Gas crisis should refocus the EU's priorities

This article was published in European Voice on 29 January 2009.

The first lesson of the Ukraine-Russia gas dispute is that no bilateral solutions are good solutions, no matter how privileged a country's bilateral relations with Russia might seem. The Bulgarian government relied happily on its agreement with Gazprom and was totally unprepared for the crisis. Unlike Hungary, which, after the first crisis in 2006 started building an expensive storage facility, or Latvia, which decided to pay above the market price for gas in order to keep Russia off their back, Bulgaria - almost entirely dependent on Russian gas - expected both lower gas prices and secure deliveries from Gazprom. 

"We scored a Grand Slam", announced Georgi Parvanov, the Bulgarian president, exactly a year ago at the signing ceremony of the South Stream project with Vladimir Putin, then the president of Russia, now its prime minister. The victorious tone reflected the Bulgarian government's belief that it had pressured Gazprom to concede 50% of the local company created to operate South Stream. But the recent crisis demonstrated that gas security means both diversification of transit routes and of sources. With South Stream diversifying only the route, but not the source (Russia), the government should also have attempted to establish connections to other networks such as the Turkish-Greek-Italian pipe or to the liquefied natural gas terminal in Thessaloniki.

Intermediaries

The second lesson of the gas saga can be put succinctly: no intermediaries. The surprising fact that all of Gazprom's delivery contracts with other national gas companies go through intermediaries became clearly visible through the crisis. In eastern Europe, as in Ukraine, ‘mediating companies' is a synonym for ‘corruption opportunities'. The beneficiaries can include high-ranking government officials. In the Bulgarian case, the intermediaries do not have sufficient capital to meet possible damage claims from Bulgargas, the state-owned gas company. And it is doubtful whether they would, in turn, raise claims against Gazprom, the head company.

Now for the third lesson: Even the Russophile Bulgarians can easily turn to Russo-sceptics, if not Russophobes, within days. For the past decade, European polls have shown the Bulgarian public to be the most Russia-friendly (with support for Russia always running at 66-68%). Even though the country's policies did not qualify it quite as a Russian ‘Trojan horse', it was often regarded as Moscow's trusted partner. But the crisis seems to have changed public attitudes. Latest polls show that the crisis has worsened the public opinion of Russia. A poll by Market Links carried out on 12-14 January showed that 49% of the respondents looked negatively on Russia due to the gas crisis, with only 32% having a positive attitude. Bulgarians now realise that relying on Russian gas - and compassion - is a tricky game. According to official data from the ministry of economy and energy, the economic losses exceed €50 million.

Lack of unity

The early hours of 13 January gave hope that the gas could flow soon following interventions from the European Commission and the Czech presidency of the EU. The fourth lesson arrived soon after: the EU's leverage had not been persuasive enough because the problem was perceived as much more eastern Europe's than a concern of the rest of the EU.

The lack of even a verbal reaction by the leaders of Germany, France or Italy sent a bad signal - and did not go unnoticed by Putin. On the same day he summoned the leaders of the countries who had suffered the most from the crisis - Bulgaria, Slovakia and Moldova. Filling the vacuum of decisive international actors, Putin appeared almost as a referee in the dispute trying to help those in need.

That two EU member states participated at the meeting can be read only as an act of desperation. This was the EU's chance to show leadership along its eastern fringe - an area where its attractiveness had already been fading. It has failed: according to the poll quoted above, the Bulgarian public's attitude toward the EU has worsened by 20%.

Mid-term steps towards setting minimum standards for gas security in the new EU member states, as well as political intervention to find a long-term solution to the problems, which originated with Gazprom, would help to overcome the EU's credibility crisis in the east.