Transatlantic Politics

Creepy words from Vladimir Putin at the Black Sea Economic Cooperation summit in Istanbul that sound eerily familiar to Eastern Europeans of the "old days" of Soviet occupation:

"The Balkans and the Black Sea have always been a sphere of our special interests. And it is but natural that a resurgent Russia is returning here."

The last move that practically checkmates the timid EU strategy in lowering its dependency on Russia was made last Saturday, when the Italian company ENI signed a memorandum with Gazprom to build a pipeline through the Black Sea, thus undermining the Nabucco-project that would have crossed Turkey, Bulgaria, Romania, Hungary and Austria - bringing gas from the Caspian region and maybe Iran to the Western markets. Here is what the Moscow Times reports:

Gazprom and Italian oil firm Eni unveiled a plan Saturday for a big new pipeline to take Russian gas under the Black Sea to Europe, undermining an earlier plan to extend a Turkish route. The 900-kilometer South Stream pipeline would come ashore in Bulgaria and then branch to Austria and Slovenia in one spur and southern Italy in another, Eni CEO Paolo Scaroni said at a news conference with Gazprom deputy CEO Alexander Medvedev and the two countries industry ministers.

Austria, of course, is well off, after having signed a deal with Gazprom on building joint storage facilities at Baumgarten, the regional hub where the Nabucco pipeline would have ended. (See also: Russia: If we can't own the pipeline, we'll control the faucet) Coincidentally or not, the South Stream pipeline has a branch to Austria..

While the Russian monopoly has succeeded in cutting out British Petroleum of the Siberian gas fields, both the EU and US lack leadership in respect to the Black Sea and Caspian region. As Vladimir Socor puts it, the US and EU energy policies in Eurasia are collapsing:

In retrospect, Washington's retreat from leadership on Central Asia-Europe energy transit projects in 2001-2005, along with a policy vacuum in Brussels, set the stage for the debacle just seen. Even after the January 2006 "wake-up call" (triggered by Kremlin manipulations with Turkmen gas supplies to Ukraine and beyond), the U.S. and EU relegated Caspian energy policy mainly to mid-level officialdom, with only episodic top-level involvement.

In Washington, for example, a deputy assistant secretary of state was tasked to promote these energy projects in the relevant countries, in a direct match against Putin. The Russian president (along with his energy executives) was personally interacting with the same countries and leaders to pull his incomparably greater political weight for the Russia-favored projects. The United States and the EU did not seriously attempt to offset Kremlin pressures on the Kazakh and Turkmen presidents. Nor did they develop timely and convincingly resourced alternatives to the ready-made Russian projects.

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There is something about the Baltic states… something refreshing, inspiring and courageous.

Their recent history after the breakup of the Soviet Union is an economic success story with double-digit GDP growth rates. Estonia is the most high-tech society in Europe - with e-government & online voting - having earned the nickname "E-stonia".

Yet listening to the their three foreign ministers speaking about the 85 years of US-Baltic relations at the Heritage Foundation last Thursday, some differences do become obvious. Especially concerning their relationship with Russia.

The most pro-Russian stance was the Lithuanian one. Foreign Minister Petras Vaitiekunas, with a strong Russian accent, underlined several times that "Russia is not the USSR anymore, it differs profoundly" when the discussions were becoming too critical of Moscow. He also spoke of a "political brand of the three Baltic states", a brand that was not reflected in their very different views on Russia.

"We need Russia, so in our relationship, patience is the word" - Petras Vaitiekunas, Lithuanian Foreign Minister

Trying to strike a balance, the Latvian Foreign Minister Artis Pabriks first payed his tribute to the role of the US in the Baltic states' quest for freedom:

"All our achievements, in our economies, but also on a personal and professional level, could not have been accomplished if we weren't free countries. During the Soviet occupation, we used every opportunity to listen to Radio Free Europe, despite the Russian scrambling, and we really believed that one day we will be free countries." 

But talking about the Latvian relationship to Russia, Pabriks said that "this relationship shouldn't be a prisoner of the past".

Latvia just recently ratified a border-treaty with Russia, and the Foreign Minister proudly announced that his Russian counterpart Sergei Lavrov promised to visit Riga, Latvia's capital, soon.  Of the three Baltic states, Latvia should be considered the occupier of the middle ground with respect to how they view Russia.

A tougher stance came from Urmas Paet, the Estonian Foreign Minister, who was much more outspoken and than his Slavic counterparts.

"Russia is building up its foreign policy through confrontation with the US & EU, and through confrontations with its neighbors and the new democracies surrounding it." 

The recent row with Russia over the displacement of a Soviet statue and the following cyber-attacks against Estonian websites prompted the government in Tallinn, Estonia's capital, to take a firm stance against the Kremlin: Estonia successfully pushed to expand NATO powers onto the Internet.

"We experienced three weeks of cyber attacks, with 400 times greater traffic than normal, aimed to completely paralyze our country. The Internet has become the battlefield of the 21st century. It is possible to inflict serious damage in highly digitalized societies, just like a regular attack on conventional infrastructures", explained Paet.

The Estonian Foreign Minister requested that a "legal definition of cyber warefare" be formulated as soon as possible and announced the upcoming opening of a "cyber defense center" in Tallinn. 

Daniel Fried, Assistant Secretary of State for European and Eurasian Affairs,  confirmed the fact that "NATO is already working on the technical cooperation"  regarding  "these unconventional threats: Using energy for political aims, cyber attacks or financial pressure", obviously alluding to Russia's new power policies.

"Russia's policy is to surround these countries, to encircle them. The EU is very many things, but certainly not a conquering imperialist force. And isn't it in Russia's best interest to be surrounded by democracies? Russia should have learned from its experience that it is not democracies who pose a threat, but totalitarian regimes and dictatorships." - Daniel Fried, Assistant Secretary of State

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A pretty incredible piece in The Washington Times about how China is secretly sending arms to Iraq & The Taliban militia in Afghanistan through Iran:

New intelligence reveals China is covertly supplying large quantities of small arms and weapons to insurgents in Iraq and the Taliban militia in Afghanistan, through Iran…

Some arms were sent by aircraft directly from Chinese factories to Afghanistan and included large-caliber sniper rifles, millions of rounds of ammunition, rocket-propelled grenades and components for roadside bombs, as well as other small arms.

The Washington Times reported June 5 that Chinese-made HN-5 anti-aircraft missiles were being used by the Taliban.

According to the officials, the Iranians, in buying the arms, asked Chinese state-run suppliers to expedite the transfers and to remove serial numbers to prevent tracing their origin. China, for its part, offered to transport the weapons in order to prevent the weapons from being interdicted.

The weapons were described as "late-model" arms that have not been seen in the field before and were not left over from Saddam Hussein's rule in Iraq.

U.S. Army specialists suspect the weapons were transferred within the past three months…

Is anyone surprised?  After all, the Chinese are still Communists. 

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The Nabucco project is one feeble EU attempt to build an alternative to the Gazprom-controlled, already-built natural gas pipeline-network. 

It is supposed to bring gas from Azerbaijan and/or Iran, through Turkey, Bulgaria and Romania to the huge gas-hub in Austria, at Baumgarten. Russia tried first to discourage the Azerbaijan government from moving forward with the project.  Instead, Russia built its own direct pipeline through the Black Sea via Turkey (entitled Bluestream), all the while openly dismissing the Nabucco pipeline, by saying that Russia needs to protect and expand its own pipelines in order to ensure an uninterrupted gas flow to its European clients.  Given Russia's recent history towards energy policy, some might view this sequence of events as disturbing.

But Russia's ultimate strategy came to life 10 days ago, during Putin's visit to Vienna. The gas hub in Baumgarten, where the Nabucco pipeline would be connected to other Western European pipelines is now a shared venture between OMV (the Austrian gas corporate) and..Gazprom - the Kremlin-controlled Russian oil conglomerate!

Can't own the pipeline? No big deal, we'll own the faucet.

This might just be the beginning of a "beautiful friendship" with the Austrians, similar to the Gerhard Schroeder affair.  The former German chancellor struck a deal with Putin just weeks before the election he lost that called for building a direct pipeline through the Baltic Sea linking Germany directly to the gas fields in Siberia.  Doing so conveniently reduces the gas flow through the Baltic states and Poland - who have openly criticized Russia. Punishment and reward in its most basic form.  Since signing this deal on behalf of the German government he no longer leads, Schroeder has been rewarded with a seat on the executive board of Gazprom and he is now actively lobbying for the continuation of this and other projects of the Russian state-controlled giant.

Pictured above is the map of the Nabucco-project. The construction of the pipeline is due to start next year and be ready by 2011. It is not clear yet which branches will be developed first. With Russia having also struck a deal with Kazakhstan and Turkmenistan regarding their Caspian Sea reserves, and with Iran being the second gas producer, there is only Azerbaijan left to feed the pipeline. And Azerbaijan's reserves are not sufficient. With Gazprom waiting patiently at the other end of the pipeline, one might ask if it really matters anymore.

As Ed Lucas puts it in this week's Europe view column -

"Russia has largely won the gas wars before most Europeans even noticed they were being fought. So far this year the Kremlin has stitched up the Caspian (by striking a pipeline deal with Turkmenistan and Kazakhstan). It has nobbled Austria, Belgium and Hungary (to add to its powerful position in Germany, France and Italy). By schmoozing other producers it has begun to form a gas cartel. Russia has also built a strong pro-Kremlin camp elsewhere in the European Union (Greece, and Cyprus chiefly; Hungary, Latvia and Slovakia increasingly; and probably Bulgaria too if anybody looked closely). Its banks and businesses have created a fifth column in the City of London and other world financial centres."

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