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THE SOUTHERN GAS CORRIDOR – WINDOW OF OPPORTUNITY OR CHALLENGE FOR THE

WEST?

NINO KALANDADZE

FORMER DEPUTY MINISTER OF FOREIGN AFFAIRS, GEORGIA

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The Southern Gas Corridor, starting from Azerbaijan, crossing Georgia, Turkey,

Greece and Albania, and shipping gas from Caspian Sea into the European Union, fully

bypasses Russia. Thus it seems a very appropriate and timely solution.

PREFACE The ongoing crisis in Ukraine has made the West, and especially the EU, rethink its strategy toward Mos- cow. Once again Western govern- ments are questioning Russia’s   reli- ability as a partner in international affairs. Energy security is high on the EU agenda. The current crisis seems unlikely to resolve itself for some time, and the Kremlin’s  threat- ening rhetoric is increasingly loud.

Against this background, there is a powerful understanding that a com- mon Western policy must be estab- lished in order to protect European energy security from future threats from Russia. Consequently, at a meeting in late March 2014, Europe- an leaders asked the European Com- mission to propose a comprehensive plan for strengthening EU energy independence. In that context, the Southern Gas Corridor (SGC) is be- ing posited as a possible solution.

The Southern Gas Corridor, start- ing from Azerbaijan, crossing Geor- gia, Turkey, Greece and Albania, and shipping gas from Caspian Sea into the European Union, fully bypasses

Russia. Thus it seems a very appro- priate and timely solution. However, there are also obstacles. Any at- tempt by the West to strengthen its political and economic presence in the post-Soviet world may be seen by Moscow as a direct threat to its 57

strategic interests, especially in the context   of   the   EU’s   energy diversifi- cation strategy. To avert any further Western engagement in what Russia conceives of as its sphere of Influ- ence, any kind of destabilisation in the already fragile South Caucasus region may become a useful tool in Moscow’s  hands,  ultimately jeopard- ising regional security and thereby the entire project . While acknowledging both the ur- gent need to diversify Europe’s   en- ergy supply, as well as the positive security and economic impact of the Southern Corridor on the EU and the countries of the southern region, this paper argues that the security issues in South Caucasus, such as the unresolved conflicts and Russia’s   ac- tive military presence in the region, cannot be ignored and should be ad- dressed at a strategic level. Thus re- storing stability to the region should

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become comprise a key part of the West’s  plan   for implementing its en- ergy security concept.

A. EUROPEAN ENERGY SECURITY I. INTRODUCTION

The ongoing crisis in Ukraine has made the West, and especially the EU, rethink its strategy toward Mos- cow. Once again Western govern- ments are questioning Russia’s   reli- ability as a partner in international affairs. Energy security is high on the EU agenda. The crisis is unlikely to be resolved any time soon, and Kremlin’s threats to cut off Ukraine’s  gas supply, unless it pays the price set by Moscow, are increasingly loud. History is repeating itself. Similar gas disputes have characterised the recent past, carried out by Moscow against its neighbours, including Georgia,1 Belarus,2 and Ukraine. In

58 the latter case, several Central and Western European countries were also left without gas supply.3 Today, again, talks on how to negotiate with Russia are topping the agendas in the   EU’s   national   parliaments. Risks to Europe’s   energy security are becoming more and more urgent, given that approximately 50% of

Russia’s  supply to the West is still de- livered through Ukraine, making up a significant proportion   of   EU’s   an- nual gas consumption. Against this background, Western policy makers are powerfully aware of the need for a common strategy to diversify Eu- rope’s   energy supply sources. Even if currently it seems unrealistic to sub- stitute the Russian supply in full, an effective alternative must be found at least to replace the volumes threat- ened by the prolongation of the Rus- sian – Ukrainian crisis. II. HISTORICAL BACKGROUND AND CHALLENGES OF DIVERSIFICATION Access to natural resources such as hydrocarbons has for decades rep- resented one of the major challenges for international security and stabil- ity. So far, there seems to be no clear- alternative to substitute fossil energy, excluding nuclear energy with the latter requiring huge financial invest- ment and bearing high political costs. Thus gas and oil remain the preferred energy sources for a major part of the world economy.4 According to a 2013 survey, EU member states are collec- tively the world’s largest energy im-

1. January 2006, two blasts shut down the main pipeline supplying Georgia with Russian gas, leaving the country without gas

during one of its coldest winters. The Georgian government classified the attacks as deliberate action against Georgia. The view that this was done deliberately by Russia is substantiated by the fact that explosions took place in the Russian- controlled North Ossetia, bordering Georgia’s then breakaway South Ossetia (fully occupied by Russian military forces), suspiciously coinciding with the scandalous discovery and public handover of Russian spies by the Georgian government. Finally, the attacks were preceded by gas disputes Russia against Moldova and Ukraine, providing further credence to this assumption. (For further discussion see Victor Yasman, Russia: “Is Georgian Gas Crisis Evidence of Moscow’s New Energy Strategy? Radio Free Liberty, January 2006.

2. Russia vs. Belarus gas disputes stretched out over a decade, emerging in 2004 alongside other Russia-Belarus disputes

that were to follow almost every year, including gas cut-offs and disputes. Largely, it was understood as a politically motivated move on behalf of Russia, as Gazprom hoped to gain control over Beltransgaz and of its 6,000 km of pipelines, and thereby of the gas transit route delivering gas to Europe. (For further discussion see Chloe Bruce, fraternal Friction or Fraternal fiction: The Gas Factor in Russian-Belarusian Relations, The Oxford Institute for Energy Studies, March 2005.

3. David Gow, “Russia-Ukraine Gas Crises intensifies as all European Supplies are cut off”, theguardian.com, Jan 2009. http://

www.theguardian.com/business/2009/jan/07/gas-ukraine

4. International Energy Outlook 2013, US Energy Information Administration, http://www.eia.gov/forecasts/ieo/nat_gas.cfm, see also “Recent trends in the Global Energy Oil & Gas Economy”, IISS – Oberoi Lecture, IISS, 14 August 2014, http://www. iiss.org/en/events/events/archive/2013-5126/august-1e98/recent-trends-in-global-energy-1218

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porter, importing about 55% of their energy supply-approximately 84% of their oil and 64% of their natural gas. Fifteen EU member states are increasingly reliant on natural gas, in order to reduce carbon dioxide and greenhouse gas emissions.5 As the European demand for gas is un- likely to decrease,6 a huge bulk of Eu- ropean energy imports are expected to come from the three major gas suppliers of Europe, namely Norway, Algeria, and Russia.7 Approximately 30% of the EU’s net gas consumption is provided by Russia.8 In 2012, Rus- sia accounted for 34% of European natural gas imports, surpassed by Norway as the lead supplier. Algeria is the third-largest supplier to the EU.9 However, even though there are

other suppliers, it seems that Europe will still remain extremely vulner- able to Russian control over gas sup- plies. As stated by The Economist, while 10 billion cubic metres (bcm) could come from Norway, the scope for further production inside the EU would remain limited. For instance, in the Netherlands public opinion would demand the country to pump

59 less gas, not more. Britain’s gas fields

- due to depletion - would further of- fer no better option. Moreover, North Africa has “proved an unreliable supplier, beset by terrorist threats and other unrest.”   Italy’s   imports from Libya are also described as a weak option; supplies were down by 11.9% in 2013. Supplies from Algeria were down by a full 40%.10

5. The European Commission forecasts that EU will import over 80% of its natural gas needs by

2030. Europe’s Energy Security: Options and Challenges to Natural Gas Diversification, CRS, August 2013, P. 5,

6. International Energy Outlook 2013, US Energy Information Administration, http://www.eia.

gov/forecasts/ieo/nat_gas.cfm, see also “Recent trends in the Global Energy Oil & Gas Economy”, IISS – Oberoi Lecture, IISS, 14 August 2014, http://www.iiss.org/en/events/events/ archive/2013-5126/august-1e98/recent-trends-in-global-energy-1218

7. Europe’s Energy Security: Options and Challenges to Natural Gas Diversification, CRS, August

2013, P. 5, http://fas.org/sgp/crs/row/R42405.pdf

8. Clingendael International Energy Programme, Factsheet, p.1, 2, http://www.clingendaelenergy. com/files.cfm?event=files.download&ui=9C1DEEC1-5254-00CF-FD03186604989704

9. Europe’s Energy Security: Options and Challenges to Natural Gas Diversification, CRS, August

2013, P. 5, http://fas.org/sgp/crs/row/R42405.pdf

10. “Conscious uncoupling”, European energy security, The Economist, Apr 5th 2014, see also http://www.eia.gov/forecasts/ieo/nat_gas.cfm

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This picture makes Russia by far the most important gas supplier for the EU. In addition, as it is ex- tremely complicated and expensive to transport hydrocarbons via sea routes, the European gas reserves

60 are highly dependent on the respec- tive pipeline infrastructure for the delivery of Russian gas. Moscow’s  gas supply to the EU is distributed exclusively through the pipelines of Russia’s   state-owned Gazprom en- ergy company.11

This rationale gives rise to condi- tions whereby the race to preserve national security through energy se- curity and individual development can easily become a politicised issue

- both for the EU and Russia, further shaping their political relations. The aforementioned gas disputes sup- port this notion.

As noted above, Russia’s   gas deliv- ery to European markets makes up

about 30% of the EU’s current gas consumption. It reached 541 bcm in 2013, 161 bcm of which was supplied by Gazprom. About half of the Russian gas imported in 2013 (approximately 80 bcm) crossed Ukraine. Even though the EU has drawn an important lesson from the Russia - Ukraine gas dispute in 2009, i.e. reducing its dependence on Ukraine as a transit country for gas, the most important entry point for Russian gas into the EU remains the “Brotherhood”   pipeline, located on the Ukrainian Slovak border (transit of 52.5 bcm in 2013).12 This makes it even more urgent to address the need for diversified, alternative sup- ply routes.

Notably, the EU realised the neces- sity of diversifying gas supplies long before these crises ever took place. Calling upon member states to over- come   the   EU’s   dangerous depend- ence on Russian energy resources,

11. Buckley – Buck, “Duma votes for Russian Gas Export Monopoly, FT, June 2016, http://www.

ft.com/intl/cms/s/0/f042c74a-fd59-11da-9b2d-0000779e2340.html#axzz35pyWwoZy, Gazprom even controls pipelines leading out of Central Asia and herewith their access to European markets, see Isabel Gorst, “Caspian Boost for US policy”, FT, Dec 2013, http://www. ft.com/intl/cms/s/0/e4f52b20-8ad6-11db-8940-0000779e2340.html#axzz35pyWwoZy

12. Clingendael International Energy Programme, Factsheet, p.1, 2, http://www.clingendaelenergy.

com/files.cfm?event=files.download&ui=9C1DEEC1-5254-00CF-FD03186604989704,

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the European Commission and the individual states proposed the de- velopment of a collective interna- tional energy policy more than two decades ago. As early as in 1991, the EU adopted the Energy Charter Dec- laration, which identified the need for the EU energy supply diversifi- cation and called for a common vi- sion.13 In response to the gas crises, the EU tabled the March 2006 Green Paper on energy security.14 The pa- per recognised the danger of the EU’s sole dependence on Russia, and set out policy recommendations to launch new partnerships with en- ergy producers in Caspian, Middle Eastern, and North African regions.

However, as the negotiations with Russia proceeded, it became clear that the Charter was becoming a “paper   tiger,”   while Russia had em- braced the “divide and rule” strategy, and had gone ahead with striking bi- lateral energy deals with individual EU member states to undermine the common vision for European energy security. As a result, major EU states such as France, Germany, Italy, al- though well positioned to promote

diversification of energy supply, have instead sought separate bilat- eral agreements with Russia, un- dermining the common EU policies. The national energy companies of IN RESPONSE TO THE GAS CRISES, THE EU TABLED THE MARCH 2006 GREEN PAPER ON ENERGY SECURITY.

these states, namely, Germany’s EON Ruhrgas, Italy’s     ENI     and     France’s  EDF have all signed bilateral deals with Gazprom on future energy sup- plies.15 Later on, Budapest and Sofia joined the list of Russia’s   gas con- sumers, as Hungary’s   MOL,   the   oil  and gas company, joined efforts with Gazprom to expand the Blue Stream pipeline project into Hungary pass- ing through the Black Sea and the Balkans.16 In 2008 and 2009, Bulgar- ia and Slovenia respectively formal- ised an arrangement with Gazprom, thereby joining the planned South 61

Stream project.17

Thus it seems that the European states have thus far failed to imple- ment the common European Energy

13. http://www.encharter.org/fileadmin/user_upload/document/EN.pdf

14. European Commission Green Paper: A European Strategy for Sustainable, Competitive

and Secure Energy, 2006 http://europa.eu/documents/comm/green_papers/pdf/ com2006_105_en.pdf

15. In July 2006 Gazprom and E.ON AG signed a framework Agreement for asset exchange in

natural gas production, sales and trade and power industry. In August 2006, Gazprom Export and E.ON Ruhrgas AG extended existing contracts and signed contract on gas supply through NEGP. http://www.gazprom.com/press/news/2006/august/article63576/. At the same time Gazprom and Eni signed a Strategic Partnership Agreement. Under the deal, Gazprom was to start supplying up to 3 billion cubic meters of gas per year directly to Italian market and was allowed to acquire Eni’s stakes abroad. http://www.gazpromexport.ru/en/partners/italy/. In November 27, 2009 Gazprom and Electricite de France (EDF) signed a Memorandum of Understanding on EDF partially joining construction of the South Stream gas pipeline envisioning to secure Gazprom’s stance on European markets, http://press.edf.com/press- releases/all-press-releases/2009/gazprom-and-edf-sign-memorandum-45454.html. For further discussion see also, Vladimir Socor, Gazprom broadens, deepens inroads into European Union’s internal markets, transport Systems, Eurasia Daily Monitor Volume: 3 Issue: 55, March 21, 2006, The Jamestown Foundation; http://www.jamestown.org/single/?tx_ttnews[tt_ news]=31499&no_cache=1#.U6wH56hK6F4.

16. Vladimir Socor, “Hungary signs South Stream Project Agreement”, World Security Network,

Feb. 2010 http://www.worldsecuritynetwork.com/Energy-Security/Socor-Vladimir/ Hungary-Signs-South-Stream-Project-Agreement

17. http://www.south-stream.info/en/pipeline/history/

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Security policy. However with the recent Ukrainian crisis there seems to be light at the end of the tun- nel. Indeed, at their meeting in late March 2014, European leaders de- cided to undertake concrete steps toward reducing Europe’s   depend- ency on gas and asked the European Commission to propose   a   “compre- hensive plan”  to  enhance  EU’s  grow- ing energy independence, naming the   Southern  Gas  Corridor   as   a   “key element”      in      seeking      energy sup- ply alternatives.18 Given the current limited export options along with dominance of Russian pipelines and the dependency on Russian Pipeline infrastructure one of Europe’s   best  options for its energy diversifica- tion may indeed be the Southern Gas Corridor.

B. THE SOUTHERN GAS CORRIDOR - A WINDOW OF OPPORTUNITY

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The Southern Corridor is an initia- tive of the European Commission to supply Europe with gas from Caspi- an and Middle Eastern regions. The initiative was proposed in the Euro- pean Commission’s Communication “Second     Strategic Energy Review, namely an “EU Energy Security and Solidarity Action Plan.”19 The South- ern Gas Corridor plans to transport gas from Azerbaijan’s   Shah Deniz

Field Phase II, across Azerbaijan, Georgia, Turkey, Greece, and Albania into the EU, terminating in Italy.20

The Corridor should consist of three major pipelines: the existing South Caucasus Pipeline (SCP), a pipeline of almost 700 km running from Baku across Azerbaijan and Geor- gia to the Turkish border.21 The sec- ond pipeline would be the planned Trans Anatolian Natural Gas Pipe- line (TANAP), an approximately 2000 km pipeline across Turkey, and to the third planned pipeline, the 870 km line Trans Adriatic Pipeline (TAP) to run across Greece, Albania and along the seabed of the Adri- atic Sea into southern Italy. TANAP should carry 16 bcm annually from the SCP, leave 6 bcm in Turkey and carry 10 bcm into EU territory.22

Clearly, neither the volume nor the geographic scale can position this Corridor as Europe’s   major   alterna- tive route, or a full substitution for the Russian supply. After all, the 10 bcm the SGC will carry to Europe represents   just   2%   of   the   EU’s   gas consumption, as illustrated above. As noted by Eurogas President Jean- Francois Cirelli, the current volumes of Russia’s   gas supplies to Europe cannot be entirely substituted by other sources such as the SGC.23

However, the strategic importance of the SGC lies not necessarily in its

18. European Commission, Newsletter, Energy in Europe, Editorial, March 2014, http://ec.europa.

eu/energy/newsletter/20140331-newsletter.htm

19. EU Energy Security and Solidarity Action Plan, Second Strategic Energy Review, Commission of The European Communities, Brussels 2008, COM 2008, 781 final, P. 4, http://eurlex.europa.eu/ LexUriServ/LexUriServ.do?uri=COM:2008:0781:FIN:EN:PDF

20. http://www.bp.com/en_az/caspian/operationsprojects/Shahdeniz/SDstage2.html

21. http://www.bp.com/en_az/caspian/operationsprojects/pipelines/SCP.html

22. BP Press Release, Dec 2013, http://www.bp.com/en/global/corporate/press/press-releases/

shah-deniz-final-investment-decision-paves-way.html, Vladimir Socor, “SCP, TANAP, TAP: Segments of the Southern Gas Corridor to Europe”, in Eurasia Daily Monitor V. 11 Issue: 8, The Jamestown Foundation, January 15, 2014, http://www.jamestown.org/regions/thecaucasus/ single/?tx_ttnews[pointer]=1&tx_ttnews[tt_news]=41821&tx_ttnews[backPid]=641&cHash= b1ec61bb21352f0b198410befb470539#.U6Q326hK6F4

23. Rianovosti, 14.05.2014, http://en.ria.ru/world/20140514/189824573/Europe-Plans-No-

Extension-to-Southern-Gas-Corridor.html

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capacity to fully substitute Russia’s  gas supply, but rather in diversify- ing supply sources and routes. As explained by the Eurogas President, the corridor is not an alternative, but    “it    is    important    for Europe to try many different sources of gas.”24

Opening up a fourth major gas cor- ridor is less about substitution, and more about establishing competi- tiveness. It is about creating a valid infrastructure that has the capacity both to deliver natural gas to Europe, circumventing Gazprom’s   involve- ment, with the potential for future expansion, if necessary. As sources indicate, there may be more natural gas available in Azerbaijan as it plans further exploration of Shah Deniz fields.25 Moreover, there are other, oil and gas rich countries in the re- gion, such as Kazakhstan, Uzbeki- stan, most importantly Turkmeni- stan, that may potentially be looking

THE STRATEGIC IMPORTANCE OF THE SGC LIES NOT NECESSARILY IN ITS CAPACITY TO FULLY SUBSTITUTE RUSSIA’S GAS SUPPLY, BUT RATHER IN DIVERSIFYING SUPPLY SOURCES AND ROUTES.

for diversified export markets, and consequently turning West.26 Turk- menistan holds the largest natural gas reserves in Central Asia, of ap- 63

proximately 265 trillion cubic feet,27

and with its involvement the SGC could ultimately meet European demand in its entirety. Finally, as described   in   the   EU’s   Energy Secu- rity and Solidarity Action Plan, the Southern Corridor has the potential to incorporate natural gas from Iraq. Should the political conditions expe- rience a shift though, even Iranian gas could be connected up. Iran, no- tably, has the world’s   second   largest gas reserves.28

24. Rianovosti, 14.05.2014, http://en.ria.ru/world/20140514/189824573/Europe-Plans-No-

Extension-to-Southern-Gas-Corridor.html

25. http://www.bp.com/en/global/corporate/press/press-releases/shah-deniz-final-investment- decision-paves-way.html

26. Europe’s Energy Security: Options and Challenges to Natural Gas Diversification, CRS, August

2013, P. 5, http://fas.org/sgp/crs/row/R42405.pdf

27. Energy Information Administration, Country Analysis in Brief, Turkmenistan, last updated January 2012, http://www.eia.gov/countries/analysisbriefs/cabs/Turkmenistan/pdf.pdf

28. EU Energy Security and Solidarity Action Plan, Second Strategic Energy Review, Commission

of The European Communities, Brussels 2008, COM 2008, 781 final, P. 4, http://eur-lex.europa. eu/LexUriServ/LexUriServ.do?uri=COM:2008:0781:FIN:EN:PDF, http://www.eia.gov/countries/ country-data.cfm?fips=ir

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There are benefits for supplier and transit countries as well, most no- tably for the South Caucasian non- EU, non-NATO member states such as Azerbaijan and Georgia. These post-Soviet states were dependent on Russian pipelines throughout the Soviet Union both for exporting and importing gas for domestic con- sumption. This significantly under- mining their political and economic autonomy, and provided Moscow with additional leverage. This situ- ation underwent a major shift with the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which delivers Azerbaijani oil through Georgia to Turkey.29 In addition, since 2006, Georgia’s   do- mestic needs have been met almost exclusively by gas from Azerbaijan, with no further reliance upon Rus- sian supply.30 The Southern Gas Corridor will further contribute to the region’s   political   and   economic  independence. Azerbaijan, as the

64 supplier, will reach European mar- kets, while Georgia and Turkey will benefit from “Russia-free” supplies as well as substantial revenues as transit countries. Moreover, since good infrastructure and unimpeded delivery will be of major importance to all parties involved, the construc- tion of a new corridor will inevitably require even closer cooperation be- tween the Georgia, Azerbaijan and Turkey on the one hand and the EU on the other. This can only strength- en regional political and economic ties, boosting further engagement by western Allies in the region, strengthening their economic and political independence from Mos- cow.

This represents great opportunities for European energy security, as well as the for long term economic security and stability of the region. However, there are also risks. The Caucasus region is currently host to several political, economic and ethnic instabilities. Most impor- tantly the so-called frozen conflicts, military occupation and substantial uncontrolled armed presence of a foreign country make the region particularly vulnerable and suscep- tible to further destabilisation. Any kind of escalation has significant potential to jeopardise regional sta- bility and the entire energy security concept. C. THE SOUTH CAUCASUS AND ITS SECURITY CHALLENGES The Caucasus enjoys a strategic lo- cation at the crossroads between Europe and Asia, between the Cas- pian and Black Seas. Consequently, it attracts interest from different parts of the world, most notably from big players such as the US, EU, Turkey and Russia. The latter has by far the most significant impact on the post- Soviet countries. As outlined above, the region’s   specific   importance   is  increasing with Europe’s   growing awareness of the importance of se- curing reliable, stable and diversi- fied delivery of hydrocarbons on the one   hand,   and   the   Caucasus’   crucial  role as a source and transit route in this process on the other. Russia, however, perceives any further po- litical engagement by the West in its   “near   abroad”   zone,31 together with the attempts to locate alterna-

29. http://www.bp.com/en_az/caspian/operationsprojects/pipelines/BTC.html

30. MFA Georgia, http://www.mfa.gov.ge/index.php?lang_id=ENG&sec_id=748

31. A term that first emerged in Russian to describe Russia’s relations with the other former

republics of the Soviet Union underlining Russia’s superiority and the existence of a an unequal relationship. See also http://www.pearsonhighered.com/assets/hip/us/hip_us_ pearsonhighered/samplechapter/0205189938.pdf

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tive energy sources, as a threat to its strategic interests. The Kremlin’s  desire to maintain its political influ- ence over the post-Soviet countries may well be rooted in sentiment, though it would be naïve though to believe that Moscow’s   economic  interests are not the major motiva- tion. The Eurasian Union initiative, President Putin’s  major  current pro- ject, which envisions a trade bloc between the post-Soviet countries, only strengthens this notion.32 In this context, economic and political engagement by Western players in the post-Soviet space means further alienation from Russia and more political and economic independ- ence for those countries. Alternative energy routes not only pose a threat to Russia’s economic interests as major supplier of the Union, but also create conditions for intensified en- gagement by Western countries in South Caucasus, a part of the world that Putin believes to be the sphere

of Russian influence.33 Moreover, it also underpins relations with Tur- key34 – another ambitious regional power with good relations with Georgia and Azerbaijan. More pre- cisely, even though the Southern Gas Corridor does not jeopardise Rus- sia’s position as the main supplier in Central and Southeast Europe in its initial stages, given its long-term capabilities and its potential impact on regional orientation toward the West, the Kremlin’s   actual percep- tion may be very different.35 The fact that Moscow is not ignoring such “threats” became more than obvious in August 2008, where Russia took military action, to many, against NATO’s    enlargement and Georgia’s  European and Euro Atlantic Integra- tion.36 As the most recent example of Moscow flexing its political and mil- itary muscle against the European integration of Russia’s neighbouring countries is seen in the Ukrainian 65

crisis and the subsequent annexa-

32. See also Andrey Gurkov, “Eurasian Union: Putin’s Answer to the EU”, May 2014, http://www.

dw.de/eurasian-union-putins-answer-to-the-eu/a-17669138

33. Andrew E. Kramer, “Russia claims its Sphere of Influence”, NYT, August 2008, http://www. nytimes.com/2008/09/01/world/europe/01russia.html?_r=0

34. Tracy C. German, “Corridor of Power: The Caucasus and Energy Security, Caucasian Review of

International Affairs, Spring 2008, Vol.2 (2), p.70

35. German describes: “some Russian observers (citing Zhil’tsov et al) have described the issue of pipelines in the Caspian region as a “battle for domination”, particularly the US, which is seeking to accelerate economic isolation of former Soviet republics from Russia…the battle between Russia on the one hand and Turkey, Azerbaijan and the US on the other, over the transport of oil from the Caspian region is not just about securing transit revenues, it is predominately about securing geopolitical influence in the region” further stating that the analysis would highlight “the suspicion with which Moscow regards growing western influence in the Caucasus and Caspian region. Tracy C. German, “Corridor of Power: The Caucasus and Energy Security, Caucasian Review of International Affairs, Spring 2008, Vol.2 (2), p.70

36. George Friedman describes NATO’s enlargement concept by the US and EU as a move that

Moscow understands as their strategy to “encircle and break Russia”, especially while trying to include in this concept Georgia and Ukraine, further arguing that Russia’s invasion in Georgia in 2008 was nothing but an attempt to “reestablish the Russian sphere of Influence in the Former Soviet Union region”, implying that Moscow’s goal was to keep the west out of its own “Sphere of Influence”, George Friedman, “The Russo – Georgian War and the Balance of Power, STRATFOR, August 2012, http://www.stratfor.com/weekly/russo_georgian_ war_and_balance_power#axzz35lmn7LGM. This Notion is further strengthened by the statement of the then Russian President, Dimitry Medvedev that by invading Georgia Russia had halted NATO’s eastward expansion (http://en.ria.ru/russia/20111121/168901195.html). Peter Beaumont, “Russia makes latest high-risk move to keep pieces of its “near abroad” in check, The Observer, March 2014, http://www.theguardian.com/world/2014/mar/02/ russia-moves-keep-near-abroad-soviet-states-in-check

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tion of Crimea by Moscow, following Kiev’s  moves to sign an Association Agreement with the EU.37

THERE IS A NEED FOR A CLEAR AND EFFECTIVE WESTERN POLICY, PARTICULARLY ON CONFLICT RESOLUTION.

There are plenty of areas of vulner- abilities in the Caucasus region that may become useful tools in Mos- cow’s hands. By far the most danger- ous, though, are the armed conflicts. Azerbaijan and Armenia have unre- solved Nagorno-Karabakh conflict. Even if it seems somewhat stable for the moment, the 2008 Russo- Georgia war clearly demonstrated how rapidly a “frozen conflict” can turn into a hot war. Georgia’s Abkha- zia and Samachablo (South Ossetia/ Tskhinvali Region) are still under Russian occupation. There is a Rus- sian military base in Gumri in Arme-

66 nia, controlled by Moscow. In addi- tion, Russian military forces actively control Georgia’s   two occupied ter- ritories. This scenario seriously en- dangers the security and stability of the entire region. Should, e.g., the situation in Karabakh escalate for some reason, there is a significant possibility that Moscow, backing its

strategic ally may connect its illegal military base in Georgia’s   Samacha- blo with its Gumri base in Armenia, further threatening Georgia’s   ter- ritorial integrity. The lack of any ef- fective international peacekeeping or observer mission raises further concerns in this respect.38

As described by Sipos-Kecskemethy, once aware of the multiple options for transporting trans-Caspian hy- drocarbons to Europe via the South Caucasus, the Black Sea and Ukraine, the EU changed its “homogeneous”  attitude to the former Soviet region, drawing upon its soft-power capac- ity by including some of those coun- tries in its European Neighbour- hood Policy39 as well as the Eastern European Partnership initiative. In case of Georgia and Ukraine, the EU went further and signed Association Agreements.40 NATO has also, gradu- ally, become an important player in the region. After engaging in several cooperative rapprochement mecha- nisms, it even made a pledge at the 2008 Bucharest Summit, promising Georgia and Ukraine NATO member- ship at some future date.41

Nevertheless there is a clear deficit of a concrete and comprehensive long-term strategy in relation to

37. Moscow put immense economic and political pressure on Ukraine’s previous Administration

to dissuade it from signing the Association Agreement with the EU, ultimately leading to then President Yanukovych’s refusal to sign the deal with the EU during the EaP summit in Vilnius, triggering mass demonstrations in Kiev. See also “Ukraine #1 – Agreements, Protests and Sanctions: A Chronology of Events, Untold Europe, March 2014, http:// www.untoldeurope.eu/ukraine-1-protests-agreements-sanctions-chronology-events/, Peter Beaumont, “Russia makes latest high-risk move to keep pieces of its “near abroad”  in check, The Observer, March 2014, http://www.theguardian.com/world/2014/mar/02/ russia-moves-keep-near-abroad-soviet-states-in-check

38. The European Monitoring Mission (EUMM) was established by the EU following the 2008 war

and has been operating on Georgia’s territory since then. However the monitors are effectively, though illegally, denied access to the occupied territories by the de facto authorities of breakaway Abkhazia and South Ossetia. Thus they have been unable thus far to fully carry out their mandate, which includes monitoring of Georgia’s entire territory, see also http://www. eumm.eu/en/about_eumm

39. Sipos-Kecskemethy, “Energy security and the Caucasus Region”, Aarms, vol. 8, N. 3, 2009,

p.408

40. Lawrence Peter, BBC News, June 27, 2014, http://www.bbc.com/news/world-europe-28038725

41. http://www.nato.int/cps/en/natolive/official_texts_8443.htm

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regional security, which, for obvi- ous reasons, cannot be resolved by the countries affected on their own Along with political and economic engagement by Western countries, there is a need for a clear and effec- tive Western policy, particularly on conflict resolution. This approach needs to be understood by the West- ern allies as a strategic challenge and an intermediary means of securing their own long term energy secu- rity. In that sense, even if there are no immediate and effective means to promptly resolve conflicts in South Caucasus, the fragility stem- ming from unresolved conflicts and its direct causal link to securing the regional and European energy se- curity cannot be ignored. It must be addressed in a more specific man- ner. In that sense, as a short to me- dium term approach, NATO’s   could  accelerate Georgia’s       membership  (as Azerbaijan is not seeking any integration into the Alliance at this stage). In the long run however, in order for the SGC to be successfully launched and implemented, conflict resolution in South Caucasus should become an indispensible compo- nent of the   EU’s   broader energy se- curity package.

CONCLUSION

The EU’s decision to intensify talks on energy supply diversification and the Southern Gas Corridor is a more than welcome initiative. With the potential to deliver 10 bcm to South Europe, and bypassing Rus- sia, the SGC provides an excellent opportunity for Europe to diversify its supply and reduce Gazprom’s  virtual monopoly in the short to medium term. With the possibility of expanding the pipeline to include other Central Asian and potentially Iranian sources, Europe’s   long term energy security could also benefit. There is also an undeniable political and economic benefit to the supply

and transit countries, such as Azer- baijan, Georgia and Turkey. How- ever, since the whole scenario may be seen by Russia as a direct threat to its strategic economic and politi- cal interests, the security deficit in South Caucasus, in particular the unresolved conflicts, may become a major threat to this project. There- fore, effective measures need to be taken by the EU and NATO in order to guarantee the successful imple- mentation of the project, in order to secure its diversified energy supply. While short-term steps need to be taken to observe the security situ- ation in the region via establishing effective international observer mis- sions, conflict resolution needs to become a central component of the EU’s   broader energy security strat- egy, in order to safeguard the poten- tial of the entire concept.

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