Russia readying for pipeline politics with neighbours

While the Russian-German pipeline offers clear energy benefits to Western Europe, Central and Eastern European leaders fear it could lead to a new era of gas-leveraged Russian domination of the former Soviet bloc. With its gas wealth and eyebrow-raising personal ties, Russia has divided members of the European Union that have vowed to act collectively to protect their security.

Currently, Russian gas has to be piped through Eastern Europe to reach Western Europe. If Russia shuts off the gas to pressure a neighbour in the East, it is felt in the more powerful, wealthier countries to the west, where it touches off loud protests.
The new Nord Stream pipeline will change that equation. By travelling more than 750 miles underwater, from Vyborg, Russia, to Greifswald, Germany, bypassing the former Soviet and satellite states, it will give Russia a separate supply line to the west.

As a result, many security experts and Eastern European officials say, Russia will be more likely to play pipeline politics with its neighbours. “Yesterday tanks, today oil,” said Zbigniew Siemiatkowski, a former head of Poland’s security service. That is not the way the Russians present it. Gazprom, which supplies Europe with 28 per cent of its natural gas, says the $10.7 billion project is commercial, not strategic.

Matthias Warnig, Nord Stream’s chief executive and a former East German, said Eastern Europe’s fears are unfounded. “The wall broke down 20 years ago,” he said. Europe needs additional natural gas to compensate for declining output from the North Sea, he said, and Russia is the best place to get it.

European officials have portrayed the project as one that helps unite Europe and enhance its collective energy security. The European Commission and European Parliament endorsed the pipeline as early as 2000 and both reconfirmed their commitments as recently as 2006. “As far as common energy policy exists, we are part of it on the highest priority level,” said Sebastian Sass, Nord Stream’s main representative to the European Union.

But officials in Central and Eastern Europe fear that while profits from the pipeline, a joint venture between Gazprom and a trio of German and Dutch companies, will flow to Russian suppliers and German utilities, the long trod-upon countries once under the Soviet umbrella will become more vulnerable to energy blackmail.

Such tactics are hardly without precedent. A Swedish defence ministry-affiliated research organization has identified 55 politically linked disruptions in the energy supply of Eastern Europe since the breakup of the Soviet Union. Until now, Russia’s use of natural gas as a foreign policy tool has been limited to short embargoes, at least in part, analysts say, because it is so blunt a club.

Last January, for example, Russia shut down a pipeline that crossed Ukraine, ostensibly over a dispute with Ukraine on pricing and tariff fees. The shutoff left hundreds of thousands of homes in southeastern Europe without heat and shuttered hundreds of factories for three weeks.

What had been a bilateral dispute spilled across the continent, angering influential western governments and costing Russia money. The new pipeline and a similar project in southern Europe called South Stream, to run under the Black Sea, will insulate Western Europe from such actions and limit the political and financial costs to Russia.