The European Energy Partnership with Russia: a Risk for Europe?

A few days ago, a consortium was established between the Russian Company Gazprom, Gaz de France, the German Wintershall and the Italian SNAM to build a two billion dollar pipeline that would bring to western Europe natural gas from Russian soil.

The European Energy Partnership with Russia: a Risk for Europe?

By Françoise Thom (*)

A few days ago, a consortium was established between the Russian Company GazpromGaz de France, the German Wintershall and the Italian SNAM to build a two billion dollar pipeline that would bring to western Europe natural gas from Russian soil. It is supposedly the first phase of a would-be « Energy Partnership » between the European Union and Russia, as promoted by Romano Prodi, the President of the European Commission, with the enthusiastic support of the German Government: a plan to double the purchases of natural gas from Russia in exchange for massive European investment in the Russian energy sector.

At first sight, such a project appears alluring: at a time of high oil prices, when the Middle East seems to turn once again into a powderkeg, it seems useful to diversify Europe’s energy supplies. Yet, such a « partnership » with Russia is not only an economic decision, the possible benefits of which had better be balanced against its likely failures. It is first and foremost a highly political decision, with enormous strategic implications. And that is why it ought to be subject to a public debate, instead of being negotiated in the shadows of the bureaucratic labyrinth of the European Commission, to be inflicted upon the European taxpayers at the behest of the German-Italian tandem. For the project is fraught with risks and serious shortcomings.

Let us start with the economic aspect: Russia is now exporting oil and gas at maximum capacity, so that any extra shipment abroad already comes at the expense of an already strained domestic market. Massive investments are thus required to expand research and productive capacity. To give an example, UES the Russian electricity monopoly, needs 70 billion dollars just to maintain its present capacity. UES also wants to be part of the « East-West Energy Bridge », as recently declared by its chief executive Anatoly Chubais; last August Russia started exporting electricity to Germany. Such a massive financial effort, however, should be accepted only with reliable partners; yet, the Europeans will have to deal with corporations like Gazprom, which beats every record of financial opacity, even in Russia, and like the UES of the aforementioned M. Chubais, who boasted in 1998 that he had « swindled several billions of dollars out of those strangers ». The more cash the European Union sinks into the « energy partnership » with Russia, the more the Russian supplier will be in a position to dictate its conditions. Recent and less recent Russian history should inspire the utmost caution towards such ambitious contracts with Russian companies: rare indeed are the instances when the foreign partner got off scot-free.

But there is even more reason for concern: to be sure, the Russians want the Europeans to foot the bill for the reconstruction of their dilapidated energy system; but their interest in the project is not mainly economic. In their opinion, the political advantages of an « Energy Partnership  » with the EU carry much more weight than the economic ones. And the conditions which they have already advanced for the « Prodi Pact », when they are not yet negotiating from the position of strength they would gain in case the « energy partnership » came through, should have given the Europens a warning. The Russians demanded that the layout for the pipeline bypass the Ukraine, which confronts that country with a dilemma: either to be throttled economically, or to abandon ownership of its gaz network to the Russian Gazprom. Furthermore, since Poland refused to take part in a scheme which would virtually deprive the Ukraine of its independence, Moscow has had the gall to demand that the Europeans twist the arm of the Warsaw government. Nor is that the end of the story. The Russians have also demanded that the European Union decline to take part in a Baku-Ceyhan pipeline project to export oil from the Caspian region bypassing Russia. Quite clearly, Moscow regards the « Energy Partnership » with the EU as a major means to restore Russian domination over CIS nations. Historical precedents irresistibly come to the mind: the Treaty of Berlin of 27 August 1918 whereby Russia committed itself to supply Germany (then at war with the Allies), with a quarter of the Baku oil supply on the condition that it ceased supporting the independence of the Ukraine, Azerbaidjan and Armenia, or the March 1921 trade treaty with Great Britain, a reward to the British for abandoning Menshevik-led Georgia.

This leads us to the final point: since the USSR broke up, we have seen Moscow use the weapon of energy cuts to force the nations « near abroad » to abdicate ever greater elements of their independence. Very recently, Russia had the Ukrainian chief of military intelligence sacked, for being too well-disposed towards NATO; it then claimed the head of the Foreign Affairs Minister Tarasyuk, who also happened to like the West too much. Do European leaders really imagine that Russia will refrain from acting similarly towards their governments when they have put their heads into the energy noose? Besides, there is no need to wait all that long. We can already observe the spectacular turnabout made by Germany, – the European country which depends most on Russian supplies, – in its policy towards Moscow. The Berlin meeting with Vladimir Putin last June was a watershed in Russian-German relations. That was when the German government decided to develop an « Energy partnership » with Moscow, « investing » one billion dollars into the development of an offshore oilfield in the Arctic and granting a 700 million dollar credit to Gazprom. Whereas Berlin had first showed itself to be very critical of the Chechen war and the Russian attitude towards Kosovo, German diplomacy now seems to have forgotten overnight the Chechen problem, and has lined up with Moscow about Yugoslav issues. The BND even sent an official delegation to Chechnya! Chancellor Schröder has eloquently denounced the risk of an « arms’ race » linked with the American Missile Defense project. When Putin suggested in June that Russia should deploy a missile defence system from the Atlantic to the Urals, in co-operation with NATO and the EU, he reacted favourably. During his lightning visit to Moscow on 26 September, the German Chancellor expressed the wish that Germany « act as a bridge between Moscow and the West », and that she should intervene in favour of co-operation between Russia and the European Union. « We should integrate Russia into Europe on all levels, from the economic and political points of view as well as those of security and defence », he declared. From now on, « Russia will be able to count upon Germany ».

This poses a serious problem for the European Union. Could the freedom of European states be seriously undermined through the simple mechanism of communautaire integration, once Germany depends on Russia for its energy supply? The Council of Europe has already abandoned any idea of expelling Russia,  and contemplates restoring its voting rights, while atrocities in Chechnya continue unabated. If Europe takes rash and thoughtless decisions about the  » Energy partnership  » with Russia, the EU risks becoming Russia’s « near abroad ». Our leaders would do well to stop concentrating on the technical aspects of the « Energy partnership » with Russia, and to start taking into account its political consequences. There needs to an open debate urgently about a decision which endangers the future independence of Europe.

(*) This article was published in Le Monde on November 1, 2000. Dr. Françoise Thom teaches History of International Relations and Cold War at the Sorbonne University in Paris. Famous Sovietologist, writer and lecturer, she first published « Communism: Newspeak » in French « La langue de bois » in 1987 (Julliard); « Le moment Gorbatchev » (Hachette) in 1991 and « Les fins du Communisme » in 1994 (Criterion) among other books.