Turning the Russian tap
Daniel Korski 3:30pm
Russian gas, and the power it gives Moscow, has become one of the main issues in international politics. Last year, Moscow used its ability to control Ukraine’s gas supply to interfere in Kiev politics. As European leaders huffed and puffed over Russia’s invasion of Georgia, the threat of having gas supplies cut off to parts of Europe explained the EU’s failure to develop a common policy approach towards Moscow. And now, Russia is leading Iran and Qatar – the world's two biggest holders of natural gas after Russia – to form a "gas OPEC," an organization modeled after the oil cartel.
Showing what hold this “gas weapon” has over our imagination the last episode of the BBC series Spooks featured a Russian plot against Britain and a double-agent weighing up his loyalties by thinking through Britain’s dependence on gas.
But despite this fear of Russian gas-based power, matters are not as dire as they seem. Russia is the largest external gas supplier to the EU, but is far from a monopoly provider. Since 1980, Europe’s diversification of its gas supply has seen Russia’s share of EU gas imports roughly halve, from 80% to 40%. Today, Russian gas represents just 6.5% of the EU primary energy supply, a figure that has remained essentially unchanged over 20 years. And, as my colleagues Pierre Noel notes, "contrary to widely held belief, Russian gas exports to Europe are unlikely to increase significantly in the foreseeable future."
In a new report, Noel – one of Europe’s leading energy experts – says the problem is not dependence, but divisiveness. “Russian gas is divisive because Europe’s gas market is dysfunctional and segmented. Most of the EU’s imports of Russian gas go to a few countries in western Europe, where supply is diversified, while several member states in central and eastern Europe consume relatively little Russian gas but have no other external suppliers.”
How to solve this situation? You guessed it, by creating a single competitive European gas market that can ‘Europeanise’ the current large bilateral contracts between European importers and Gazprom, which so damage the EU’s negotiating position by allowing Moscow to divide and rule. Specifically, Noel says the EU should build on the 2004 directive on security of supply in natural gas, and help these member states devise and implement national action plans for gas security. He also proposes strengthening the powers of the new Agency for the Co-operation of Energy Regulators (ACER) so as to create a powerful regulatory coordinator with a mandate to deliver market integration.
Crucially, the paper warns the EU not to commit too many resources to its external energy policy, which can do little to solve Europe’s problem with Russian gas and serves as a distraction from internal reform.
As readers of Coffee House know, I think the Tories’ current EU scepticism will present serious problems for the party if it gets into government. But this is a policy area where the Tories’ EU policies -- and the free-market instincts we all share -- will stand them in good stead. Last year, Liam Fox wrote in The Times that “the EU has an important role to play” and the European Commission “must act to remove protectionism and national monopolies, creating a genuine free market in energy.” The government, meanwhile, seems torn between David Milliband’s belligerence and Peter Mandelson’s pro-Russian overtures.
Pierre Noel has provided the Tories - or any other political operators - with a fleshed-out Russian gas policy, which they should consider adopting as their own.
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Rhoda Klapp
November 7th, 2008 4:00pm Report this commentI think you'll need to provide some example of tory euro-scepticism if you want this audience to take you seriously. This business of over-dependence on gas supply may be over-rated. The supplier is as locked in as the customer, he becomes as dependent on the money as the client is on the gas. And that means two-way trade, which we all want, don't we?
Rhoda Klapp
November 7th, 2008 4:01pm Report this commentI think you'll need to provide some example of tory euro-scepticism if you want this audience to take you seriously. This business of over-dependence on gas supply may be over-rated. The supplier is as locked in as the customer, he becomes as dependent on the money as the client is on the gas. And that means two-way trade, which we all want, don't we?
David Parker
November 7th, 2008 7:56pm Report this commentDaniel Korski is either a clairvoyant, or is better informed about Cameron's EU 'policy' and 'euroscepticism' than most of us who have been trying, in vain, to discover the extent of these, ever since he became the Conservative party leader.
Whilst I agree that the grass roots membership is generally eurosceptic and increasingly becoming more so, it is by no means yet certain that a majority even of Conservatives would vote for "Out" rather than "Remaining In", were a referendum to be as simple and clear cut as that. Probably, with the eurosceptics of all parties, the result would be "Out", but not with a degree of certainty that would convince any current political leader to risk any sort of genuine unbiased referendum.
Consequently, Cameron (but not necessarily all of his opposition front bench) has adopted a psuedo eurosceptic, deliberately non committal attitude, just sufficient, he hopes, to mollify the mainstream grass roots activists.
This, of course, would immediately conflict with the concept of a single European gas policy, which might well be against the best interests of the UK, or (yet another) pan European supervisory/regulatory body, if Cameron's euroscepticism is in any way genuine.
Sue Denim
November 8th, 2008 11:42am Report this commentThere's no doubt that to the Euro crowd, a common euro-policy is the answer to every question. Brits may wonder whether the common fisheries policy or the CAP have been the best solutions we could find to problems we didn't even have before the EU came along.
Ted
November 8th, 2008 11:52am Report this commentDavid Parker, there is a difference betyween Eurosceptic and Europhobe. One is sceptical and needs proof that integration rather than voluntary co-operation is in long term interests of the UK, the other is convinced that the EU is the "EUSSR" and we are better off out. Cameron is clearly sceptical but not BBO.
Sue Denim
November 8th, 2008 2:34pm Report this commentTed, your definitions are not right. I'd rather the term anti than -phobe. Phobe is a loaded term, it implies irrational fear and hatred. The position of the better off out movement would be, it's fine for anybody who wants to be in it, but not the best thing for us. You can love Europe the place without wanting to be part of a giant anti-democratic bureaucracy, can't you?
David Parker
November 9th, 2008 2:30pm Report this commentTed, I take your point,but would disagree with the term "Europhobe" for the majority of those who would like to see the restoration of the supremacy of our own laws and Parliament, but would be perfectly happy to co-operate amicably with the EU under a new relationship with terms different to those of our current EU membership.
If scepticism is a matter of waiting for proof or evidence before committment to total integration then, as Sue Denim has pointed out above, what more proof does Cameron need that a one size fits all policy is not in Britain's best interests? If the CAP & CFP are not enough how about the European Waste Directive, or Emissions Trading Policy?
The option of re-negotiating Britain's terms of membership of the EU has never really existed and Cameron knows that, with the adoption of the Lisbon Con/Treaty by the majority of EU member states, complete integration will proceed at an ever increasing pace.
By Ted's very reasonable definition, the term "eurosceptic" is also now probably obsolete, since the option of waiting for proof before deciding at leisure no longer exists.
In many ways it would be better all round if we all stopped playing semantics and just classified ourselves as BOOS (Better off out) or BINS (Better off in).
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