Andrey Sushentsov
The President promised to redirect Russian energy streams to countries where “economy is not confused with politics”. He was referring to the Summit host Turkey in the first place with its increasing need for energy resources. Despite the differences between Turkey and Russia on the Syrian issue, the two states are deepening their cooperation in the energy field making their relations genuinely strategic.
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6 декабря 2014 | 14:33

The ′South Stream′ streams South

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Russia no longer considers Europe a reliable partner

The text is originally published in Russian by Lenta.ru 

The main event of the Russian foreign policy this week came unexpected. During the Russian-Turkish High-Level Cooperation Council meeting in Ankara Vladimir Putin said that Russia ceases the realization of the ‘South Stream’ project because of the hindrances created by the European Commission. The President promised to redirect Russian energy streams to countries where “economy is not confused with politics”. He was referring to the Summit host Turkey in the first place with its increasing need for energy resources. Despite the differences between Turkey and Russia on the Syrian issue, the two states are deepening their cooperation in the energy field making their relations genuinely strategic. Today Russia is the main source of gas, oil and carbon for Turkey, and is building the first nuclear power station in the country.

It has been long known about difficulties between Moscow and Brussels. The European Commission is insisting on applying the norms of the anti-monopoly Third Energy Package to the ‘South Stream’. The document states that energy suppliers cannot be owners of the energy infrastructure according to the principle ‘what is happening within the EU is to be regulated by the law of the EU’. Russia being the main supplier of pipe gas to Europe has been calling for an agreement that would exclude the ‘South Stream’ from the framework of the Third Package.  For instance, this principle works for the Russian-German consortium for the ‘North Stream’, and Russia has been hoping to replicate the success for the southern pipeline.

Without rejecting the project in principle, Balkan states, mainly Bulgaria and Serbia, have adopted a wait-and-see attitude in order to bargain with Moscow and Brussels for some preferences. The Bulgarian leadership has shown most outrageous behavior, and since the symbolic opening of the Stream it has paused the works twice in 2014 on the pretext of consultations with the European Commission. However, it never allowed the project to continue its implementation. In its turn Serbia, not being an EU member, has been following the EU’s instructions. In such conditions Moscow claimed that Bulgaria is “unable to behave like a sovereign state”, and announced that the works on the project were ceased.

The news caught reporters and analysts, as well as Russia’s European ‘South Stream’ partners, unawares. The pipeline was to go through Bulgaria, Serbia, Croatia, Slovenia, Hungary and Austria bringing sustainable profits of several hundred million dollars a year for the Balkan countries and decreasing dependency on Ukrainian transit for Austria, Hungary and Italy as end users. The circumstances made Europe start energy consultations. Bulgarian Prime minister Boyko Borisov addressed the parliament to commission him with the case. And Serbian President Tomislav Nikolic complained that his country had become a victim to the confrontation between Russia and the West. On the sidelines of the OSCE Ministerial Council meetings Russian Foreign minister Sergey Lavrov was plied with questions of his Austrian, Italian and Serbian counterparts about the further development of the situation.

A meeting of Energy ministers of the states participating in the project is set for 9 December. To cast all the vain hopes aside, European Commission President Jean-Claude Junker said that the conditions for the ‘South Stream’ project are long known, and it only takes secure compliance with the regulations of the Third Energy Package. He also demanded that Russia stops blackmailing the EU. Thus, Brussels, for which the new pipeline does not make much of a difference, continues to stand firm and has rejected even to discuss a possibility of concessions in its talks with Russia.

In the debates on the ‘South Stream’ the consumers of Russian gas that are concerned with realization of the project have not been persistent enough to ensure their national interests.

In contrast, when it was the case with Germany, the government not only obtained the European Commission’s agreement on excluding the ‘North Stream’ from the framework of the Energy Package (with the latter conveniently adopted nor sooner than in 2009), but it also refused to decentralize its energy monopolists. Berlin had enough influence in the EU to shift the attention of the European Commission to other issues. With the German persistence in mind Brussels is better prepared this time. Moreover, this time the case does not concern Germany, but an uncoordinated group of Balkan states that do not have a comparable economic power.

Putin’s announcement about ceasing the realization of the project looked like an improvisation, however, it was a well-prepared one. Russia may deliver gas to Europe not just through the Black Sea, but the Turkish territory - with Ankara resistant to pressure from Brussels. A gas hub may be constructed in the Turkish-Greek border, where the EU countries would be able to buy the energy products.

Energy alliance with Ankara has a long-term effect, which demonstrates important changes in the Russian European strategy. Moscow no longer considers the EU a reliable partner and is trying to reduce the risks and safeguard its interests from Brussels’s influence as much as it can.

The stimulus came from the European Commission’s stubbornness on the ‘South Stream’ and the anti-Russian sanctions, in addition to the stabilizing measures of the Cyprus crisis in 2013, which resulted in the Russian business “cleaned out”, as Putin called it. The new mode of Moscow’s relations with the EU is an evidence of Russia’s preparedness for a long period of arguing with Brussels.

The Russian-Turkish deal is also an evidence of a change in the geography of Russian interests in Europe. The ‘South Stream’ was planned to strengthen Russia’s relations with the Balkan states, which in their turn were supposed to back Russia in its negotiations with Brussels. However, this approach has failed with the Bulgarian and Serbian governments unable to commit to a constructive partnership. The implications for Belgrade and Sofia are that they will not be able to benefit from the Russian gas transit.

Russia is making its return from ‘friendship’ – to national interest policies. And Turkey looks like an appropriate partner from this point of view. Despite numerous wars between them in the past and serious differences in approaches to the Syrian crisis settlement in the present Moscow and Ankara are purposefully deepening their interdependency for the sake of economic growth. The relations between the two countries have reached the level of making unnecessary steps towards each other.

For instance, Turkey was the first to approve the building of the ‘South Stream’ pipeline in its exclusive economic zone, although it is not among the direct beneficiaries of the project. In its turn, Russia has remained open to negotiations on decreasing gas prices with Gazprom joining the Turkish distribution network. At the same time, the growing Turkish consumption of the Russian gas is demanding expansion of the infrastructure. If the tendency develops, any energy transporting project of Turkey, including the ambitious Trans-Anatolian pipeline – may soon become a part of Russian interests.

These prospects are even less favourable for the European Commission, than the ‘South Stream’ realization.

And the ability of Brussels to influence the Central and East European states does tot stretch to reach the Russian-Turkish energy tandem. Therefore, the EU might be searching for ways to revive the Russian interest in the ‘South Stream’ in the upcoming months. This search is bound to become even more active in case of Russian gas transit problems through the Ukrainian territory.

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