Russia and the EU ‘trade’ natural gas supplies and commercial concessions in and out of Ukraine

From left to right: Herman Van Rompuy, President of the European Council, Petro Poroshenko, President of Ukraine, José Manuel Barroso, President of the European Commission. (Council of the European Union photographic library).

Despite the willingness of the West (EU and US) to gradually cut off Russia from the western and central European economic volume, the gas pipelines are always there, supplying the rest of Europe with Russian combustible materials and reminding everybody that the Old Continent is still dependent on Russian fossil fuels. The ‘Euro-Mediterranean Platform on Gas’ discussed in Malta on 11 July and said to cover a large part of EU’s needs in natural gas from eastern Mediterranean sources, must have attested the very long-term character of this project, leaving in the between the EU heavily reliant on Russian gas.

Possibly this is the reason that the EU accepted to work over Moscow’s grievances about the possible economic consequences of the EU-Ukraine АА/DCFTA (Association Agreement including a Deep and Comprehensive Free Trade Area) on Russia. To this effect a trilateral meeting of Commissioner Karel de Gucht, Russia’s Minister of Economic Development A. Ulukayev and Ukraine’s Foreign Minister P. Klimkin was held in Brussels also on Friday 11 July.

EU agrees to make it up to Russia

According to the Brussels sources this consultation took place following an agreement between Presidents Barroso, Poroshenko and Putin. This is the first time that such an agreement is made public. Seemingly the European Union could not resist the Russian pressures, to discuss and possibly repair Moscow’s losses in the aftermath of Kiev’s decision to finally sail towards the West and abandon the Moscow led Eurasian Union. This last project was conceived by Putin intended to create an economic volume around Russia, as counterbalance to the EU and earn a stronger global position to Moscow. However it collapsed when Kiev decided to sign an Association Agreement with the EU. Let’s take one thing at a time.

A meeting in Valletta

Last Friday the European Commission issued a Press release on a meeting which took place in the Maltese capital Valletta. According to it Günther H. Oettinger, Vice-President of the European Commission responsible for energy, and Konrad Mizzi, Minister for Energy and Health of the Government of Malta distributed a joint statement, on a conference to discuss Europe’s natural gas needs and the new-found sources in the East Mediterranean region to cover them.

The joint statement read like this: “Today, Energy Ministers from the EU, North Africa and the East Mediterranean, high officials, industry representatives and key stakeholders in the energy sector met in Malta to exchange views on how gas-related developments in the Mediterranean region can enhance security of supply in Europe, North Africa and the Middle East. This discussion takes place at a critical time when the wider geopolitical events could have implications on energy security. In reaction to this, and in line with the European Council conclusions of March 2014, the European Union is putting further impetus on its supply diversification objectives. North African and Eastern Mediterranean countries are also looking to develop their economies and meet increasing domestic energy demand”.

Looking for natural gas in the sea

Obviously EU’s objective is to urge the interested East Mediterranean countries (Israel, Cyprus, Turkey and others) to speed up their efforts and solve the political and technical problems around the production and transport to Europe of the newly found natural gas deposits, lying deep below the bottom of the sea. To achieve all that, a lot of political and technical problems have to be resolved. A task, which may require many years to accomplish.

It’s not yet clear how the Israeli natural gas from the ‘Leviathan’ deposit is to be transported to Europe? Via Turkey or via Cyprus and Turkey or through pipelines or what? The same is true for the Cypriot natural gas found in the ‘Aphrodite’ source, also below the bottom of the sea. Evidently the difficulties to resolve the huge technical and political problems haunting this project will deprive Europe from any noticeable quantities of natural gas being delivered to her in the next years, leaving the EU on the Russian hook.

Concession against gas supplies

Despite the very long-term character of the project ‘East Mediterranean natural gas for the EU’, Brussels actually ‘advertise’ this vision as a tangible prospect, in order to gain if nothing else, at least a theoretical argument against the Russians. Unfortunately in dealing with Moscow such tricks don’t count. The Russians obviously were unimpressed by the Oettinger threats to replace EU’s natural gas purchases from Russia with supplies from East Mediterranean. Moscow must have asked for something tangible in return for the unobstructed continuation of natural gas sales to the EU and Ukraine. Understandably Putin wanted concrete concessions from the EU, in return of Moscow’s losses in Ukraine. These concessions could be the repairs requested by Russia to cover her losses after Kiev’s decision to sign the Association Agreement with the EU.

To this effect the EU, Russia and Ukraine on 11 July agreed on this text: “The liberalisation of trade under the EU-Ukraine AA/DCFTA will modify the trade and investment conditions in the Ukrainian market…In order to deal with any such potential risks (to Russia), and to create favorable conditions for the trade and economic relations, the participants agree to launch a consultation mechanism… with primary focus on technical regulations, standards, customs administration, conformity assessment procedures and sanitary and phytosanitary measures, etc. arising from the implementation of the AA/DCFTA. Russia will circulate a list of precise concerns/potential risks by 20 July 2014.Based on this list, bilateral consultations will be conducted at expert level in order to exchange views and search for possible solutions to such concerns/risks…The experts will try to find solutions for as many concerns/risks as possible and will identify those issues which need to be discussed at higher level. As part of this work the experts will also clarify the urgency of the particular issues, taking into account, inter alia, the timelines foreseen in the AA/DCFTA”.

There is no doubt that in this way Putin exchanges the Russian losses in Ukraine with commercial concessions from the EU. In reality the Russians appear ready to ‘trade’ the aspirations of the Russian speaking populations in the eastern Ukrainian regions against concessions from the EU. It’s a pity to watch unfolding this inhumane horse trading in international relations, where decision makers trade human lives and aspirations for commercial gains. At the same time Kiev’s tanks and fighter planes bombard residential areas in Donetsk and the West keeps quiet. As for Russia, Putin seems ready to trade the killings with commercial concessions.