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Putin's pianoforte gas diplomacy

Edward Lucas made the interesting point on BBC Radio Four’s Start the Week this morning, that almost unnoticed amid the weekend’s press coverage of Russia’s disputes with the British Council and Royal Academy, President Putin went to Bulgaria to sign a gas pipeline deal that closes a circle as elegantly, in its way, as Matisse’s La Danse.

Hugh Barnes
21 January 2008

Edward Lucas made the interesting point on BBC Radio Four’s Start the Week this morning, that almost unnoticed amid the weekend’s press coverage of Russia’s disputes with the British Council and Royal Academy, President Putin went to Bulgaria to sign a gas pipeline deal that closes a circle as elegantly, in its way, as Matisse’s La Danse.

The South Stream, a joint venture between Russia’s Gazprom and Eni of Italy will carry 30 billion cubic metres of gas a year under the Black Sea, making Bulgaria a gateway for Russian gas delivery to southeast Europe, just as its counterpart the Nord Stream project under the Baltic Sea from Russia to Germany will bypass troublesome Ukraine in the opposite direction.

Inevitably,Putin was accompanied on his Balkan jaunt by the Russian Tweedledum of energy politics, his anointed successor, Dmitry Medvedev, who currently trebles up as first deputy prime minister, president-in-waiting and chairman of Gazprom, thestate-controlled gas monopoly which is already the world’s seventh biggestcorporation in terms of market capitalisation, and may soon overtake ExxonMobil or PetroChina as the world’s most valuable company.

The Moscow Times has a funny story today about those unlikely lounge lizards, Putin and Medvedev, finalising the deal at a midnight meeting in a Sofia piano bar frequented by Bulgarian premier Georgi Parvanov.

Januaryis traditionally the month that western European countries shudder at the prospect of their growing dependency on Russian gas. Forecasts for 2020 show that the EU's dependence on natural gas will grow from its present 40% to 70-80%, and Russian gas exports to the EU in the same period will increase from 26% at the moment to 40-50%. And not only does Russia hold the world’s largest natural gas reserves. Its oil reserves may equal those of Iraq. As world energy demand grows, particularly because of China’s explosive rise as an economic force, Russia’s wealth and potential power are certain to grow as well.

Two years ago, a gas dispute with Ukraine illustrated the danger of Russia’s emergence as a global energy power. Nor was the South Stream deal the only contract Putin signed in Sofia. He also finalised an agreement to set up a company to build a pipeline from the Black Sea port of Burgas in Bulgaria to Greece’s Alexandroupolis on the Aegean. A third contract signed in the piano bar will see Atomstroyexport, Russia’s nuclear power export arm, build two reactors at Belene on the Danube to replace four Chernobyl-era units that were shut down as a condition of Bulgaria’s EU accession last year.

So Putin’smission to Bulgaria, which is expected to be his final foreign trip as president, neatly showcased three of the fundamentals of the Putin boom: the“vertical of power“, the emergence of a new Kremlin-based oligarchy, and fuel diplomacy which Russia is beginning to use as a lever for its newly resurgent foreign policy.

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