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EU Can Unite on South Stream, If Not Sanctions

Published: July 25, 2014 (Issue # 1821)




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Strong suspicions of Russian involvement in the tragic shooting down of a Malaysia Airlines aircraft have led EU countries to consider new sanctions against Moscow.

Tough sanctions would involve targeting Russia's natural gas exports. But any new measures will fall short of this. Europe's dependence on Russian gas, and the pipeline projects that accompany it, handicaps the EU's response in the Ukraine crisis.

But if hard sanctions are not possible, the EU should at least make a choice in favor of energy independence from Russia. As a new European Commission forms in Brussels, EU leaders should appoint an energy commissioner with a strong backbone. The new commissioner should also be willing to confront one of the most effective Russian instruments for dividing Europe: the South Stream pipeline.

The EU has long known that it needs to improve its energy security, and events in Ukraine have placed it at the top of the European agenda. Russian gas accounts for nearly 30 percent of Europe's gas consumption, about half of which is transported through Ukraine.

Gazprom's recent decision to cut gas shipments to its neighbor and switch to a system of advance payments clearly put European gas supplies at risk, a danger President Vladimir Putin warned of in his April letter to European leaders. His message came after the EU decided to impose sanctions on a number of Russian individuals and companies, raising the possibility that Putin's warning was, in fact, an implicit threat that he can hurt Europe's economy as well.

The European Commission and some EU governments have therefore rightly concluded that European dependence on Russian gas leaves it exposed to political pressure from Moscow. So, on May 28, the European Commission published an energy security strategy. The strategy contains a set of measures to reduce Europe's overreliance on Russian gas and increase European "energy resilience" by liberalizing its gas market and diversifying its imports. But it is struggling to put this plan into practice.

The June 24 agreement between Austria's OMV and Gazprom to build part of the South Stream pipeline sent the wrong signal to Russia. Alongside a similar commitment from the Hungarian government in early July, it demonstrated that several EU countries valued their economic agendas over a united front on the Ukraine crisis. The ill-timed deal does not bode well for a coherent European approach to energy issues and foreign policy.

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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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