Europe must act fast on energy security – Analysis – Overview of Eurasia | Daily News Byte


Luke Coffey*

Russia’s campaign against Ukraine in February fundamentally changed the geopolitical landscape of the transatlantic community. The consequences of this conflict have yet to be fully felt and will likely take years, if not decades, to be fully understood.

For example, Russia’s campaign against Ukraine has reignited a debate in Europe about defense spending not seen in decades. Politicians who once said they were spending more on the military are now finally putting their money where their mouth is and investing in the armed forces. Billions of euros of new military investments have been invested. Billions more are dedicated to future projects.

The campaign against Ukraine was also a wake-up call for NATO. Its latest “Strategic Concept”, released earlier this year, states that “the Russian Federation is the most significant and direct threat to the security of allies and peace and stability in the Euro-Atlantic area.” Compare this wording with NATO’s previous version from 2010, which stated that the alliance remains “convinced that the security of NATO and Russia are intertwined and that a strong and constructive partnership based on mutual trust, transparency and predictability can best serve our security”. How times have changed.

After the invasion, NATO scrambled to strengthen its defenses in central and eastern Europe, along its border with Russia, while at the same time millions of Ukrainians fled the fighting to seek refuge across Europe.

The economic impact of this war was felt around the world with higher food and commodity prices. This has further exacerbated the already precarious economic situation due to the COVID-19 pandemic. For Ukraine itself, the economic situation was devastating. It is estimated that nearly half of its gross domestic product has been wiped out since the Russian invasion. The cost of Ukraine’s damaged infrastructure is estimated at more than $50 billion and counting.

However, there is one area where Europeans have acutely felt the effects of the Russian invasion. This is energy. The International Energy Agency recently announced that the world is facing a “global energy crisis of unprecedented depth and complexity” and that “there is no going back to the way things were”.

The pain was acutely felt in Europe. Frankly, Europe should have seen that. But decades of cheap Russian oil and gas fueled its economic development and growth. Europe’s dependence on cheap energy has created a situation of collective denial when it comes to the degree of dependence on Russia. For many policymakers across the continent, the loss of Russian energy from European markets seemed impossible to fathom.

This state of denial manifested itself in two ways. First, there was a burning desire to implement radical timelines for achieving “net-zero” carbon dioxide targets, with an unrealistic and disproportionate emphasis on renewable energy sources. Another was the EU’s commitment to Nord Stream II, a gas pipeline that would connect Russia directly to Germany across the Baltic Sea.

Russia preferred this method because it removed Ukraine from the transit route to European markets. Germany liked the pipeline because it would allow it to consolidate even more power over much of Europe. The vast majority of European countries, especially those in Eastern Europe, were concerned about Russian dominance of the continent’s energy market, but it was only after the invasion of Ukraine in February that Berlin finally woke up to the realization that supporting such a pipeline was unsustainable. .

It is not as if the warnings did not exist for Europe. Russia has had a long record of using energy stocks as a foreign policy tool. This included Russian cyber attacks targeting energy infrastructure, including in Germany, Georgia, Ukraine and the US. Even before the invasion of Ukraine, Europe was already facing high energy prices. Now they soared even higher. Natural gas prices in Europe are seven times higher than the recent average. Meanwhile, the price of electricity is 10 times higher than just a few years ago. Globally, crude oil prices are higher than they have been in several years.

There are some plans to reduce Europe’s dependence on Russian energy. The EU will implement an embargo on Russian oil at the end of 2022. There are plans to diversify away from Russian natural gas as well. Earlier this year, the EU signed an agreement with Azerbaijan to import more natural gas from the Caspian region. Italy and France are considering options to import more gas from North Africa. However, the process of diversification away from Russian natural gas moved at a snail’s pace.

Meanwhile, Europe continues to pay Russia billions of euros every week for natural gas. This reduces the total amount of EU military and humanitarian aid given to Ukraine, so that, ironically, the EU is actually funding the Kremlin’s war effort. Some countries like Hungary have even increased their imports of Russian energy since the invasion of Ukraine.

There are alternatives to Russian oil and gas if Brussels can find the political will — and money. For example, the Southern Gas Corridor connects gas fields in the Caspian Sea with Southern Europe and has the potential to supply European markets with 60 billion cubic meters of natural gas per year. At the moment, the Southern Gas Corridor supplies only 10 billion cubic meters per year. There is also talk of the final construction of the Trans-Caspian gas pipeline to bring natural gas from Central Asia to Europe, bypassing Russia. This pipeline would be connected to the Southern Gas Corridor.

The pipeline is the only economically viable way to transport natural gas across the Caspian Sea. This means that there is currently no profitable way to get gas from Central Asia to Europe without going through Russia or Iran. Europe should take the lead in making the proposed Trans-Caspian gas pipeline a reality.

Kazakhstan recently announced that it will begin using Azerbaijan’s Baku-Tbilisi-Ceyhan pipeline to begin transporting its crude oil to world markets next year, ending Russia’s two-decade monopoly on transporting Kazakh oil. This is a positive development that Europe should build on.

In addition, Europe’s energy security can be strengthened by the Three Seas Initiative. Launched in 2016 to facilitate the development of energy and infrastructure links between 12 Eastern, Central and Southern European countries, the initiative aims to strengthen trade, infrastructure, energy and political cooperation among countries bordering the Adriatic, Baltic and Black Seas. As a remnant of the Cold War, most infrastructure in the region runs from east to west, preventing greater interconnection. The development of interconnections and north-south pipelines would increase Europe’s energy security.

In the meantime, the Biden administration needs to remove the red tape that is preventing America’s energy sector from reaching its full potential. The more American oil and gas that can be exported to Europe, the better.

One cautionary note is worth making. As European policymakers become increasingly desperate to find alternatives to Russian energy, some are turning to Iran. The desperation for new sources of oil and gas explains the recent enthusiasm of some Europeans and the Biden administration to secure a new deal with Tehran over its nuclear program. Iran’s oil minister, Javad Ovji, said over the summer that the country was ready to help Europe with its energy crisis and that many Europeans naively believed it had something to offer.

But the hope that Iran can come to Europe’s aid is not in line with reality. Iran produces a lot of natural gas, but most of it is for domestic consumption. What little gas may be available to the EU lacks the necessary pipeline and other infrastructure for export to Europe. On the oil front, Iran is in a better position to help, but challenges remain.

Even if a new agreement between the international community and Iran is signed tomorrow, it could take months to dismantle the massive economic sanctions regime currently in place. During that time, no oil would be exported to Europe. On top of that, Iran lacks the proper infrastructure to export significant amounts of oil to Europe due to years of chronic underinvestment. So in the case of Iranian oil and gas, anything that could be exported to Europe would likely be too little too late for this winter.

Then there is the moral question of shifting energy reliance from Moscow to Tehran. Iran supplied armed drones to Russia for use in Ukraine. In recent weeks, dozens of these suicide drones have targeted civilian infrastructure targets across Ukraine. These attacks had a damaging effect on the power grid as Ukrainians headed into the cold winter months. Is it wise to buy energy from a country that enables Russia’s war?

When it comes to European energy security, there are many lessons to be learned. Due to the cautious steps taken by policymakers earlier this year, it looks like Europe will get through the coming winter without much trouble. However, next winter should be a concern. There is no doubt that the war in Ukraine will continue. But can European policymakers find new and sustainable sources of energy to see the continent well into the future?

If steps are taken now, Europe can move towards energy security for the first time in decades. Every barrel of oil and cubic meter of natural gas that Europeans get from somewhere other than Russia and Iran will make the continent safer. 2023 is the time for action.

  • Luke Coffey is a senior fellow at the Hudson Institute. Twitter: @LukeDCoffey


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