Global Economics

U.S. Warns Europe of Russian Energy Threat


Washington supports EU plans to build a natural gas pipeline from the Caspian, but a senior U.S. official cautions the project is 'only a piece of the puzzle'

Washington continues to support the EU-backed Nabucco gas pipeline, but this project is "only a piece of the puzzle" when it comes to reducing Europe's reliance on Russian gas, U.S. special envoy for Eurasian energy Richard Morningstar has said.

"We support Nabucco. We support the Southern Corridor. It's an important part of the puzzle, but it's only one piece," Mr Morningstar told EUobserver on Wednesday (30 September) in an interview on the margins of a Black Sea energy forum organised in Bucharest by the Atlantic Council, a Washington-based think tank.

Alternative technologies and energy efficiency were also important in Europe's bid to reduce its reliance on Russian gas, he said.

"More interconnections between the countries in Europe, more storage facilities, terminals for liquified natural gas (LNG)—all will help reduce dependence on a sole supplier."

But at the same time, Russia will be a "major player over the coming years. That's a reality," he noted, while making clear that the U.S. energy policy in the Caucasus and Central Asia was not 'anti-Russia.'

"We want to engage with Russia and we're hoping there will be ways to co-operate, that we don't look at things as a zero-sum game. Zero-sum games are expensive and [unappealing] in today's financial world."

In the Obama administration's view, there is "no contradiction at all" in backing Europe's energy diversification while also engaging with Moscow as broadly as possible on the energy front.

A bi-national commission chaired by U.S. secretary of state Hillary Clinton and Russian foreign minister Sergei Lavrov is in the making, with energy being dealt with in a special working group of that body. Its task is to look at ways American and European companies can develop projects in Russia for instance to bring the Soviet-era infrastructure back into shape.

But these investments have to be carried out "in a predictable and transparent business environment," Mr Morningstar said, in reference to a long history of Western companies being forced to sell their assets to Russian state firms.

Asked if the U.S. was pressing Moscow to ratify the Energy Charter, a legally binding document protecting foreign investments in Russia, the U.S. diplomat said his country was itself not a member of this agreement, but it "certainly certainly supports all of the principles which the Energy Charter represents."

Former Soviet states not abandoned

As to ways of alleviating fears in former Soviet republics such as Georgia over their own energy security if the U.S. was developing a Russia-friendly policy, the diplomat said that Washington was not abandoning them.

"We talk with President Saakashvili and Georgian officials all the time. They know that we strongly support Georgia's energy security and its independence. And Georgia will be a transit country for routes coming from the Caucasus and central Asia. So again, there's nothing contradictory about this at all," he said.

The EU's own involvement in the Caucasus and central Asia was "critically important" in order to show these countries that the bloc is "really serious" about buying up their gas, he added.

"Just looking back three to four years ago, the involvement on energy issues in the Caucasus and central Asia by the EU was close to non-existent. That has changed tremendously over the the past years and it's been a very positive thing which I think will lead to more resources going west towards Europe."

As to promoting human rights and democracy in energy-rich countries the U.S. and EU is doing business with, Mr Morningstar said that by just talking to those governments "makes things incrementally better."

"I don't think anybody will be able to convince me that by not engaging in energy, democracy and human rights issues will be better in any of those countries."

Energy-rich Caspian states commonly dubbed as the 'Stans' have a consistently bad record in human rights violations, corruption and organised crime.

Potential energy resources in the Black Sea

With a potential for energy resources to be exploited in the Black Sea, the U.S. considers it to be very important for all the bordering states—Russia, Ukraine, Georgia, Turkey, Romania and Bulgaria—as well as central and eastern European countries work together to develop these resources and diversify their energy supplies.

"It's really important for the countries of this region—both the Black Sea and the central and eastern European countries to work together and develop these resources," Mr Morningstar said.

Asked about the Russian-Italian South Stream project that would run along the seabed of the Black Sea and bring gas to countries such as Bulgaria and Hungary, already dependant to a large extent on Russian gas, the diplomat said the U.S. was "not opposed to it."

"We don't consider South Stream and the potential for South Stream to be a detriment to Nabucco. There are countries involved in South Stream, but it's still very unclear whether South Stream will happen," he said, citing high construction costs and uncertainties about where the gas would come from.

Nabucco, the 3,300-kilometre pipeline set to run from Turkey to Bulgaria, Romania, Hungary and Austria also needs firm gas commitments from supplying countries in Central Asia and possibly Iraq.

But Mr Morningstar was confident that the project will eventually be completed, after a breakthrough in July when the five countries agreed on transit and legal issues.

"There are still a lot of steps that need to be taken to get from here to there, but I think it's going to happen. The key is that there be the political will to do it," the diplomat concluded.

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