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Germany And Russia Joined At The Pipe

With its emergence as an energy powerhouse, Russia has in the past years repeatedly flexed its energy muscles in several oil and gas price rows. Critics also accuse Russia of using its energy assets as a foreign policy weapon against former Soviet republics that turn toward the West. Russia, however, contends that it is merely asking these states to forgo preferential rates on energy and pay what the rest of Europe does.
by Stefan Nicola
UPI Energy Correspondent
Berlin (UPI) Aug 10, 2007
Germany's special energy relationship with Russia threatens energy security in Europe, critics say. Others argue Europe's largest economy needs to build up strong ties with Europe's biggest energy importer. Energy security has become an increasingly important topic in European politics of the past years; domestic resources of oil and gas were scarce to begin with, and they are dwindling as consumption increases.

Russia towers above the Middle Eastern and Caucasus countries as the continent's largest supplier of oil and gas.

However, Russia's image as a dependable supplier is being questioned ever since Moscow in early 2006 temporarily shut off Ukrainian gas supplies, until the Ukrainians agreed to pay higher prices. The row sent prices high and officials in Europe scrambling to double-check their energy security strategies.

Poland, traditionally a skeptic of Russia, even called for an energy NATO at the time, to ensure European energy interests.

It was just the first of a series of moves made by Russia since its emergence into an energy superpower. Russia has the seventh-largest oil reserves in the world (6 percent of all oil) and tops the globe when it comes to natural gas reserves (34 percent of all gas).

With its emergence as an energy powerhouse, Russia has in the past years repeatedly flexed its energy muscles in several oil and gas price rows. Critics also accuse Russia of using its energy assets as a foreign policy weapon against former Soviet republics that turn toward the West. Russia, however, contends that it is merely asking these states to forgo preferential rates on energy and pay what the rest of Europe does.

Moreover, democracy shortcomings like the killing of Kremlin critics Anna Politkovskaya (a journalist) and Alexander Litvinenko (a former Russian spy) have increased the public unease in Europe over Russia as a reliable partner.

To guarantee energy security, Europe has -- unsuccessfully -- tried to get Russia to ratify the Energy Charter, an international agreement aimed at integrating the energy sectors of the former Soviet Union and Eastern Europe into the broader world market.

As Western companies have been bullied out of oil and gas field development contracts in Russia in the past, the European Union would like to act as a coherent negotiator in deals with state-controlled energy giant Gazprom.

"This made sense at three levels: it would give real meaning to the solidarity that former eastern Europeans craved from membership (having experienced energy dependency in the raw during the cold-war era); it would prevent Gazprom engaging in divide-and-rule and hence confront a monopoly producer with real bargaining power; and it would provide a practical way for Europeans to see their commission playing an important role -- especially in foreign policy," writes Dieter Helm, an economist at the University of Oxford, in a commentary for Britain-based political forum

Helm argues that this strategy has been thwarted by national governments that pursue their own security strategy toward Russia. The key country Helm names is Germany, undoubtedly Russia's closest single partner: Germany imports nearly half of its gas and a third of its oil from Russia, which buys machinery and electronics from its partner in Western Europe.

The Baltic states and Poland have in the past harshly criticized Germany for building up exclusive energy ties that sideline smaller countries in Eastern Europe. The center of concern is the German-Russian pipeline under the Baltic Sea. Stretching 750 miles, from Vyborg near St. Petersburg to Greifswald in northeastern Germany, the pipeline is scheduled to go into operation in 2010. It would then tap into the giant Yuzhno-Russkoye field, which has an estimated annual output of 25 billion cubic meters of natural gas.

The pipeline has angered Poland, but an expert told United Press International that Germany's close relations with Russia are necessary and don't endanger European energy security.

"Germany 30 years ago decided to establish a new energy relationship with Russia, and looking back now, this step proved to be the right one," Alexander Rahr, Russia expert of the German Council on Foreign Relations, a Berlin-based think tank, Friday told United Press International in a telephone interview. "I think that what (former Chancellor Helmut) Kohl and (former Chancellor Gerhard) Schroeder have done in recent years, intensifying those ties, will also prove to be the right decision."

Germany, however, is in danger of losing its unique leadership role when it comes to energy relations with Russia, Rahr said.

"Merkel has in the past always paired her press conference appearances with harsh criticism that don't go down well in Moscow," he said. "She may gamble away the advantage for German companies that her predecessors Kohl and Schroeder have built up."

Rahr said especially the decision to harshly turn down Russia's offer to make Germany a natural gas hub for Europe was wrong.

"Other nations in Europe, like Italy, Hungary and the Netherlands are ready to jump in," he said.

But another expert said Merkel had done the right thing.

"You can't accept such an offer," Roland Goetz, an energy security expert at the German Institute for International and Security Affairs, a Berlin-based think tank, Friday told UPI via telephone. "You would politically isolate yourself in Europe."

Political isolation is a path that Russia may also be heading for if it continues to flex its muscles. But Rahr said the current bullying by Moscow is but a mere side effect of the new self-confidence that will soon grow less aggressive once Russia's reserves dwindle and countries look into renewable energy alternatives.

"You won't reach your goal by bullying," Rahr said. "Russia will realize that, and then it will be a rude awakening."

Source: United Press International

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British officials say no chance of hitting renewables target: report
London (AFP) Aug 13, 2007
British officials have told government ministers that the country has no chance of meeting its commitments under European Union plans to raise the proportion of energy made from renewable sources by 2020, The Guardian reported on Monday.

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