Gas Disruptions By Winter, Said Eastern European Diplomacy
As the crisis deepens, Europeans are sadly becoming aware of the risk of winter gas disruptions, suggested experts on Monday at a conference organized by the Atlantic Council.
“It is a crisis. It is a war. Russia is trying to destabilize the country (Ukraine)… We should be ready for disruption,” Slovakia’s Pavol Hamzik said during the two-day meeting hosted by the Washington-based think-tank.
Hamzik, Ambassador-at-Large for Energy Security at the Ministry of Foreign and European Affairs, said that Eastern European countries are now called to take a difficult decision, and there are not many alternatives. They could either try to bargain better contracts with Gazprom, or they could promote European markets integration. But this move is not an easy one, as it would inexorably cause further tensions with Russia.
Slovakia’s case is a clear example of this. Bratislava ended up clinching a deal for reverse flow to Ukraine in the past days, after several complications and problems. Despite the clear intention to proceed with the easiest way to promote market integration, Slovakia had to be as quiet as possible. The country tiptoed; it gently approached the issue in an attempt to minimize possible backlashes, being perfectly aware it could pay a high price. While Slovak delegations were meeting Ukrainians under the aegis of the European Union, Gazprom was already speaking up.
However, if it is sure that the Kremlin exerted, exerts and will exert political pressure to avoid that converging interests trigger complete energy integration, it is equally clear that the recent deal between Slovakia’s Eustream and Ukraine’s Ukrtransgaz marked a turning point. Rising tensions could get hand in hand with increased cooperation in Europe.
DISRUPTION BY DESIRE OR ACCIDENT
“We are all forced to show our hands,” the Czech Republic’s Vaclav Bartuska said during the conference titled 'American Energy Prowess in a Strategic Foreign Policy Perspective.'
Bartuska also explained that the most likely scenario is a shutdown of gas supplies going through Ukraine. In this case, the other routes could partially make up for the decreased flows'.
“I expect severe problems (through Ukraine) either by desire or by accident,” said the Ambassador-at-Large for Energy Security at the Ministry of Foreign Affairs, adding that Bulgaria would bear most of the brunt. According to Bartuska, the other countries will be touched by the events, but they could still import Russian gas through Poland via the Nord Stream and the Yamal pipeline.
On a position quite different with respect to Bulgaria's, some experts said that the Czech Republic would be only marginally affected.
“We do have a default option, which is to remain with the German market. Honestly, Germany is the most interesting market in Europe, the most liquid one, the one most likely to survive no matter what,” said the Czech diplomat.
Should Russia stop its entire gas flow to Europe, the Continents’ energy security would be seriously threatened in the short term. The Czech Republic would also suffer. Experts also discussed that Eastern European countries are lagging 20 years behind Western Europe in terms of infrastructures and energy strategies.
“Whomever we interconnect with, it would be just Russian gas,” György Harmati, Deputy CEO for Strategy at Hungary’s MVM Group, said during the conference. And this would be the start and the end of the problem.
The Bulgarian Ambassador confirmed Harmati’s viewpoint.
“We are all dependant on one source, one country,” Bulgaria’s Lachezar Matev said during his speech.
In this sense, the vulnerability in Europe seems so clear that there are little alternatives, namely LNG imports from the United States, new sources of supply like Azerbaijan and Turkmenistan, energy efficiency and reverse flows.
AMERICAN INTERESTS
According to several panellists, it is in the American interest to support Eastern European countries and especially Ukraine. In a Western perspective, Kiev has to be helped to decrease its reliance on Russia, tapping its indigenous resources and promoting changes.
“There has to be a clean up in the energy sector,” said Brenda Shaffer, Professor and Visiting Researcher, Center for Eurasian, Russian and East European Studies (CERES), Georgetown University.
According to Shaffer, poor politics and bad decisions brought Ukraine to the current situation, implicitly calling on a new political class to lead Kiev out of its problems in the medium-long term. What would the US' role be in this context? What could Washington do to push Ukraine closer to the West block? This question has been only marginally raised and the American role has not been precisely discussed.
All in all, most of the panellists agreed on possible benefits of LNG export liberalization. Eastern European countries are asking it loudly, advocating that it would send a clear message to Russia and to the markets. But we all know that the situation is not quite that easy.
The US is carefully studying potential consequences of such a liberalization on the national economy. At the same time, the long time-frame and the difficult process to get LNG export permits by the American Department of Energy could hamper the attractiveness of the significant investments.
“The fact that there are twenty something projects in the queue does not mean that they will be built,” said Edward Chow, Senior Fellow, Energy and National Security Program, CSIS.
EASTERN EUROPE SET TO SUFFER
In this context, it comes as no surprise that Eastern European countries are set to pay a price for their history and for the international community’s inability to foresee that these countries would have played a central role in this second Cold War.
The lack of ad-hoc infrastructures and the risk of disruption unequivocally put these countries at risk. If no major change occurs in the near future, it could be just a matter of months for them to cool their expectations down.
Russia is indeed intentioned on triggering a domino effect, impacting one European country after the other. In the case of more European and American stalemates, Moscow could incredibly win several battles. And this would be particularly heroic, reminding all that Russia’s GDP is around 1/8 of the European Union's.
Sergio Matalucci