13.12.2014 Author: Petr Lvov

Energy Aggression Against Russia is Expanding

4534521During his recent trip to Ankara, President Vladimir Putin said on December 1 that the construction of the South Stream gas pipeline project for Southern Europe would be terminated due to the negative position of both Bulgaria and Brussels. Instead of that, it was proposed to build a gas pipeline through the territory of Turkey to its western borders with the EU, where it will be possible to create a kind of a “gas hub” for the countries of Southern and South-Eastern Europe. Naturally, this has caused a nervous reaction of some Europeans. It is one thing to bluff to the tune of the Americans, while it’s quite another to lose an opportunity to purchase gas directly from Russia, bypassing another difficult transit country – Turkey, instead of unreliable Ukraine. What we are talking about here means to “bargain one trouble for another”.

And the fact that Ankara is not the easiest partner for Brussels is understandable; after all, it was EU that for decades stubbornly refused Turkish membership in the EU. At the same time they are actively involving Turkey in NATO plans in relation to Iraq and Syria. And almost immediately the EU High Representative for Foreign Affairs and Security Policy, Ms. Federica Mogherini, arrived as a head of the representative delegation to meet with President Erdogan in an attempt to convince him to refuse from engaging in President Vladimir Putin’s gas project proposal.

But after all, it was the Europeans themselves, being influenced by the Americans and by Brussels under various pretexts, and by their own hands “buried” the gas pipeline South Stream, twisting the arms of Bulgaria. Moscow had just spent considerable time explaining the importance of security of the supply energy by way of diversification on account of the Ukrainian crisis, especially for the European region depressed in terms of the economy, where all the countries, without exception, are fighting for any additional sources of income. They only just have reached that Moscow and Ankara decided jointly to build a gas pipeline to Europe via Turkey, and not through the territory of Bulgaria. But having lost touch with reality, European officials demanded an explanation from Moscow and began to insist that it was not their fault but the fault of the Kremlin for the failure of the South Stream project. So they set out to twist the arms of Ankara. And in order for Turkey to forget about business, the EU played its most important trump card. Mogherini promised Ankara to speed up the process of Turkish accession to the EU.

Meanwhile, on December 9 a ministerial meeting took place on the South Stream project in Brussels with the participation of Bulgaria, Hungary, Slovenia, Austria, Croatia, Italy, Greece and Romania in order to take measures in connection with the refusal of Russia from implementing the project. And there are things that should worry those countries. Technical capacity of the pipeline is 63 billion cubic meters of gas per year. The length of the main pipeline is approximately 540 kilometers. The payback period for the investments will be no longer than 15 years from the start of commercial exploitation of the pipeline on the territory of Bulgaria. It does not involve complex and unpredictable transit countries such as Ukraine and Turkey.

But, as it turned out, the EU is looking for a replacement pipeline for South Stream, the construction of which Russia previously refused, rather than trying to return to it. The meeting was initiated by the vice-president of the European Commission for Energy Union, Maroš Šefčovič. Moreover, Russia did not participate in the meeting, nor did Serbia as it is not yet included in the EU. The heads of the Ministry of Energy for Bulgaria, Hungary, Slovenia, Austria, Croatia, Italy, Greece and Romania have come up with three alternatives to the South Stream project. In particular, countries of the EU are planning to build LNG terminals to receive “blue fuel” from the Caspian Sea along the “Southern Gas Corridor” as well as develop gas fields in the Black and Mediterranean seas. Besides that, another idea is to create a system of vertical pipelines between the South East and Central Europe with the possibility of two-way gas flow. Earlier it was reported that the EU countries participating in the South Stream project would not receive compensation.

As it has become known, Ankara showed no adherence to its principles. On December 10 information from Turkey appeared that the country considers as the key project construction of a major gas pipeline from the Caspian region, that is to say, from Azerbaijan, possibly Turkmenistan, and probably on the basis of development of the Southern Transport Corridor project and Nabucco.

And this once again reaffirmed what is already well known: Turkey is a difficult partner not only for the EU, but also for Russia. After all, this country is a member of the NATO Alliance. And in terms of Syria and Iraq, it occupies a position closer to the American position, not the Russian one. It often takes into account the interests of Saudi Arabia and is subject to pressure from Washington, ready to bow to the highest bidder.

From the very beginning, even a few months ago, it became clear that Russia should go in another direction with regards to gas, not through Turkey, but through Iran, as well as to quickly create production capacity of its own LNG fields in the Artic and the Far East and look for other markets instead of Europe: above all India, Pakistan and countries of Southeast Asia. And in order to realize this, it should build together with Iran a gas pipeline from Iran that is connected into the gas transportation network of the Russian Federation, especially from the South Pars field, filling it with both Iranian and Russian gas to Pakistan and India. While Moscow was thinking about it, Tehran voiced on December 9 its intention to implement the project of building a gas pipeline to Pakistan. And then there’s still the United States who are increasing pressure on Russia and Iran in order to thwart their cooperation within the economic sphere. American State Department spokesman, Jen Psaki, on December 2 threatened Russia with new sanctions because of the alleged agreement between Russia and Iran on the exchange of “oil for goods”. The volume of the proposed transaction was valued at 20 billion USD; It is alleged that Iran would supply Russia with around 500 thousand barrels of oil a day for two or three years at a slightly lower than the market price, and in exchange, Iran would receive a variety of civilian goods.

Unfortunately, in fighting against these sanctions, Moscow, for whatever reason, is unable to show resolve in relation to Tehran and reach some sort of a “breakthrough” in its relations with Iran. And without that, Russia will continue to face obstacles in the face of countries that are subject to American pressure. And procrastination here is dangerous. Ultimately, in Tehran, they are tired of waiting for Moscow to shake an outstretched hand and do what needs to be done in relation to its strategic partnership with Iran.

In addition, infatuated with gas, in Russia they have clearly forgotten that at this current stage, another energy weapon oil is far more dangerous. Even the recent OPEC decision didn’t make Russia realize a quite obvious thing: US – backed by Saudi Arabia and with support by Kuwait – is about to bring Russian economy down by instigating a sharp decline in oil prices that fell on December 10 to 65 USD per barrel and will soon fall to 40 USD per barrel – and this will just repeat what happened in the mid-80s under Reagan. And then Washington, by making use of the natural resentment of the Russian population and the decline in the living standards will proceed by organizing “colored” demonstrations in an attempt to create mass protests in Moscow and other Russian cities such as those which occurred in Kiev at Maidan Nezalezhnosti.

Of course, it won’t go the Ukrainian way; however it may be the right time to make a step forward from reassuring speeches that one should not be afraid of the falling oil prices or the value of the ruble to actual countermeasures with help from those who are still on the same side of the barricades with Russia Iran being among them.

Peter Lvov, Ph.D in political science, exclusively for the online magazine “New Eastern Outlook”.