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Romania: President Pushes Country's Role As Energy Conduit

Romanian President Traian Basescu (file photo) (AFP) Europe should be concerned at Russia's "unique monopoly" as a gas supplier, says Romania's president -- and Romania offers an ideal route for alternative pipelines.

WASHINGTON, July 29, 2006 (RFE/RL) -- Romanian President Traian Basescu wound up a three-day visit to Washington on July 28 at a forum where he presented his country as an ideal conduit to bring Caspian oil and gas to the West. The aim, he said, was to keep Europe from being beholden solely to Russia's state-owned energy monopoly, Gazprom.

Basescu reminded his audience, at a forum about Caspian oil sponsored by the Jamestown Foundation, a private Washington think tank, that Europe now imports much of its gas from Russia's state-owned monopoly Gazprom.

He urged "democratic countries" to find alternative sources of energy because of the "increased risk" posed by the "unique monopoly" enjoyed by Gazprom in Europe and as a means of "diminishing the political impact of using a single supply Europe."

Basescu described two pipeline proposals as alternatives to energy from Russia. One, measuring 1,300 kilometers, would move Caspian crude oil from Constanta, on Romania's Black Sea coast, to Trieste in northeastern Italy. He said this project is supported by both the United States and Europe.

The second, the details of which have yet to be worked out, would be a 2,800 kilometer pipeline, requiring an investment of about $4.8 billion. Basescu said Turkey, Bulgaria, Romania, Hungary, and Austria have already agreed to allow such a pipeline to run through their territory.

The U.S. 'Mantra' Is Diversity

Also appearing at the forum was Lana Ekimoff, the director of Russian and Eurasian affairs at the U.S. Department of Energy. She agreed with Basescu that European countries that were once part of the Soviet sphere of influence are the most vulnerable to unexpected interruptions of their energy supplies.

Ekimoff did not mention problems that Ukraine and Georgia faced last winter when their sources of gas were threatened or severed entirely. Rather than potential political differences between Russia and its energy customers, she emphasized future demand.

"Countries in Europe that were formerly part of the Soviet bloc are much more dependent on Russia than others. But the reality is that as demand grows, there is the potential for greater dependency," she said. "Russia provides about one-third of Europe's gas demand, and Europe's demand is expected to grow about more than 30 percent by 2020. Romania is fortunate, as [President Basescu] mentioned, in that it has some oil and gas resources. However, as its own demand grows and its resources are depleted, it will have to import more."

Ekimoff highlighted the broad investment in Caspian oil by private Western companies, particularly U.S. energy corporations. And she pointed to four areas where U.S. companies have invested in the region's energy -- one in Azerbaijan and three in Kazakhstan.

But the U.S. Energy Department official stressed that the U.S. government is not interested only in the natural resources of the Caspian, and that it opposes energy monopolies of all sorts.

"The U.S. mantra domestically and internationally is energy diversity both of suppliers and sources. Competition among sources is essential to energy security, and is a core part of our bilateral discussions."

"We are not just interested in their oil and gas contributions to global markets, but also share a common goal of building an energy sector in their countries that is diversified, cost-effective, and secure to support their growing economies," she said. "The U.S. mantra domestically and internationally is energy diversity both of suppliers and sources. Competition among sources is essential to energy security, and is a core part of our bilateral discussions."

While Basescu and Ekimoff spoke of alternatives to energy delivered by Russia and an avoidance of monopolies, perhaps the real point of the meeting was to make sure that Caspian energy delivered to the West circumvents Russia altogether. That is, at least, the view of Vladimir Socor, a senior fellow at the Jamestown Foundation, which sponsored the event.

In an interview with RFE/RL before the meeting, Socor said Russia's Western energy customers have to worry about more than just accidental interruptions of service.

"The key to the project [outlined by Basescu] is the concept of bypassing Russia," Socor said. "There can be no energy-supply security for the Euro-Atlantic community if an inordinate share of its supplies come from Russia or via Russia from third countries. This is why Georgia's location is of key interest to the Euro-Atlantic community and Georgia's independence and security as a nation state is a major interest of the United States and Western Europe."

Socor said the West's overdependence on Russia for so much of its gas would be, in his words, "fraught with enormous political risk."

(RFE/RL's Romania and Moldova Service contributed to this report.)

Russia's Gas Strategy

Russia's Gas Strategy

RUNNING HOT AND COLD The crisis over Russian supplies of natural gas to Ukraine that erupted on New Year's Day has implications that spread well beyond these two countries and will impact both economic and political policymaking throughout Europe. On January 19, RFE/RL's Washington, D.C., office hosted a briefing the examined the ramifications of the natural-gas conflict.

CLIFFORD GADDY, a senior fellow at the Brookings Institution, outlined Russia's "grand energy strategy," in which Ukraine is perceived as merely an obstacle frustrating Russia's energy ambitions in Western Europe and therefore a nonentity in Russia's broader strategic planning. According to Gaddy, Russia's strategic goal regarding energy is to maximize the role of its own energy resources in the world energy markets, so as to increase its geopolitical influence. To do this, it must reduce competition and maximize dependency on its own energy resources, as well as ensure a stable supply.

TARAS KUZIO, a visiting assistant professor at George Washington University, rebutted Gaddy's argument, claiming that Russia's actions evidenced a complete lack of geopolitical strategy and resulted in strong denunciations by Western countries and a loss of political allies in Ukraine. According to Kuzio, Russian President Vladimir Putin's desire to have a deal signed by the January 4 European Union energy summit outweighed his hope of reinforcing opposition to Ukrainian President Viktor Yushchenko during the run-up to Ukraine's March 26 parliamentary elections.

RFE/RL Coordinator of Corruption Studies ROMAN KUPCHINSKY did not fully agree with Kuzio's assessments of Yushchenko or Ukraine. He outlined three major problems that are feeding the conflict between Russia and Ukraine. The biggest, he argues, is that the state-controlled Russian gas giant Gazprom holds a monopoly on natural-gas sales outside the CIS. Kupchinsky also decried Ukraine's consumption of natural gas, terming it "out of control." Corruption is also a major factor in the conflict, Kupchinsky said, although the extent to which it taints the deal struck between Russia and Ukraine remains unknown.


Listen to the complete panel discussion (about 90 minutes):
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Moscow's New Energy Strategy

Moscow And Energy Leverage

Russia's New Imperialism

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