GMF - The German Marshall Fund of the United States - Strengthening Transatlantic Cooperation

The EU-Commission's "Strategic Energy Report" contains many feasible suggestions for improving competition conditions within the European energy market, promoting environmental protection, as well as developing renewable energy. These objectives provide, without a doubt, indispensable elements of a common European energy policy considered essential in order to protect the survival of the human race on our planet.

The report falls short, however, by neglecting to address the significance of the EU concerning themselves with foreign and security-political issues for the sake of energy security. As the energy needs of India and China continue to explode and as Europe continues to rely upon resources from instable crisis regions, the importance of Europe securing its own energy needs becomes increasingly more important. The present dispute between Russia and Belarus over oil prices, transit duties, and custom tariffs further demonstrates the very fragile state of European energy security. We should not deceive ourselves: even if the EU achieves its ambitious goal of obtaining 20 percent of its energy needs from sun, wind and bio energy by 2020, the EU will not meet its original target of attaining 12 percent by 2010. Despite an increase in energy efficiency, the EU will continue to rely upon oil and gas to contribute to over 50 percent of its energy needs in the next 20 years. The EU currently acquires 82 percent of oil and 67 percent of gas from third world countries. Moreover, EU import dependence is projected to increase to 93 percent in oil and 84 percent in gas imports in the next 25 years. Russia is and will remain the largest energy supplier for the EU; their influence over the market will continue to grow.

How should the EU work together with Russia, Europe's key energy supplier, who does not respect and will not respect the rules of the planned free market? This is the actual EU energy challenge for the next 20 years, and is the question to be addressed by EU foreign and security policy, rather than by climate and environmental policy.

Government-owned Gazprom is the instrument used by the Kremlin to buy countries' energy dependency in order to conduct former great power politics on a global stage. Prices are arbitrarily staged and imposed, unannounced supply interruptions affecting third parties are accepted, and a reduction in production is used as a threat, as done recently by President Putin. The growing revenues are not invested in the improvement of old pipeline systems and the urgent development of new oil and gas fields, which furthers doubts of whether Gazprom will be able to fulfill its domestic as well as foreign supply obligations after 2010. Revenues are instead primarily used to acquire additional foreign pipeline systems.

The owner of these systems controls price and quantity delivered, and in the long run determines the purchaser's policies. The authority over the pipeline systems has become Russia's leverage for its international power politics. Russia has revived its old geo-political energy game - and the EU has responded by emphasizing biodiesel. The EU's reactions to Russia's actions are hardly detectable in its foreign and security policies. It is the statement highlighting the necessity of a distribution in energy import from various supplier countries that makes the acknowledgement recognizable.

The 27 EU members must agree on a coherent common foreign energy policy. This will allow the Union to combine its power and demand Russia to stop its trying to play off member states against each other. This will result in a greater European balance as well as minimize interruptions in energy supply to the EU and its neighbor states. Real competition in a privatized, liberalized, single European energy market is urgently required.

It is in the interest of the EU to follow the energy industry and high priority security supplies, which can not always be guaranteed by private companies. The private and local energy businesses must be included in an EU foreign energy policy through licenses and financial support. As long as Russia prevents western enterprises from investing in Gazprom's Russian transport system, licenses to sell parts of their system to Gazprom will not be granted. On the contrary, European companies must be politically and financially supported in order to buy in the Ukrainian, Central Asian, and North African pipeline systems. This combination of responses in European foreign policy is the answer to Putin's geopolitical misusage of Gazprom.