The Merits of Debate: The EU’s Southern Corridor Policy

“What we most need to avoid is a discussion on the relative merits of Nabucco West and TAP [the Trans-Adriatic Pipeline]”. So said EU Energy Commissioner Günther Oettinger in a mid-April letter, obtained by news agencies, to EU foreign policy chief Catherine Ashton. He said that current import projections suggested that both projects would be needed, and that claiming otherwise could create “a needless split in European solidarity”.

Coming as it does just two months before the Shah Deniz consortium decides between the two pipeline routes, Oettinger’s letter clearly carries some significance. It seems a clear demonstration that the EU’s claim to be ‘project-neutral’, after years of backing Nabucco, is genuine. But his claim that the discussion is a “fruitless debate” looks – at first - like obscuring the contest’s political aspect, a dimension which the EU itself acknowledges should be critical to the consortium’s choice.

The EU’s old rationale for supporting a Central European route, rather than across Southern Europe to Italy, was always clear. Central and south-eastern Europe are the regions most in need of diversifying away from Russian gas; the 31bcm offered by Nabucco dwarfed TAP’s initial offering of 10bcm; and the Baumgarten hub where Nabucco terminates is a critical node in EU efforts to improve internal gas connections. Southern Italy, by contrast, looked like a dead end.

Consequently Nabucco was lavished with political and financial support: TAP and its defeated Southern European rival ITGI were not, a fact which TAP has spun to its advantage by pointing out that it doesn’t rely on public funding and is non-political in nature. 

The shift to ‘project neutrality’ came in late 2011 when it became clear that Nabucco was a white elephant, with spiralling costs and a fragmented consortium of stakeholders. With the financial crisis sending European gas demand projections over a cliff, something smaller and more flexible looked a much better option. Nabucco recovered by developing the Nabucco West proposal, which cut out the Turkish section (replaced by TANAP) and reduced the volumes, but the EU remained committed to objectivity.

The question is: why? The strategic calculus behind supporting Nabucco – diversifying southeast European supplies and bringing gas to a central European hub – remains the same even for Nabucco West. The claim that both pipelines will be needed in the future as gas demand rises is true, but is also not particularly relevant at the moment: the question is which pipeline will be chosen at the moment. The development of the Southern Corridor is all about timing, and the EU’s policy on the appropriate sequencing of that development is not “fruitless”.

Nor would it be much of a risk to EU solidarity to favour one route over another. The race between Nabucco and TAP is being conducted openly and transparently – exactly the kind of free competition which the EU prides itself on supporting. Italy, Greece and non-EU member Albania will obviously support TAP; central and eastern European states will back Nabucco. This is not exactly a secret, and host governments have been lobbying the EU accordingly.

In any case, Oettinger knows full well that one of the Shah Deniz criteria involved is ‘public policy’. Most of the Shah Deniz consortium are European companies with European priorities, and one is Socar, with a political mandate to link Azerbaijan with Europe as effectively as possible (and Azerbaijani officials have come out strongly in support of Nabucco). Claiming that this is solely a commercial matter, in which the Commission should not involve itself, would seem rather naïve.

Indeed the Commission itself has acknowledged this. In advance of an EU foreign ministers meeting on energy security on 22 April, a briefing note said that although the decision is indeed a commercial one, whether or not the pipelines contribute to EU policy objectives is also an important factor. The note also refers to the need to use energy as a tool to build closer political relationships with states in Central Asia and the Caucasus.

These are all points which were raised in a letter by the foreign ministers of the Nabucco transit countries, delivered to the European Commission on 18 April. The letter, which calls Nabucco an “embodiment of the European principles and priorities in achieving energy security”, ends by pointing out that EU support for Nabucco would “only be consistent with its previous statements and views.” True enough.

So why is Oettinger insisting on project neutrality so close to the wire? It could be that he simply fears backing the wrong horse: that the EU cannot afford to be involved in lobbying for a project when it cannot actually choose the outcome. But this seems a rather flimsy reason, especially given EU confidence that Nabucco is in the lead.

A related and more serious concern could be that Russia’s South Stream project will flood the Balkans with cheap gas, undermining the future expansion of Nabucco. Putting all of the EU eggs in Nabucco’s basket could be short-sighted if it fails to develop as originally envisaged. In that scenario it makes sense to rhetorically commit to building both pipelines one day.

Indeed this actually presupposes confidence that Nabucco will be chosen in June: Oettinger can now afford to reassure investors and governments that TAP will be built in the long-term if he is convinced that Nabucco will be built in the short-term.

So Oettinger’s prevarication - despite the European Commission’s acknowledgement that the pipeline choice does have political implications for the EU – looks like an attempt not to frighten the horses. Europe ultimately wants both routes to open, and with Nabucco apparently leading, it suits the EU’s policies to maintain an equal distance from both competitors for now. Not having a debate is just as political as having one, it seems.

Alex Jackson is an analyst of political, energy and security issues in the Caspian region. He is based in London and can be contacted at ajackson320@gmail.com.