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Next Cold War heated with natural gas?

disclaimer: image is for illustration purposes only
by Stefan Nicola
Berlin (UPI) Nov 11, 2010
Russia launched the South Stream pipeline not for energy reasons but to pull Ukraine eastward, a strategy that could spark a Cold War-like conflict between Europe and Russia, former German Foreign Minister Joschka Fischer has warned.

"South Stream is a project directed against Europe and especially Ukraine. It's used to pressure Ukraine into Russia's direction -- first economically and then politically," Fischer said Wednesday at the European Autumn Gas Conference in Berlin. Such a move, he added, would "completely change the geopolitical situation" between the European Union and Russia.

Fischer's strong language is a sign that the battle of the pipelines is in full swing. He's an adviser to Nabucco, a European pipeline project intended to reduce Europe's dependency on energy imports and a direct competitor to South Stream.

Backed by Germany's RWE and OMV from Austria, Nabucco would transport Caspian and Middle Eastern gas to Western Europe, bypassing Russia. Consortium members are currently in talks to secure gas from northern Iraq, Azerbaijan and Turkmenistan.

The Kremlin as a response launched South Stream, which is now vying for similar supplies and customers than Nabucco. Ever since a row over gas prices with Ukraine in 2006, the Kremlin has been accused of using its energy reserves as a political pressure tool.

Ukraine has flirted with NATO membership and aims to join the European Union, a westward course Russia is eager to delay or stop altogether, observers say. Kiev needs transit fees from Russia to consolidate its budget, so South Stream, which has the potential to reroute much of the Russian gas sent through the Ukraine, could do severe damage to Ukraine's economy.

People close to Nabucco have also said Russia that is pressuring potential Nabucco suppliers in Central Asia -- Russia's traditional sphere of influence -- into committing to South Stream.

In the battle of the pipelines, this could spell the defeat of Nabucco, as experts have warned that there is room for only one of the two projects.

Fischer, Germany's foreign minister from 1998 until 2005, said the choice is clear.

Nabucco could establish transit country Turkey as a "second energy hub for Europe," bind Central Asia to the West and help stabilize Iraq, he said. It might even convince Iran, which sits atop vast gas supplies, to "change its mind politically" to join the project, he added.

Marcel Kramer, South Stream's new chief executive officer, said at the same conference in Berlin that his pipeline wasn't about geopolitics but about supply and demand.

"Our pipeline makes economic sense," Kramer said in a discussion with Fischer, arguing that companies such as Italy's Eni wouldn't invest in South Stream just to further Russia's interests. "We simply want to get gas from A to B."

Fischer contested Kramer's pledge that South Stream, led by Russia's state-controlled energy giant Gazprom, could be built for no more than $14 billion.

"I heard rumors that Eni has a feasibility study which is talking about $40 billion," Fischer said, adding that South Stream will have trouble getting financing.

Kramer's reply came immediately.

"Let's agree to disagree," he told Fischer, "and see what the bankers have to say."

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