turkmenistan and Kazakhstan, which could reach the EU via Turkey.

The source admitted that most investment in these energy corridors would have to come from private companies, saying "there is no hidden Marshall Plan behind this, this is not how it works."

`NO NEW EU POWERS'. The paper is also careful not to question member states' sovereignty on energy policy.

"The legitimate right of individual member states to pursue their own external relations for ensuring security of energy supplies and to choose their internal energy mix is not in question."

An earlier version of the paper had proposed a new EU "instrument," a "monitoring mechanism to provide early warning" in the event of an external energy crisis such as the Russian supply crunch in January.

But this version was watered down by member states as it circulated among their Brussels representations in the past few weeks.

The new version merely proposes that the EU should envisage a "network of energy security correspondents."

The text changes echo member states' touchy response to the commission's landmark energy paper in March, with Berlin in particular resisting stronger EU powers over energy policy.

The document also carefully avoids the mentioning of nuclear power.

"At this stage it would be counterproductive to put something in which is divisive," an EU official said.


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