South Stream: Battle for Bulgaria

South Stream: Battle for Bulgaria

Brussels and Moscow have started their battle for domination in European energy field with quite high stakes. By this Ukrainian GTS, as it pumps a huge share of Russian fuel to Europe, and the South Stream project are likely to become the trade subject. The Kremlin is getting ready before the final battle, recruiting European countries dependent from Russian energy supplies in the ally. Moscow splits Europe along the line of relations of individual states with Ukraine, as well as the on the issue of additional gas supplies passing Ukrainian GTS along the South Stream. Ukraine as well as the number of other countries involved into gas projects are able to become the hostages of agreements between Brussels and Moscow.

 

During the interview for Handelsblatt paper the EU Commissioner underlined, that he hoped on resolution of the conflict between Kyiv and Moscow “on mutual  terms”, which points out the intention of the EU to preserve Ukrainian role as the main gas transiting country. Refusal of the Europeans from the prospect of further increase of Russian gas supplies, along the ways passing Ukraine, strengthens the position of Kyiv which intends to deprive Gazprom for the option to control the native GTS and at the same time to make is a part of the common European gas transporting system. On the other hand, the officials in Brussels have their own play with Russia, and Kyiv should keep it in mind, as their main task remains to the assurance of uninterrupted gas supplies to Europe.

 

Is a compromise viable, as the EU has not made a final decision but simply paused the project? According to Günther Oettinger, the South Stream project today contradicts to the provisions of the “third energy package” of the EU, in accordance with which gas producing companies cannot own main pipelines within the territory of the EU.

 

The Permanent Representative of Russia to the EU Vladimir Chizhov in reply to Oettinger’s statements, claimed that intergovernmental treaties of Russia on the South Stream had been concluded  yet in 2008 — a year before the “third energy package” came into power, and with some countries – even before their entering the EU. Russian keeps on pressing that its energy treaties with the governments of individual states of European cannot be the subject of objections of the European Union officials. Moscow has also used the procedures of the WTO to object the norms of the “third package” of the EU.

 

The President of the Russian Federation Vladimir Putin observes the situation as a “competitive battle” against Russia, in which Europe in its policy is supported by the USA.  Putin has called to refuse of the perception of these projects as the projects targeted “against someone” (Ukraine, in particular). “We are doing it for the sake of our interests. We and our partners ", insists the President of Russia. He once again confirmed his intention to “push forward” the South Stream no matter what. 

 

But a new thing is that Europe, probably, for the first time attempts to confront Russia by working out of new common approaches, and the European Commission finally acts in this issue if not as the main player, then the center of decision-making. In this intention Europe is supported by the USA also.

 

Brussels does not hide that the initiative to develop EESS is incited primarily by Ukrainian crises, inability of Kyiv and Moscow to agree on debts and gas prices, as well as the need of long-term prospects of Europe supply with fuel. Let’s remind that 18 out of 28 EU member-states import between 10 and 80% of consumed gas from Russia, and another six countries are 100% dependent from Russian fuel supplies, and only four EU members manage without it.  In the months to come Europe shall have gas “stress-tests”, allowing evaluation of the vulnerability of the member-states’ economies, if Russian gas supplies would be reduced for some reason, or suspended at all.

 

Active European search for the alternatives to Russian fuel and the attempts to act in cooperation in the issues of energy provoke the Kremlin and controlled Gazprom for more active countermeasures in Europe. This touches upon the relations of Russian gas monopoly with its clients, as well as Russia – with individual states, especially with the ones, which are highly dependent from Russian gas. The objective of Moscow remains the same – not to allow further consolidation of positions of the EU member-states. By this the government of Russia declares openly, that Brussels has no alternatives in its choice of fuel suppliers.

 

Russia however has limited options for maneuvers, considering political and geopolitical factors and realities. The South Stream gas pipeline (of EUR 10 billion cost and 63 billion m3 capacity) is designed to be piped along the bottom of the Black Sea to the cost of Bulgaria, going through Serbia and Hungary, getting to the finish line in Austria. Last week Serbia and Hungary also confirmed their interest in the project. According to Hungarian Prime Minister Viktor Orban he supports Ukraine…but does not wish to depend on it within gas supplies. “Those saying that we should not construct the South Stream should give us an alternative, the way we could live without energy”, stated Hungarian Prime Minister on July 2nd.

 

Russia, the EU and the USA – each party pushes its own line in relation to Sofia. And the battle for Bulgaria – the A point for Russian South Stream – can be the first one within a full-scale European-Russian gas war. The victory maybe shall somehow define the distribution of powers before the final battle for Ukraine and its gas transporting system. However the experience of Bulgaria should be a significant warning for Kyiv in order not to become a hostage of someone else’s game.

 

The salt of this situation is that any result of the confrontation between Russia and Europe threatens Bulgaria with losses – it may become the first victim of this confrontation.

 

This situation has already led to political and economic crises in the country, as a result of which the government of socialists was forced to announce early elections on October 5th. Such variant is of no good for Russia. The socialists were not supported by Bulgarian voters during the elections into the European Parliament on May 25th and one of the reasons for BSP defeat was named as the intention to construct the South Stream despite the views of the EU leaders. And if Bulgaria refuses of the pipeline, the alternatives for Russia shall be just few — Turkey or Romania — but Gazprom observes them only in theory.

 

The domestic situation in Bulgaria develops contrary to the benefit for Russia. In case of early elections the opposing right-centric party GERB (Citizens for European Development of Bulgaria) may count on majority in new Bulgarian Parliament, and its leader Boyko Borisov has all chanced to become the next Head of Bulgarian government.

 

Probably he shall be the one and already only in autumn to decide in the beginning of the South Stream construction. It interesting that he signed the agreement on this gas pipeline with Russia, however now he shall have to have more careful policy. Many people in Bulgaria recollect, as Russia several years ago literally “did out” the government of Borisov with multi-billion projects of nuclear plant and oil pipeline construction in Bulgaria. Now evidently he would try to play on the side of Brussels, putting the question for the Kremlin bluntly: for the gas pipeline to lie through Bulgaria, Putin and Gazprom first of all should agree with the European Commission. Borisov has already stated: “I am one of those able to tell Putin “no”.

 

 

World media monitoring

  

  

  

 

11.07.2014

 

 

 
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