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Germany Says 'No' To Nabucco Funding

Merkel: No to Nabucco

Merkel: No to Nabucco

Among the issues European leaders meeting in Brussels plan to discuss at their two-day summit is an initiative by the European Commission to spend 5 billion euros for investments in European infrastructure.

The commission wants to use a large part of the money -- 3.89 billion euros ($5.33 billion) -- for energy projects, among them the expansion of the EU's internal energy network.

Originally, it was expected that the Nabucco pipeline project would get part of that money. Nabucco is meant to bring gas from the Caspian Sea to Southeast and Central Europe, bypassing Russia.

However, it appears the EU funding deal is now off the table -- at Berlin's insistence.

The lack of interconnection between national networks has been identified as one of the major reasons for the EU's vulnerability to delivery shortages. The commission is convinced that a unified energy market with strong interconnections would make the EU safer against outside pressure.

That way, if an individual country were subject to a reduction or cutoff in energy supplies, other EU members could more easily make up the shortfall in an emergency.

The package has been under negotiation for several weeks. And it has led to controversy.

On one side is the commission, the current Czech presidency, and some other Central European member states. On the other is Germany.

Berlin is opposed to the inclusion of the Nabucco pipeline project in the funding package.

Initially, the commission had planned to support Nabucco with some 250 million euros, in order to kick-start the project.

But on March 1, speaking after an EU summit, German Chancellor Angela Merkel came out against the proposal, saying that there was no need for EU financial support for Nabucco.

Merkel said she thought there was enough private money available. Merkel also said Germany would only support projects that had a stimulating effect on the economy in 2009 and 2010. This was interpreted as an argument against Nabucco, as the pipeline's construction is supposed to start only in 2011.

On March 16, at the EU foreign ministers' meeting, the proposed EU funding for Nabucco -- downgraded to 200 million euros -- remained on the agenda.

But no consensus was reached. As Czech Deputy Prime Minister Alexandr Vondra explained, there was "a strong group of countries" that wanted to keep Nabucco funding on the list. But they did not prevail.

The Czech presidency still hopes that the EU leader's summit can find agreement on the package. Vondra warned that failure to do so could damage the EU's credibility.

But speaking to the German parliament today, Merkel again indicated Berlin's answer was "no."

And so it appears the chances of getting agreement on EU funding for the new pipeline are slim indeed.

-- Ulrich Speck

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