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Russia Sees Underhanded Sanctions in Bulgaria's Suspension of South Stream

Published: June 10, 2014 (Issue # 1814)



  • An engineer welding a section of the South Stream pipeline in Bulgaria.
    Photo: Gazprom

Bulgaria's decision to suspend construction of the Russia-led South Stream pipeline project on its territory, undermining Russia's efforts to diversify its gas transportation infrastructure to Europe away from Ukraine, is an underhanded economic sanction thrust on Russia by the West, a top Russian diplomat and Russian industry analysts said Monday.

Vladimir Chizhov, Russia's envoy to the European Union, slammed the move against the $45 billion pipeline project, which followed a visit by three U.S. senators to Bulgaria late last week, as "economic sanctions by stealth," and highlighted efforts by top European officials to link the continuation of work on the project with Russia's position on Ukraine.

"South Stream is directly related to Ukraine, because once it is completed, Ukraine will loose its status as monopoly transit country [for the Russian gas going to European consumers]," Chizhov said, Itar-Tass reported.

South Stream, which is designed to deliver 63 billion cubic meters of gas per year and from Russia's Krasnodar region across the bottom of the Black Sea to Bulgaria, Serbia and Hungary before entering Austria, has the potential to shift the balance of energy power in Eastern Europe away from Ukraine by depriving the country of its leverage as the main transit country for Russia's gas.

Last week, energy-hungry EU member state Bulgaria seemed determined to withstand pressure from Brussels and Washington, with the country's Energy Minister Dragomir Stoynev defending it as a priority infrastructure project.

But following a visit by U.S. senators John McCain, Christopher Murphy and Ron Johnson on Sunday, Bulgarian Prime Minister Plamen Oresharski said the country would halt construction work on the pipeline, in which Russia's state gas exporter Gazprom holds a 50-percent stake.

McCain, who is known for his staunch criticism of President Vladimir Putin, was quoted by The Associated Press as saying after the meeting that "obviously we want as little Russian involvement as possible."

Bulgarian authorities soon tried to row back on Sunday's announcement, with the Energy Minister Dragomir Stoynev saying on Monday that the project cannot be cancelled and that it will be completed sooner or later. Serbia — the next leg of the pipeline — said it will still suspend the project until the construction of Bulgaria's section is sorted out.

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ALL ABOUT TOWN

Sunday, Nov. 23


Get in the holiday spirit at today’s Winter Bazzar at the Astoria Hotel. Featuring gifts from around the world such as French eclairs, Dutch cheeses and Indian jewelry, the annual event organized by the International Women’s Club will feature 18 international stands and raise money for charity through the sales of a diversity of products that further illustrate the city’s international connections.



Monday, Nov. 24


Dr. Axel Schulte, Department Head at Fraunhofer Institute for Material Flow and Logistics in Dortmund, Germany, is the featured speaker at the SPIBA Industrial Committee lecture on “The Fourth Industrial Revolution: Digitalization of the Supply Chain.” The event begins at 4 p.m. at the Graduate School of Management at 3 Volkohvsky Pereulok and registration is required by Nov. 21 either by emailing office@spiba.ru or calling 325 9091.



Tuesday, Nov. 25


Tag along with AmCham during their “Industrial St. Petersburg” Tour program today. This incarnation of the ongoing series will visit Philip Morris Izhora and include an Environmental Health and Safety Committee meeting.


Find out how to expand your business east during the “Business With China” forum beginning today and concluding tomorrow at the Lenexpo convention center. The largest Russian forum dedicated to business with the Asian giant, topics that will be discussed include logistics, customs clearance, trade financing and many more.



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