Flying South (Stream) for the Winter

The construction of a southern gas pipeline has been a hot topic for European states for over a decade. In order to reduce dependence on gas imports from Russia, the EU hopes to build pipelines that would allow gas to be transported from Caspian and Middle Eastern sources. However, Russia’s South Stream project threatens to eliminate competition in the southern corridor. The EU’s failure to secure energy resources may give Russia a stronger grip over its western neighbors.

 

Background

In 2006, the Russian Federation shut off the flow of gas to Ukraine for a brief period of time after the Orange Revolution in Kiev brought leaders with Western views to power. Russia claimed that the dispute was over unpaid bills, but the explanation did not disguise that Russia had been using its gas as a political tool. This was not an isolated incident. The European Union has sought for years to escape dependency on Russian gas, which accounts for about one third of Europe’s total supply. An estimated 16 percent of Europe’s gas passes through Ukraine, which has proved time and time again to be a major vulnerability in the supply route to Europe. Although there have been many projects devoted to building pipelines in the southern corridor, almost all have fallen through.

 

European Commission Goals

The European Commission has recognized the importance of finding alternatives to Russian gas. In a communication with the European Parliament, the southern corridor is referred to as “one of the EU's highest energy security priorities.” While the commission has recognized the need to diversify its suppliers of energy resources, the need has been classified as a medium to long-term challenge. For short term solutions, the commission recommends that member states stock up on gas for the winter or switch to alternate fuels.

 

Current Initiatives

Despite enthusiasm to secure energy sources within the EU, there are few prospects for immediate diversification and organized plans reflect long-term goals. Instead, the EU has resorted to legal action to limit Russian interests in the European gas market. EU competition laws prohibit a single company from controlling both production and distribution and have used these means to halt South Stream construction in Bulgaria and prospective EU member Serbia.

The EU’s alternate solution to Russian gas is to build a connection to the oil fields in Azerbaijan. A network of three pipelines has been proposed to span the gap between Azerbaijan and Italy. First, the TANAP pipeline would run from the Caspian Sea to Greece where it would connect with the TAP pipeline, running from Greece to Italy. The last section in the pipeline network will carry gas through Italy to be dispersed throughout central Europe.

Although this network of pipelines would greatly reduce European dependence on Russian oil, construction will not begin until 2016. Meanwhile, its competitor, Russia’s South Stream, is under construction despite the legal setbacks. The South Stream pipeline would stretch from Russia, through the Black Sea, across Bulgaria, Serbia, Hungary, Austria, and Slovenia. When the EU froze activity on the pipeline, participating states were eventually forced to comply. In Serbia’s case, the state was made aware that EU membership was at stake. Despite initial attempts to maintain their deal with Russia, all states involved halted construction. However, the government of Hungary recently passed a law to that will allow companies involved in the project to bypass approval from the EU. Serbia, Bulgaria, and Austria have expressed the desire to continue with construction, but wish to wait for approval.

 

Short Term Outlook

As shown by Hungary, not everyone is willing to continue waiting for energy alternatives. Sanctions imposed on Russia are also having negative effects on European states. In fact, a food ban recently imposed by Russia is projected to cost the EU $16 billion, which is 10 percent of their usual exports. This makes the EU’s member states vulnerable by pressuring them to find a short term solution to secure energy resources. Hungary’s Prime minister argued that the choice to allow Russia’s South Stream project was not a pro-Russian move, but rather a “pro-Hungarian” approach.

While other European states are complying with the EU’s boycott of the South Stream as of now, the need for energy security may soon overwhelm their better judgment. By giving in to Russia’s as a short term fix, Hungary and any state that follow suit will enable Russia’s aggressive foreign policy, both toward the EU and Ukraine. But if the EU cannot commit to an alternative, there may be no other solution.