Energy Security Concerns in South Eastern Europe
Washington, DC – On Friday July 17, the German Marshall Fund’s Lugar Diplomacy Institute and the Southeast Europe Coalition co-hosted a briefing on Capitol Hill on ”Energy Security Concerns in South Eastern Europe”. The discussion was moderated by GMF transatlantic fellow Neil Brown and featured David Koranyi, deputy director of the Dinu Patriciu Eurasia Center at the Atlantic Council; Rauf Maamadov, director of the State Oil Company of Azerbaijan Republic (SOCAR) USA; and Margarita Assenova, director of programs at the Jamestown Foundation.
Mr. Brown opened the discussion with an overview of the European energy security context with a focus on Southeastern Europe, which is largely dependent on Russia for its energy supplies. He laid out possible avenues for Europe to bolster regional and EU-wide energy security, including the integration of European energy grids and markets, increasing energy efficiency, and diversifying energy supply sources. Mr. Brown stressed the importance of transatlantic cooperation, highlighting the mutual interest shared by allies in Europe and the U.S. in strengthening European energy security.
Ms. Assenova spoke in detail about Southeastern Europe and the challenges faced by the countries in the region. Southeastern European countries are highly dependent on Russian energy imports, with some receiving 100% of their natural gas supplies from Russia. In contrast, Western European countries import a smaller percentage of Russian gas. This means that Eastern European countries need to do relatively more than Western Europe, in terms of development to lower their dependence on Russian energy. This includes building long-term energy storage facilities, building pipelines and interconnectors between European states to diversify flow and finding alternative sources of natural gas. Additionally, the varying levels of dependency on Russia make creating a cohesive European energy policy difficult to attain.
The most viable alternative route for natural gas supplies to Europe is the planned Southern Gas Corridor, which is made up of three pipelines. The project will include the South Caucasus Pipeline, which is currently being enlarged, running from the Caspian Sea to Turkey. From Turkey, the Trans-Anatolian Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP) will transport Caspian natural gas to Austria. To undermine the Southern Gas Corridor, Russia has undertaken the South Stream Pipeline, which would bypass Azerbaijan and Turkey to terminate in Austria. However, the economic viability of South Stream is in question and, according to Ms. Assenova, the project unlikely to be completed.
Mr. Koranyi argued that government policies in the region tend to choose short-term interests instead of creating long-term solutions, pointing to the example of several Eastern European countries’ support for South Stream, which would further entrench their import dependency on Russia. This is partially due to Russian influence, fear of supply disruptions, dysfunctional legal systems, and widespread corruption. However, Mr. Koranyi struck a more optimistic note for the future of Southeastern European energy security. Regional initiatives that began after the 2006 and 2009 pipeline closures by Russia are continuing to expand. The crisis in Ukraine has motivated Western Europe to further integrate itself with its eastern neighbors. The EU and U.S. could assist by supporting reform of legal systems in South Eastern Europe through funding institutional capacity building and anti-corruption efforts. The West could also push for the reinforcing and expanding of the Energy Community Treaty to improve the investment climate, while also providing funding for critical energy infrastructure projects in the region.
Mr. Mammadov went into greater detail on the Southern Gas Corridor, its specifications and its potential importance to the European energy market. The Southern Gas Corridor is scheduled to begin transporting gas in 2018, and will initially provide 10 billion cubic meters (bcm) of gas to Europe. While this is a small amount compared to the average 500 bcm used by Europe annually, Mr. Mammadov argued that the key role of the pipeline will be the establishment of infrastructure and the expansion of competitive gas markets. The pipeline will have the capability to scale up for higher volumes of gas and include multiple sources including Israel, Turkmenistan, and Iraq.
With the ongoing crisis in Ukraine, countries in Southeastern Europe are feeling urgent pressure to modernize energy infrastructure and find reliable alternatives to Russian energy imports. All three speakers emphasized that while focusing on this critical regional issue, engagement by the U.S. will be invaluable in improving market conditions and putting political pressure on Russia. The panel offered that it is important for members of Congress to travel to the region and demonstrate American commitment to European energy security.