It will be “impossible” to develop a viable energy partnership between the EU and Central Asia unless the Union is able to speak with one voice about the Nabucco pipeline and the way it wants to engage with the region’s energy suppliers, according to Luba Azarch of the German Council on Foreign Relations (DGAP).
The following is a reproduction of a contribution sent to EURACTIV by Luba Azarch of the German Council on Foreign Relations.
“Europe is the world’s largest importer of natural gas and crude oil. Therefore, it is laudable that Brussels constructively tackles energy security issues and strives to develop partnerships with leading energy producing countries. In the field of natural gas and crude oil exports, Central Asia has been playing an increasingly important role, alongside Russia, North Africa and the Middle East.
Central Asia contains huge gas reserves but is also regarded as one of the poorest, most authoritarian and corrupt regions in the world. This is why the EU’s Central Asia strategy tries to reconcile development policy goals with the pursuit of its own energy supply interests in the region. More specifically, the EU is trying to connect the Caspian region to the European energy market and to ensure that European companies are involved in the exploration of Central Asian gas reserves, while constructing a pipeline corridor between the Caspian Sea and the EU.
However, the challenges are significant, and they begin right on our doorstep. First and foremost, the EU fails to show unanimity with regard to the Nabucco project, which is estimated at a value of €7.9bn and envisioned to become the major transport route for Central Asian gas to Europe. France, Germany, Greece and Italy do not believe in its necessity and refuse to finance the project with public EU funds.
Moreover, there has been a continuing dispute between EU External Relations Commissioner Benita Ferrero-Waldner and the European Parliament on this issue. The Commission pragmatically recognizes that Ashgabat regards the conclusion of a commercial treaty as a prerequisite for deeper energy cooperation between Turkmenistan and the EU, while the members of the European Parliament are blocking this arrangement due to human rights concerns.
The situation is being aggravated because the European Union has failed to offer sufficient economic incentives to invest in the project. Clearly, European companies cannot afford to invest billions into the decayed production and transport infrastructure on their own. The overall EU budget for Central Asia’s energy sector, however, amounted to only €22m for the period 2007-2010. And it remains highly questionable whether European credit institutions are willing to provide funding for the region, given its political instability, which arises from the undefined status of the Caspian Sea, the ‘frozen’ conflict in Nagorny Karabakh, and the recent Russian-Georgian conflict.
Despite the lack of funding and incentives, Brussels keeps insisting that Central Asian governments should reform their political structures and that they should abide by Western environmental and technical standards – in other words the EU has tried to impose conditions that fail to meet the interests of local decision-makers. In fact, meaningful reforms of state institutions would entail a loss of power for the elites in the region.
Therefore, one should not expect Central Asian governments to tolerate such an intervention in the sovereignty of their states. They would not even implement such strategies if the EU offered substantial politico-economic concessions in return, simply because Central Asia does not depend on the EU as a market in the short or even medium term. In fact, the majority of currently-available gas resources have been contracted by Russia and China, both of which are advocating the principle of non-interference in the domestic affairs of other countries.
The primary interest of Central Asian states in cooperation with the European Union is of a strategic nature. The market entry of an additional competitor strengthens Central Asia’s position in negotiations with Russia and China and drives up energy prices. It is against this background that President Berdymuhamedow emphasises the significance of the EU as a strategic energy partner for Ashgabat – particularly during times of tension with Russia. At the same time, he avoids any moves that might lead to tangible progress in the talks on Nabucco or other trans-Caspian projects, such as participating in the EU energy summit in May 2009.
In summary, it should be noted that the EU and Central Asia face a considerable mismatch of interests: the Central Asian states are expecting billions of euros of investment as well as political neutrality, whereas the EU can barely offer financial aid which is accompanied by unwelcomed political conditions. Moreover, the EU has disqualified itself as trustworthy partner, since it is unable to speak with one voice concerning Nabucco or the way it wants to engage with Central Asian energy suppliers. It seems impossible that a viable partnership can develop based on such a framework.”