SOUTH STREAM PROJECT: SHAKEN AND STIRRED ENERGY SECURITY POLITICS
(RIEAS Junior Analyst, and Coordinator for the World Security Network Foundation Southeastern Europe Office)
Note: The current briefing details the developments regarding the energy security of the Balkans along with a supplement of particular Greek interest in the above field.
On the 23rd of June 2007 an important deal was signed between the Russian energy colossus Gazprom and the Italian ENI. The cooperation memorandum relays the construction of a sub water pipeline transferring natural gas of a total distance of some 900 Km from the Russian Black Sea port of Beregovaya, to Burgas in Bulgaria. Afterwards it will be divided into two “Streams”; one Southwest to mainland Greece and reaching to Italy via another subwater pipeline. The other route will trespass Bulgaria, Romania, Serbia, Slovenia and through Hungary it will end in the Central European markets. The total network is estimated to be of 3,200 Km of length, able to transport around 30 billion cubic meters of natural gas per annum and will cost 14-15 billion Euro. The beginning of its constructed according to official press a statement is scheduled for late 2008 and the multiparty negotiations are still developing.
Italy gets some 24 billion cub/m from Russia, and has been importing gas from Russia since 1969. Moreover if one adds this event, as well as, the agreement for the Burgas-Alexandroupoli oil pipeline between Greece, Bulgaria and Russia; a new era seems to emerge for the wider Southeastern European region that mostly includes heightened role for Russian exports. For the South Stream venture, both companies will have 50% stakes, whilst the other participating countries will arrange individual agreements in the future concerning passage dues.
Around the prospects of this project, Professor Jonathan Stern, who is the Director of Gas Research of the prestigious Oxford Institute for Energy Studies, commented that ‘Firstly it is not quite sure that the pipeline project will go ahead after all. It is visible that the main motive behind it is to bypass the existing transit countries. Lastly both technology and cost are the main difficulties in relation to its construction’. In relation to the source of the gas to fill the pipeline, Prof. Stern estimated that ‘It will originate from Russia and most specifically it is the same gas currently flowing through Ukraine’.
It seems that there is a visible divergence of interests between the two superpowers involving the South Stream, mainly relating to geopolitical influence of the region known as the Balkans or with the neo-term Southeastern Europe. Mr. Vitalii Martynyuk who is a Political Analyst for the Ukrainian Independent Political Research Centre, stated that “Russia strives to produce and transport its own gas and at the same time to control production and transportation from other countries, excluding the USA-leaning Ukraine in the process’
A latest development is the recent Bulgarian-Russian agreement for the construction of the South Stream gas pipeline, conceived by the Kremlin to undercut a prospective U.S. and European Union-backed gas pipeline and strengthen its dominance in E.U. energy supplies.
According to the Associated Press, "Bulgaria's interests are fully protected, because the company which will be set up to construct and run the pipeline on Bulgarian soil will be with 50% Bulgarian and 50% Russian ownership," Prime Minister Sergei Stanishev said during a visit by Russian President Vladimir Putin.
Moreover, Serbia agreed to endorse a deal with Russia in relation to the South Stream. Russia promised to extend the pipeline into Serbia and build a huge gas storage facility there, to turn the Balkan nation into a major hub for Russian energy supplies to Europe. Also according to the Associated Press a majority stake of the Serbian oil monopoly NIS will be sold to Russian energy company Gazprom. That event further dashes the European Union's hopes of reducing its growing energy reliance on Russia”.
The aforementioned culminations are the main causes for the sudden resignation of Nicholas Burns, the high level career Diplomat of the US State Department. The Russian energy advancement proved to be irresistible, in light of the ongoing Kosovo status antagonism between Washington and Moscow and the final agreement for the Burgas-Alexandroupoli pipeline that was secured in Sofia between Greece, Bulgaria and Russia.
Russian plans & mutual dependency with the EU
Putin’s Russia has proved to be an apt player in the economic game that is being unfolded through the construction of a variety of pipelines transferring hydrocarbon from East-to West. Nowadays at least 25% of the European Union’s energy needs in natural gas & oil are being met by Russia and in some cases such as Slovenia; this percentage reaches 60% (Gas) or even 100% for Romania. Moreover the projection for the next generation is negative for the EU since its energy dependency levels will increase from 76% (Oil) to 93% in 2030 as the European Parliament Report revealed in its research on the EU energy dependency rates.
The Russian exports to Europe operate under the commercial framework of 25 year contracts based on bilateral agreements. The European states have agreed on paying for a standard and minimal amount of natural gas, therefore Gazprom has a long-term steady cash flow
The reach of Gazprom is not related only to its exports to Europe. In 1993 it signed an agreement with the German corporation Wintershall AG, by which the jointly formed WINGAS that currently owns 2,000 km of pipelines and a reservoir bunker for natural gas of 4 billion m3 space. Gazprom has a 35% stake and consequently a portion of the German natural gas pipeline network.
Gazprom has grown to become a corporate emblem of modern day Russia and an eminence of the importance of energy as exercised by the Kremlin. Despite the vast amounts of investments, Russia is still considerably dependent on Europe for its economic renewal through the steady flow of energy exports. Even if Russia fully constructs an export policy with China and Japan, Europe will form a large segment of its revenues and it is a geopolitical unit that is not interested in gaining political advances against Russia. Thus, the role of Europe is integral and could facilitate Russian economic expansion over the long-term.
On overall it should be noted that the main element that has assisted to a great extent the ability of Russia to present a dynamic role in the international scene is an amalgamation of high energy prices, the West vs. Islamic terrorism war and the economic expansion of the East being fuelled by the globalization process
The only stable parameter nowadays is the continuation of the USA-Russian rivalry that will lead to peripheral shift of balances (i.e. Balkans, Caucasus, Iran) and the diverging interests of the EU member states due to Russian dependency on natural gas mostly. The role of the countries in the midst of the antagonisms, such as Poland, the Baltics, Turkey, Greece, Bulgaria, Georgia and Ukraine will shed light for the mid-long term consequences of Russia’s energy expansion.
Greece: Stakes run high
The Russian-American energy rivalry is an angle behind the wider antagonism between the Eurasian emerging neo-capitalism and the ageing maritime one, who has been the driving force of the world economy for the past 250 years. Nowadays the moral decadence of the latter one is being exceptionally described by the criminal negligence of its business leaders to protect the fundamental principle of the shareholders rights by exposing themselves in dubious practices, on which the infamous subprime crisis is just a minor detail. Unfortunately the nature of maritime capitalism has become a self absorbing process of excessive profitability and over consumerism and in constant need of natural resources. If one adds the dynamics of China and India in the parameter, then you have a global prism of what may follow over the coming years. The powers that have the resources will fight viciously against the ones that want to acquire them.
The countries in between the two power units that due to their favorable geopolitical placement hold important energy routes will face tremendous challenges. Greece in particular has to bear in mind that the stakes discussed are not just a bilateral political concern between Moscow & Washington but rather a chasm of two different worlds. Moreover in contrast to the past there is no ideological fight or mores that will dictate a sentimental approach to the whole issue. It is rather a survival process that will format the winners & losers of the 21st century.
Athens should be prepared for heavy political pressure initiatives from all sides. It has to be noted that this kind of tactics have already been used up-to-date.
-A few days after the historical agreement for the Burgas-Alexandroupoli pipeline in Athens and under the scenery of the enlighten Acropolis; the incumbent Greek Administration was rocked by the alleged “Bond Scandal-Omologa”. According to reliable Open Source information the data concerning the above were handed out to the newspapers by unknown sources. In short there wasn’t a journalistic research that revealed the transactions but a well-coordinated force that was apt in retrieving a multitude of specialized financial information through the global banking system
-Less than a week after the signing of the South Stream pipeline in Istanbul on the 21st of June, a wildfire destroyed the largest part of the Parnitha Conservation Area in the outskirts of Athens. Afterwards a barrage of wildfires ravaged throughout the countryside and resulted in the worst catastrophe the country has witnessed since the Civil War in 1946-49. It is illuminating to point out that the other damaging wildfires in Southern Bulgaria and Southern Italy also hit the two other signing parties of the pipeline agreement. In Italy’s case the Mafia has already been accused, whilst in Greece the Fire- Service has classified most of the cases as professional arson.
-In early December the Greek government decided to acquire 450 BMP-3 infantry fighting vehicles. In parallel the most popular Greek newspaper “To Proto Thema”, reveals misdeeds of the employment Minister Mr. Magginas, creating a stir in the domestic political scene. Note however that the shareholders of this particular newspaper were brought to the limelight less than a month later due to another scandal, and one of them is on the verge of being accused for his possible involvement that affects the Prime Minister’s Office.
-Lastly during Karamanli’s visit to Moscow on the 19th of December a new scandal erupted that continues up to date and reveals an intriguing atmosphere of blackmail and extortion of the Greek political, journalistic and business life.
On overall a coincidence that keeps repeating cannot be classified as a coincidence, according to common knowledge and the insightful understanding of complex political affairs.
Lastly should all of the energy plans are to operate as planned, Greece has to form a cohesive strategy for their conclusive security.
1) Security against terrorism:
A) Islamic terrorism
B) Balkan organized crime groups
C) Domestic anti-systemic extremists
D) Agent Provocateurs
The Greek security and intelligence apparatus will have to strive for another viewpoint of its systems, centered in the Northern Greek peripheries and the Aegean Sea. Apart from the conventional military threats and the current asymmetrical ones, energy security demands constant update of view for global threats associated with the global rivalry as described in the first paragraph. The time is nigh and any hesitation will have dire consequences.