How many of us, as European citizens, turn on the gas to cook something and reflect that we are part of an enormous geopolitical and environmental picture? But we are. Europe’s energy dilemmas go back to the 1970s and 80s, when decisions were made to build huge gas infrastructure networks connecting the west of the continent to the Soviet Union’s gas fields. At the time, US presidents Jimmy Carter and then Ronald Reagan expressed worries that such plans would place European allies under Moscow’s sway. Fast forward to 2015 and the Ukrainian crisis: the latest message on Europe’s need to find smart ways to use energy and wean itself off its dependency on Russia’s Gazprom has just come from the European commission, with a new policy paper outlining ambitions for a European energy union.
One of the reasons Europe has been so ineffective in dealing with Vladimir Putin is that it never quite anticipated to what degree he would use the energy card to further Russia’s nationalist goals. The question is: can Europe get it right now?
It’s easy to understand why the proponents of an EU energy union would use slightly grandiose language to sell their ideas. They have cast this plan as the “most ambitious European energy project since the Coal and Steel Community” of the 1950s. After all, energy solidarity is what Europe was all about at the start. Having France and Germany share their coal and steel was seen, in the words of Robert Schuman, one of the founders of the European project, as the best way to “make war not only unthinkable but materially impossible”. Peace and prosperity were to flow from regional integration.
Last year, war broke out in the country (Ukraine) through which most of Russia’s energy exports transit on their way to many of our homes. A key feature of Putin’s Ukraine strategy has been to make sure this country of transit would never quite escape Moscow’s domination – and that Gazprom would never lose the possibility of directly controlling Ukraine’s gas pipelines to Europe.
The Brussels commission is right to push for a new union. Energy should be, along with freedom of movement for people, goods and services, a key dimension of the EU. It would help in dealing with Russia’s behaviour as well as in tackling climate change. It is of huge strategic importance. Yet it has not happened – so far – because it is so difficult to build politically, and it will be expensive.
Energy is run nationally – not at EU level – at present. Key countries, especially the UK, France and Germany, have their own views on how energy policy should be run, and they are all different. The UK has a deregulated market, many private players, and no dependency on Gazprom. France is highly centralised, with a handful of , state-controlled big players and 75% of electricity generated by nuclear power (which is anathema to the Germans). Germany dislikes nuclear energy and wants to get rid of it, preferring to burn coal if they run out of gas or renewables. And they have had historically good relations with Gazprom. Poland burns a lot of coal (it prefers that to Russian gas), but Poles also want to look for shale gas. They don’t worry that much about greenhouse gases. The list goes on.
There is a disorderly patchwork of energy policies across Europe. But questions that have been important for years need to be re-addressed. It is too late to settle scores over who wrecked Europe’s previous chances of setting up a common energy policy. But Germany does have a special responsibility here. Its large and powerful energy companies, E.ON and RWE, were the first in the early 2000s to carve out long-term contracts with Gazprom without much consultation with European partners. Later, Germany unilaterally signed up to Russia’s North Stream pipeline which the Baltic states and Poland could only perceive as an attempt to pressure them geopolitically.
The new EU plan doesn’t aim to dismantle such realities but is pragmatic enough to try to deal with some of Europe’s obvious weaknesses. Because energy has been mostly a domestic issue there are very few, interconnecting pipelines and grids. The plan is to build more. This would allow compensation for energy cut offs – such as the ones that Russia created in 2006 and 2009, causing thousands of eastern European homes to be left without heating for weeks.
Another idea is to diversify energy supplies by working on a southern gas corridor linking Europe to Turkey and Central Asia, or by setting up liquified natural gas hubs in northern Europe that could act as back-up in case of another gas crisis with Russia.
The complexities are numerous. Some energy business insiders point out that negotiating with a Central Asian country such as Turkmenistan is like landing on another planet. One told me about a meeting with 30 Turkmen government officials sitting immobile behind long tables in the Hall of the Peoples of Turkmenistan’s capital, who didn’t say a word but just stared. Turkmenistan is a big gas producer whose operatives have been known to sell the same quantity of gas several times over to various buyers (Russians, Chinese, etc).
The story that gets less attention than Ukraine’s military plight – or how Russia is yet again trying to strong arm it over gas payments – is that Gazprom is now clearly viewed as a security threat by just about everyone in Europe, including the Germans. For a few years now Gazprom has been getting a hard time from the EU, with antitrust proceedings on contracts and pricing clauses, dawn raids on their European offices and permits for some of their projects refused. A special anti-Gazprom clause was even included in a 2009 EU regulatory package that requires “unbundling” for the electricity and natural gas industry.
Gazprom, say some experts (perhaps optimistically), has few friends left in Europe – except maybe in Viktor Orban’s Hungary, but they won’t count much in the big picture.
If it negotiates as one bloc, Europe will not only be strategically stronger, but also in a better position to set an example on fulfilling its climate goals. The best way, for example, to encourage Poland to cut down on its use of coal is to ensure that its gas needs will not be subjected to external blackmailing. After all the criticism that has been aimed at EU institutions, the latest plan from Brussels deserves support.
