The EU looks carefully at the Caucasus and its energy potential

by Lili Di Puppo

The energy crisis, which has been named the "energy war" by some commentators, and which has seen a confrontation between Moscow and Tbilisi, and later Kiev, in last January, has shown to what extent Russia is determined to make use of its energy supplies as leverage and a foreign policy tool.
Energy security has thus gained a prominent place on the EU agenda and is likely to determine the EU's relations with candidate and partner countries in the coming years. As part of the search for greater energy-related independence, the EU, with Germany leading the way, is coming closer to the Caucasus.

While the EU appears willing to reduce its dependency on Russian gas by diversifying its energy sources, Berlin is openly steering its foreign and energy policy in the same direction. The chancellor Angela Merkel has publicly expressed her intention to refocus German foreign policy away from Russia to its other Eastern neighbours, whilst maintaining the strategic relationship with Moscow.
In March, German newspaper Die Welt reported that Angela Merkel would outline in a speech before the Parliament on 11 May the priorities of the new European policy during the German presidency in the first half of 2007 and that the Chancellor would express her desire to see Brussels develop a new Eastern policy with energy as a core issue and the Caucasus as a regional priority.

Recent declarations by EU officials have pointed in the direction of a strengthened EU involvement in the Caucasus. After his nomination as the new EU's Special Representative for the South Caucasus, Swedish diplomat Peter Semneby declared that conflict resolution represents a high priority for the EU in the region and his mandate has been refocused on conflict resolution issues.
In last April, Hans Winkler, State Secretary in the Austrian Foreign Ministry and who conducted a European delegation on a recent visit to the Caucasus, underlined the increased interest of the EU in the region, linked to the necessity of diversifying energy supplies.

The stabilisation of the Caucasus region, which depends on an intensification of the EU's support for conflict resolution, is crucial in the light of the energy issue. The European Neighbourhood Policy (ENP), launched in 2004 with the three South-Caucasus countries, might evolve from a rather passive reaction to security threats such as terrorism and cross-border crime, with the objective of ensuring stability at EU borders through a "ring of friends", to what could become a more pro-active European energy policy in the region.
Indeed, energy-rich countries such as Algeria and Azerbaijan as well as energy transit countries such as Georgia and Ukraine are included in the ENP. In the light of these developments, Turkey's accession to the EU might even take on an all-new meaning, if Ankara knows how to play the energy card.

However, the question remains open whether the EU can afford to play a clear strategic game in a region that Russia still views as its zone of influence. The United States have, for their part, redefined their relationship with Moscow and made clear in their new security doctrine that the necessity of the common fight against terrorism can no longer conceal the two powers' diverging interests in the Caucasus-Central Asia region.
On the other side, the EU hopes to reconcile its need for energy diversification with the continuation of a strategic and supposedly mutually beneficial relationship with Russia.

However, the wariness of European states has recently been felt as they face up to the intention of the Russian state controlled energy giant, Gazprom, to extend its monopoly on European markets. Western states have already put restrictions on Gazprom's progress on the European energy market. A move which has certainly deeply displeased the Kremlin.
In what can be described as an "enlargement to the west", the Kremlin appears to try to attract key political players in Western Europe in the sphere of influence of its most efficient foreignpolicy tool, its energy arm Gazprom. The most prominent example of this strategy, and certainly not an isolated case, is the former German Chancellor Gerhard Schroeder, a close friend of Russian President Vladimir Putin, and since 30 March, the chairman of the supervisory board of the Russian-German North European Gas pipeline consortium (NEGP), which is responsible for building a pipeline under the Baltic Sea.

The company, in which Gazprom is the main shareholder (owning 51 % of the shares), is responsible for the construction of the EUR 4 bn gas pipeline linking Russia to Germany, a project that Schroeder actively promoted during his term in office.
The Russian newspaper Kommersant, reported last March that Gerhard Schroeder had offered the Kremlin to set up a lobby firm to improve Russia's image in the West. Schroeder denied this report, arguing that his intention was not to create a PR firm but a German-Russian think-tank.

Despite the threat of an increasingly unstable and unpredictable energy partnership looming on the horizon, the EU wants at all costs to avoid a direct confrontation with Russia. It remains to be seen whether the EU will manage to strengthen its presence in the Caucasus and Central Asia, while minimising possible sources of disagreements with Russia.
Another question mark: will the Russians be sympathetic to these initiatives? Nothing could be more uncertain.