Romania and Russia's Selective Transit Strategy
Central Europe Digest
Posted: 15 January 2008
Reports suggest Russia’s newest gas pipeline through Southeast Europe could skip Romania and pass through Serbia instead. If accurate, this development carries political undertones, and is indicative of Russia’s new policy of only routing its pipelines through “friendly” transit states. By depriving Romania of transit revenues, the Russian decision could further encourage Bucharest to be a voice lobbying for non-Russian sources of energy.
At the time of this writing, a four-way agreement between Russia, Bulgaria, Greece and Serbia could be in the works regarding Gazprom’s planned South Stream pipeline. Importantly, this joint Italian-Russian project is considered a competitor to the planned Nabucco pipeline – backed by Brussels and Washington – to import gas from Central Asia via Turkey (and without reliance on Russian transit). Reports indicate that Gazprom’s South Stream, traversing the Black Sea, will split into two branches once it makes landfall in Bulgaria; one will go west to Greece and Italy, the other north to Serbia (and likely on to Hungary and other markets). Earlier, Gazprom had hinted at a northern route from Bulgaria to the heart of Europe via Romania and Hungary. But it now looks possible that Gazprom will leave Romania on the sidelines.
Such a decision would be the latest signal of a broader shift in Russian energy policy. Throughout the 1990s and into the present decade, Russia provided carrots in the form of subsidized gas to a number of former communist states in East Europe. With the move towards unified gas pricing for all of Russia’s foreign customers, Moscow must find new carrots. Gazprom’s desire to expand its reach into Europe provides these carrots; the Kremlin can pick and choose among those Central European countries chomping at the bit for transit revenues.
By extension, Russia’s strategy means preventing any economic benefits from flowing to countries Moscow considers unfriendly. Just look at the Baltic region. Russia’s frosty relations with Estonia, Latvia, Lithuania and Poland are one reason for Gazprom’s decision to bypass these countries with a pipeline to Germany across the Baltic seabed. Some in Poland worry about a politically-motivated supply cutoff. This is a legitimate concern, but it would be much easier for Gazprom to simply stop transiting gas through Poland, perhaps for “technical” reasons, once the Baltic pipeline is in place. In effect, Gazprom would not use energy as a “stick” against Warsaw (transit revenues are a privilege rather than a right), but would simply deprive the Poles of a lucrative “carrot.”
Russia’s withholding of carrots is even more apparent with respect to oil. Russia is scaling back its crude oil exports through the Baltic States in favor of Russia’s port at Primorsk. Estonia transited 500,000 barrels of Russian oil per day in recent years, but Moscow has cut back on its use of Estonian terminals following a diplomatic fisticuff last year over Tallinn’s decision to re-locate a Soviet war memorial.
South Stream could effectively offer carrots to those states Moscow considers as “friendlies” in Europe’s southern tier. Bulgarian-Russian ties are quite cordial, and Hungary desires to be Gazprom’s hub for gas exports in the region. Greece has been described by some as Russia’s “Trojan Horse” within the EU, so it is no surprise that Athens would be a partner in South Stream. Finally, Moscow is keen to solidify its already-chummy relations with Belgrade by penetrating the Serbian energy sector.
Romania meanwhile does not fit within this “pro-Gazprom” caucus – and therefore does not qualify for any carrots. For starters, Romania and Russia have diametrically-opposing views on Moldova. In the energy sphere, Romania’s President Traian Basescu has underlined his support for energy projects that bypass Russia. The Russians also despise levels of self-sufficiency; Romania’s domestic gas reserves provide it a safety blanket making the country less susceptible to Russian pressure.
Romania currently serves as a transit state for Russian gas en route to Bulgaria and Greece. But South Stream’s planned connections to these two states could allow Gazprom to scale back exports through lines crossing Romania. Should the Kremlin so desire, such a move would effectively cut out Romania from Moscow’s transit payroll altogether.
Any decision to exclude Romania from South Stream could also provide an impetus for Bucharest to become an even more vocal supporter of Nabucco in European circles. Other states along Nabucco’s proposed route now seem tempted by Russia’s South Stream: Hungary has already said it will support either pipeline, and Bulgaria has shied away from articulating a clear preference. This ambivalence suggests Romania should perhaps play a more pronounced leadership role in the pro-Nabucco effort. A Gazprom decision to bypass Romania – and deny Bucharest the carrot of transit revenues – should only further drive home the situation’s urgency. To be sure, 2008 is an election year and Romanian leaders are likely be distracted by domestic politics. Yet if Romania ends up the latest casualty of Russia’s selective transit strategy, Bucharest would be wise to respond by picking up the ball on Nabucco and showing Moscow that it will not take this lying down.
Ryan R. Miller is a Research Analyst at the Center for European Policy Analysis (CEPA).
The views expressed in this article are those of the author and do not necessarily reflect the opinions of the Center for European Policy Analysis.