European Energy Security – Lessons from Bulgaria
Russia’s military conquest and economic manipulation in Ukraine has breathed new life into the smoldering transatlantic energy security conversation, marking the most critical chapter in an ongoing saga of price discrimination to European countries punctuated by occasional supply disruptions. Figuring out how to reduce dependency on Russian natural gas supplies naturally takes center stage in the discussion, but the task of enhancing security, affordability, and sustainability of energy involves much more than just supply. Bulgaria’s difficult situation demonstrates the complexity of addressing European energy security and the need to understand what is happening on the national and domestic levels.
Bulgaria is a member of the EU and NATO situated on the Black Sea’s eastern shores, dependent on Russian imports for 90 percent of its gas supplies, and pays 40 percent more for Russian gas than domestic gas, according to a new study by the Center for the Study of Democracy. In a recent briefing at the U.S. Chamber of Commerce, former Bulgarian Prime Minister Boyko Borisov laid out the suite of governance and market deficiencies in Bulgaria and the EU as well as Gazprom’s strategy to control the fates of pipelines to Europe. He is bullish on prospects for Bulgarian offshore and unconventional shale gas development and wants to see a path forward that includes expanded domestic production along with U.S. liquid natural gas (LNG) exports to Europe and better EU-wide energy policy. Such a path could help the nascent development of more liquid and competitive gas markets, cutting out intermediaries, enabling better leverage to negotiate contracts with Gazprom, and eventually lowering prices for those countries that routinely pay up to four times as much for Russian gas as countries with sweetheart deals.
Yet in the absence of an integrated EU energy policy and internal energy market (fundamental goals of the European Project), the complex web of competing interests among and within member states will hamper progress toward a cohesive European energy security strategy. Bulgaria, for example, finds itself in an odd situation. While its energy security and competitiveness interests clearly demand diversity of supply and better integration with its EU neighbors, domestic political machinations and pressure from Russia have led Bulgaria to subscribe to Gazprom’s South Stream project, which seeks to scuttle the EU’s effort to diversify supplies via the Southern Corridor. For now, the (non)strategy is for Bulgaria to punt, hoping that final decisions will be taken at the EU-Russia level. In order to move toward cohesive European energy policy, there is a need to understand what is going on in the members states and how it can be helped.
The persistent fragmentation of energy policy and markets in the EU works against the long-term interests of European consumers, industry, and security, and allows Gazprom to continue dominating a third of Europe’s gas supplies. In a new report for GMF, Jesper Packert Pedersen of Rasmussen Public Affairs makes a strong case for the necessity of a cohesive EU internal market for energy, pointing to the success of the Nordic countries as a model. Without serious attention from policymakers in Europe, the halting progress toward cohesive EU-wide energy policy is likely to sputter. The proposed Transatlantic Trade and Investment Partnership (TTIP) could also help support European energy policy cohesion through setting norms for international trade in energy and raw materials that will set the standards for future negotiations.
Andrew Fishbein is senior program officer for congressional affairs at the German Marshall Fund of the United States in Washington, D.C.
The views expressed in GMF publications and commentary are the views of the author alone.