Russia Comes Under Fire From EU, US Over Gas Supplies
Brussels, 01/05/2006
Russia came under attack Sunday from some European and U.S. politicians who accused it of using its energy assets to hold Europe hostage.
At a conference sponsored by the German Marshall Fund in Brussels, Moscow was criticized for refusing to allow Western energy companies invest in its energy sector. Some warned of Russian attempts to divide Europe on the energy issue, by building a new gas pipeline across the Baltic Sea to Germany.
Polish Defense Minister Radek Sikorski compared the Baltic gas pipeline with the deals between Germany and the Soviet Union "conducted over our head" before World War II. His government had protested the deal, struck by former German chancellor Gerhard Schroeder, to his successor Angela Merkel. But she had refused to cancel it.
The new pipeline would bypass Poland and Belarus at a cost of EUR6 billion more than building a second land-based link through those countries. "Why should the German consumer pay this unnecessary tax?" he asked, adding that Germany was enhancing its energy security at the expense of its European Union neighbors.
E.U. Energy Commission Andris Piebalgs said one country securing its own interests at the expense of its neighbors was unacceptable. The E.U. had to diversify its energy sources and encourage more competition between its largest energy companies, he added.
Sikorski's criticism was much sharper. He said that only 10 days before Germany signed up with Russia for the new pipeline, German President Horst Koehler had visited the Polish port of Gdansk and promised his hosts that Berlin never again would strike deals "over our heads" with Russia. Just before Germany invaded Poland in 1939, it signed a deal to carve up the country with the Soviet Union.
Sikorski warned about allowing Russian state-owned companies such as Gazprom to own European energy assets. "With state owned companies comes lobbying for political influence, sometimes with quite sinister motives," he said. He pointed to Russian influence in Bulgaria and Armenia.
A German diplomat at the conference said in private Germany had hoped to defuse the controversy over the Baltic gas pipeline by promising "consultations" with Warsaw.
Sikorski confirmed the German promise for "consultations," but said it was not sufficient to mollify his country's fears.
How to deal with Russia and its crucial energy resources has become a key issue, with oil prices soaring about $70 a barrel. This past winter, Russia cut off its supplies of gas through Ukraine, causing shortages throughout Western Europe. Since then, E.U. leaders have been preoccupied with energy security and have attempted to negotiate, so far unsuccessfully, a new energy partnership with Moscow.
The E.U. wants increased access for European companies to invest in Russian energy supplies, along with assurances that Moscow will meet its rising demand for natural gas.
European Commission President Jose Manuel Barroso Saturday called on Russia to sign up an energy deal. He said that he regretted President Vladimir Putin had refused to negotiate during a recent dinner he shared with Russian leader.
Weighing in for the U.S., Republican Senator John McCain of Arizona, called for a tough line on Moscow, including canceling July's Group of Eight meeting in St. Petersburg.
"The Kremlin pursues greater autocracy at home and undermines democracy abroad," McCain said. "It appears to define affairs in the Black Sea region and Central Asia in 19th century zero-sum terms."
For its part Russia wants freedom for its gas giant OAO Gazprom (GSPBEX.RS) to invest in E.U. energy companies. This energy conflict is expected to become the centerpiece of the G8 meeting scheduled to be held in St. Petersburg.
Putin has threatened to build a new gas pipeline to China, worrying Europeans further about their gas supplies.
In a statement after a meeting earlier in April between Gazprom CEO Alexei Miller and E.U. ambassadors, the company said: "Attempts to limit Gazprom's activities in the European markets...will not lead to good results."
Miller's deputy Alexander Medvedev told the Russian Economic Forum in London Tuesday that the company hadn't made "any kind of threatening statements."
Medvedev said that various imperfections in the E.U.'s plans for deregulating its market "cannot but arouse serious fears for...the stability of gas supply."
He said the Baltic pipeline would substantially improve the E.U.'s energy security, without noticeably raising the overall market share of Russian gas in the E.U.'s demand balance.
Medvedev also singled out the U.K. for what he called a "hysterical reaction" to Gazprom's efforts to expand in the U.K. market.
U.K. government officials have hinted they may be willing to rewrite national takeover law to stop Gazprom from acquiring Centrica PLC (CNA.LN), the U.K.'s largest gas supplier.
Ends --
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