Russian Energy is Europe's Achilles' Heel

Posted: 29 August 2008

by Jonathan Hayes

Europe’s inability to influence the crisis in the Republic of Georgia is fundamentally grounded in its lack of a unified energy policy. As Italy, Germany and other European states have built bilateral energy relationships with Russia, their resulting reliance on Russian hydrocarbons has left Europe in a position of material dependence and diplomatic weakness. Only Central Europe’s Baltic tier appears to have the courage to take a principled stand. A common European approach to Russia in the energy sphere would re-equilibrate the consumer-supplier energy relationship and diminish European states’ reluctance to challenge Moscow on its position in Georgia.

Following the outbreak of hostilities in South Ossetia, Italy’s Prime Minister Silvio Berlusconi telephoned Russia’s Prime Minister Vladimir Putin. Rather than lobbying Putin to embrace a ceasefire and withdraw troops from Georgia, Berlusconi iterated his support for the Russian position. Italy’s Foreign Minister subsequently discouraged calling an emergency European Union summit to address the situation in Georgia claiming that, “Asking for (a summit) means moving towards a condemnation of Russia, a position that would be negative for all of Europe.” Italy’s stance is rooted in its energy relationship with Russia. In November, Italy’s energy giant ENI reached an agreement with Russia’s state-owned Gazprom to construct a $15 billion natural gas pipeline through the Black Sea called South Stream. Analysts decried the deal at the time as undermining the prospect of a unified energy policy, and this deal has indeed subsequently influenced Italy’s policy towards Russia.

Germany and Russia initiated the construction of the North Stream natural gas pipeline in 2005 that connects the two countries while bypassing Latvia, Lithuania, and Poland. The Baltic States and Poland had hoped to collect gas transit fees from an overland pipeline, prevent environmental damage to the Baltic Sea and link Germany’s energy policy with their own. Under Chancellor Gerhard Schroder, Germany ignored the protests of its neighbors and moved forward with the North Stream pipeline, which projects to be completed in 2010. While Chancellor Angela Merkel has currently taken a harder line towards Russia during the crisis in Georgia, even lambasting President Dmitri Medvedev’s recognition of the independence of South Ossetia and Abkhazia, her Foreign Minister, Frank-Walter Steinmeier, has been less critical. Notably, Germany’s foreign minister belongs to the Social Democratic Party, which is the party that pushed for the North Stream pipeline deal in the first place. 

In contrast to Italy’s conciliatory stance and Germany’s mixed rhetoric, Poland and the Baltic states staunchly supported Georgia’s position and condemned Russia’s military action from the get-go. The Presidents of Poland and Lithuania and the Prime Ministers of Latvia and Estonia (along with Ukraine’s Viktor Yushchenko) flew to Georgia to demonstrate their support for Georgia and President Mikheil Saakashvilli. These leaders went as far to say that Russia’s policy was “imperialist and revisionist.” Poland’s President, Lech Kaczynski, accused France and Germany of being too soft on Moscow as a result to their commercial ties with Russia and stated that the security of Central and Eastern European states was at stake. The stark contrast in rhetoric towards Russia between Western and Central European capitals directly mirrors those countries’ push for a common European energy policy.

While Italy and Germany have pursued unilateral energy policies and have reached bilateral agreements with Russia, Poland and the Baltic States have strived to develop a common European energy policy as they are even more dependent on Russian hydrocarbons as the rest of Europe. At a summit in June 2006, leaders of the four states discussed the harmonization of their EU neighborhood policy with particular focus on developing a common European energy policy. At the time, Lithuanian President Adamkus stated, “The last EU summit in Lahti showed the importance of speaking in one voice in order to be heard,” and the four countries believed that a common European energy policy was central to this objective.

The failure of Moscow to comply with the French-negotiated ceasefire should have certainly sparked a unified European condemnation had other factors not affected their policy, and the energy security of individual European states sits at the center of this discord. Russia is dependent on Europe as a consumer of its hydrocarbons, but the EU cannot leverage its status as bilateral energy relations persist. By pursing national energy security independently, Italy and Germany are compromising the influence Europe wields vis-à-vis Russia. In order to for the EU to exert any pressure on Russia in the future, it must make the development of a common energy policy a priority. 

Jonathan Hayes is an Analyst for Jane's Strategic Advisory Services. He specializes in energy and security in the former Soviet Union.

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.