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Pipelines, politics and power
interrupted gas shipments to Belarus, citing Minsk’s non-payment, few people in Europe noticed except for the Poles. When Russia halted the oil flow to Belarus in early 2007, Europe was soon up in arms. The Kremlin was appalled. It had believed for years that the West had wanted Russia to put pressure on Europe’s “last dictator”. Russia, of course, did not mean to punish Lukashenko: it wanted him to pay up and fulfil his old promise to sell Beltransgaz to Gazprom.
A direct route to Europe Together, Ukraine and Belarus, as transit countries, have controlled the lion’s share of Russia’s oil and gas exports to Europe. Since the Kremlin came to view both as unreliable, it decided to substantially reduce Russia’s dependence on them. In 2006 Gazprom, with Ukraine’s co-operation, replaced barter payment for transit across Ukraine with money transactions. This simplified the payment procedure, reduced haggling, and increased Russian revenue. More important, however, was Moscow’s decision to shift gas export pipelines from land to sea, and thus to decrease the need for transit, if not eliminate it altogether. This trend started in the early 2000s, when Russia stopped the flow of oil through pipelines to ports in the Baltic states, using instead its own Baltic Sea terminals, Primorsk and Ust-Luga. The Estonians and Latvians saw this move as punishment for what the Russians claimed were unduly harsh naturalisation and integration policies that left hundreds of thousands of local Russian residents stateless. More to the point, Russia wanted to develop its own port infrastructure and keep the money in the country. Already in the 1990s, Gazprom had built the Blue Stream pipeline across the Black Sea to Turkey, thus avoiding the politically hazardous land route along the Caucasus coast. But it was the 2005 Nord Stream deal between President Putin and Chancellor Gerhard Schröder that attracted most attention. This
Energy geopolitics in Russia-EU relations
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pipeline – initially scheduled to be ready by 2011 – will transport gas across the Baltic Sea from Russia to Germany, and on to the Netherlands and possibly other EU countries. Nord Stream’s obvious objective is to go around Poland, Belarus and the Baltic states, all deemed a potential (or real, in the case of Belarus) nuisance. A similar move followed in 2008, when Russia and Italy agreed to construct a South Stream pipeline along the bottom of the Black Sea and across several Balkans countries – but not Ukraine. Some fear that South Stream, if realised, could make the EU-favoured Nabucco pipeline superfluous. Nabucco would bring Central Asian and theoretically also Iranian gas to Europe, thereby reducing the EU’s reliance on Russian gas and pipelines. Prior to announcing South Stream, Russia had secured agreements with Kazakhstan, Turkmenistan and Uzbekistan on the continued transport of their gas across the Russian territory, in return for a substantial increase in the prices Russia pays for this. Instead of a proposed pipeline across the Caspian which would pump gas into the Nabucco system, the Central Asians have announced that they will upgrade the littoral pipeline going north to Russia. The pipeline competition is far from over, with Central Asian states clearly enjoying practising what they call multi-vector foreign policies. Moscow, for its part, is not only seeking to undermine Nabucco; it has already destroyed Ukraine’s hopes of receiving cheap Turkmen gas. Seen from Kyiv, Gazprom’s activities in Central Asia look like efforts to build a ‘gas caliphate’. Yet, there are likely to be several ‘caliphs’ in this game.
A gas OPEC? Vladimir Putin once called the idea of a gas OPEC “interesting”. Moscow, however, is not particularly keen to become the organiser of a new gas community. It values its sovereignty of decision-making and prefers to keep its hands free, pragmatically siding with various partners as its interests demand. Central Asia is being managed on