Europe's Energy Contest with Russia Begins

Europe's Energy Contest with Russia Begins

The energy game with Russia has just begun. For the EU, the only viable response to Russia’s recent play is to act as one team playing for the same collective goal—as difficult as that might be.

BERLIN, Germany.

The recent collapse of the Russian-Belarusian Economic Union threatens to shake up the political order in Belarus-presenting not only Russia with potential leverage, but also the European Union with opportunities. Since the EU and Russia have largely divergent interests in Belarus, the events there, and Russia's apparent ambitions, should serve to focus the minds of EU officials.

Belarus's President Alexander Lukashenko had been greatly dependent on his trade arrangement with Russia for his country's financial wellbeing and his own political survival. The increase of Russian oil-export tariffs and of Russian gas prices preventsBelarusfrom being able to continue to re-export,, at higher prices, Russian energy sources toEurope. Also, Russia's increase of trade tariffs on imports from Belarus of formerly tariff-free goods like sugar, milk products, furniture and television sets signals a new front in the Russian-Belarusian trade war. Given the low quality of those products,Belaruscan only sell them toRussia.

Indeed, the Belarusian economy has been so entirely dependent on the profits of selling cheaply imported Russian gas and oil for a multiplied price to Europe and the export of low-quality products to the Russian market, that Moscow's trade policy will increase the domestic pressure on Lukashenko-which is why the president has been tightening his grip over the Belarusian society. That current domestic pressure offers the European Union an ideal opportunity to ratchet up the pressure onBelarusto further modernize economically and democratize politically.

Also, Russia's recent actions vis-à-vis Belarus could provide the impetus in the European Union for establishing a vital, common energy foreign policy. The energy game with Russia has just begun. The only viable response for the European Union to Russia's recent play is to act as one team playing for the same collective goal-as difficult as that might be.

Moscow, it appears, is already planning for a post-LukashenkoBelarus-i.e., the rise of a president that more readily obeysRussia's political wishes. More to the point, Russia is seeking in Belarus and beyond to secure the transit security of its energy resources to Europe, according to Russia's own rules, by gaining majority ownership of all pipelines that run through neighboring transit countries. In Belarus, Moscow would like to see the transfer of the majority stake that now belongs to the Belarus pipeline operator, Beltrans, to the Russian state-owned pipeline carrier, Transneft.

Russia's sudden halt of its European oil exports toBelarustriggered a European wave of anger and uncertainty. The stoppage marked the second time thatEurope's energy supply was immediately affected by energy-tariff disputes betweenRussiaand neighbouring European transit countries, in the wake ofRussia's cut-off of supplies toUkrainelast year. Europe has so far failed to arrive at a political answer to the dispute. The only hint of a European response was Germany's demand for the "immediate and full re-opening" of the Druzhba pipeline through Belarus, which carries 30 percent of Russian oil exports to Europe and the European Union's call for an "urgent and detailed" explanation of the cut-off.

In a very stark manner the European Union has again become aware of how dependent it is on Russian energy supplies. While the interruption of Russian oil did not cause any immediate risk to European supplies-since oil is a fungible commodity and some member states like Germany store a 90- day supply-Russia's long-time, flawless reputation as a reliable supplier of energy has been hurt. And gas is not as easy to transport as oil, and it is therefore more difficult to cover a sudden gas shortage. So Europe remains bound by gas pipelines from Russia. At a time when the European Union's main goal is to liberalize and privatize the EU energy market, it finds itself unable to respond to its main energy supplier, Russia, which uses state-owned companies like Gazprom and Transneft to foster economic energy dependencies for political interests.

The EU member states desperately need to create an energy foreign policy that goes far beyond environmental objectives, such as the curbing of climate change and development of renewable energies. This European energy foreign policy requires the diversification of energy supplies from countries other than Russia, such as those in Central Asia and North Africa.

But perhaps more importantly, Europe must pursue a common European energy foreign policy. Until now,Russianegotiated energy deals with every EU member state and their energy companies separately. A common EU energy foreign policy would reduce the potential forRussiato play one EU member state off against another. In addition, such a policy would allow the EU to compensate for a shortage in one member state through the stored supplies from another EU member states. The EU should also integrate the Eastern European neighborhood into such a policy, instead of leaving that entire transit region open to Russian economic and political influence.

The creation of such an European energy foreign policy would require the enormous political will of the 27 EU member states-requiring them to put aside their immediate national interests in order to form a coherent and collective stance that would, ultimately, come to strengthen those interests.

A series of moves on the part of the Kremlin have unfolded inGermany's backyard, providing the political backdrop forBerlinto actively prepare a common energy foreign policy during its leadership of the EU presidency.

Jörg Himmelreich is a senior transatlantic fellow for the German Marshall Fund.