Streaming nonsense

One of the declared purposes of this blog is to analyze irrational decision making processes in foreign policy. Rationality can be defined in many ways, but one is in terms of coherence of aims and means. Setting yourself an objective and then pursuing a policy which undermines that objective is not what most people would consider rational. Take, for instance, the goal of energy security. As I wrote in my Dictionary of International Security, this ‘implies guaranteed access to a reliable source of energy at a reasonable price.’ Opposing measures to improve such access, and preferring instead to preserve an unreliable source of energy supply, would not be a rational means of reaching that goal.

Yet this appears to be the European Union’s (EU) preferred method. For years a significant proportion of the natural gas Europe consumes has been bought from Russia and delivered via a pipeline running through Ukraine. This has proven not to be a ‘reliable source of energy.’ Continuous disputes between Russia and Ukraine over price and non-payment of debts, alleged siphoning off of gas, and so on, coupled with political tensions between the two countries, have resulted in Russia cutting off supplies to Ukraine on several occasions, threatening the supply of gas to the EU. A rational EU energy security policy would, therefore, not merely seek a cheap alternative source outside Russia (if that is possible), but also endeavour to bypass Ukraine so that any gas which is bought from Russia is not at risk of similar disruptions.

Given this, the North Stream pipeline which links Russia directly with Germany is entirely in keeping with the objective of European energy security. So too was the idea of South Stream, which would have delivered gas to Europe via the Black Sea and Bulgaria. But far from supporting these initiatives, the EU resolutely opposed them, and in the case of South Stream it eventually succeeded in forcing Russia to abandon the project. Now it is preparing to oppose a second North Stream pipeline.

Last week, as the Russian newspaper Kommersant reports:

Russia’s gas giant Gazprom signed a binding shareholders’ agreement with European energy companies for the construction of the Nord Stream-2 pipeline from Russia to Germany. … Gazprom will own a controlling stake, while Germany’s E.ON and BASF/Wintershall, Austria’s OMV and Royal Dutch Shell will receive 10 percent each, while France’s Engie will receive 9 percent. … The largest power companies in the UK, France, Germany and Austria signed the project, whose implementation will minimize the transit of gas through Ukraine … However, the agreement is contrary to the position of Brussels; according to Vice-President of the European Commission Maroš Šefčovič , there is no need for any gas pipelines bypassing Ukraine.

‘I hope those companies [who signed the deal with Gazprom] understand their responsibility for the overall security of supply for the whole of Europe, not only for parts of it’, Mr Šefčovič said. Polish president Andrzej Duda also opposed the deal, which he says ‘completely neglects Polish interests.’ ‘The insecurity in this context stems from the egoism of some nations and their complete disregard for the interest of other nations,’ Duda said. ‘That makes it hard to believe in Europe’s unity.’

I find Duda’s statement a little hard to understand. At present, while some gas comes from Russia via Poland, the Ukrainian route goes through Slovakia. Diverting gas from Ukraine to North Stream-2 doesn’t mean less money for Poland, or even a less secure supply. Likewise, the EU’s position as a whole doesn’t make much sense. The EU says that it would prefer to continue using Ukraine, but upgrading the pipeline there would require huge investments and given the turmoil in that country nobody is prepared to spend the money required.

The only explanation I can come up with for the EU’s position is that this is actually a matter of geopolitics. Russia is the current ‘bête-noire’, which must be isolated. Projects which strengthen Russia are therefore a bad thing per se. Ukraine, by contrast, must be supported. According to one account, ‘Brussels is worried that cash-strapped Ukraine would be hard hit if it lost crucial income from transit fees in the events of Russia shifting its gas to other routes.’ Propping up Ukraine, it seems, is considered more important than having a cheap and reliable source of energy. Thus, if Šefčovič and Duda have their way, under the guise of ‘energy security’, Europeans will end up paying more for their gas. Whatever else it may be, this isn’t a rational energy policy.

8 thoughts on “Streaming nonsense”

  1. As is well known, if you try to accomplish two separate objectives at the same time, you will probably not accomplish either; and you are very likely to end up in a real mess.


  2. I couldn’t make head nor tail of it myself: especially in view of the demonstrated fact that every other option the EU has touted – imported LNG, the Southern Gas Corridor – will cost more than Russian gas and the security of supply is just not there. The Southern Gas Corridor, for example, will have to be built at EU expense instead of being funded by Gazprom, and will supply about one-sixth the gas the EU could have expected from South Stream. They are not likely to realize greater volumes because that would exceed the capacity of the Shah Deniz Field. So we’re talking about something like 10 -11 BCm annually, where South Stream’s capacity was 63 BCm.

    They would get their gas from Azerbaijan, whose leader – as you alluded – is incredibly corrupt. But the best part, the one that made me laugh out loud, is that the Southern Gas Corridor – if it’s ever built – will benefit Russian company LukOil to the tune of nearly a billion dollars in loans.

    Pippi Longstocking and her fellow analyst from BankWatch are of the opinion that savings realized from restraint and efficiency will offset and surpass the full capacity of the Southern Gas Corridor. Interesting theory, but it does not take into account that Europe is in the grip of the most rigorous fiscal austerity budgets since the Second World War. This has failed to kick-start an economy in a downturn, which should be a surprise to nobody. Gas demand has not fallen due to willing prudence, but necessity. Natural gas is forecast to be the fastest-growing fossil fuel in terms of consumption.

    One reason for the EU’s remarkable intransigence is that it wants to keep a middleman between it and Russia – it is the EU’s impression that it can use Ukraine to squeeze Russia, without the grimy necessity of engaging in trade negotiations; covertly, as the group of nations which fancies itself the living embodiment of James Bond loves so much. Another is that while it wants to bring Ukraine into the EU’s orbit of influence, it wants Russia to finance the transition through trade and transit fees. A cool $3 Billion a year right off the top is not in the plan, and that’s about what Ukraine earns a year in transit fees.

    Yet another is offered by Nicolo Sartori, in “The European Commission’s Policy Towards the Southern Gas Corridor: Between National Interests and Economic Fundamentals”. I’m afraid it’s a paid document, but you can look it up by title. Mr. Sartori proposes that the EU believes it can inspire greater EU loyalty in East-European members by kicking the legs out from under their heavy dependency on Russia and switching their dependency to their new sugar-daddy.

    Perhaps it is not so surprising at all that EU policy is driven by a desire to increase its own power.


  3. “The only explanation I can come up with for the EU’s position is that this is actually a matter of geopolitics.”

    Obviously it is, but somehow I don’t see the EU benefiting from ‘cut off your nose to spite the face’ geopolitics. The US, on the other hand…

    This is another confirmation of Russian analysts’ often express opinion: Europeans are American minions. Oh well.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s