The European Union has an uncanny knack for shooting itself in the foot these days. Under strong pressure from a Russo-phobic Washington administration and various Russo-phobic EU governments, Brussels last year decided to take steps to block the bilateral agreements between Russia’s state Gazprom and EU countries such as Greece and Bulgaria to buy gas from a new Russian pipeline that was to have been called South Stream, the southern counterpart to the Gazprom-Germany North Stream line.
For the neoconservatives in the Obama State Department and Pentagon, that would have forged far too strong EU-Russia economic ties that would significantly weaken America’s ability to blackmail the EU. The EU Commission is brazenly violating all legal precepts by trying to enforce, retroactively, new laws that they claim Gazprom has violated. Further they forced the weak government of Bulgaria last year to back out of their Gazprom contract.
Washington’s Russo-phobes were gloating as they fantasized about getting a nuclear deal with Russia’s ally Iran that could woo Teheran to double-cross Moscow and sell Iranian gas from South Pars, the world’s largest gas field, via another pipeline through to Iran’s city of Bazargan at the border with Turkey where it would transit Turkey on to Greece and Italy.
Unlike the failed US Nabucco gas project which lacked gas, the Persian Pipeline, were Iran to be foolish enough to let Washington control it, would have gas, lots of it to weaken Russia’s hold on EU gas markets that were previously supplied via Gazprom via older Ukraine pipelines.
Putin calls EU bluff
As we noted at the time last December, Russian President Vladimir Putin caught the EU by surprise when he announced cancellation of the South Stream Gazprom EU project during a visit in Turkey with President Erdogan. There Putin proposed instead an alternative that would pipe Russia’s gas through Turkey to the door of EU member Greece. There different EU states could “take it or leave it.” The advantage for Gazprom and Russia is that they would not be responsible for construction of the needed EU pipelines.
When he announced the decision, he stated bluntly, “If Europe doesn’t want to realize this, then it means it won’t be realized. We will redirect the flow of our energy resources to other regions of the world. We couldn’t get necessary permissions from Bulgaria, so we cannot continue with the project. We can’t make all the investment just to be stopped at the Bulgarian border. Of course, this is the choice of our friends in Europe.” South Stream would have provided secure delivery to southern EU countries including Bulgaria, Hungary, Austria, Italy, Croatia and also Serbia. It would avoid the current transit pipelines running through Ukraine.
Now less than six months later Russia and Turkey have completed the landmark deal to begin deliveries of Gazprom Russian gas via a new “Turkish Stream” pipeline into and across Turkey through a pipeline now in construction. Gazprom CEO Alexei Miller announced on May 7 that, “An agreement has been made on the beginning of exploitation and deliveries of [Russian] gas along the Turkish Stream in December 2016.” The statement came following Miller’s meeting earlier in the day with Turkish Energy and Natural Resources Minister Taner Yıldız. The new pipeline will travel through Turkey to a gas hub on the Turkish-Greek border for further distribution to European customers.
A geopolitical cherry on top
And only minutes after the successful Russia-Turkish agreement, Putin, reported to be a master chess player, made a master geopolitical chess move into the European Union disaster that is called the Eurozone.
Greek news outlet, Capital.gr, reported that the very same day Miller’s Turkey Gazprom deal was finalized, Putin had an apparently very cordial phone chat with Greek Prime Minister, Alexis Tsipras. After the talk, Putin’s office released a statement that Putin had told Tsipras that Russia would be willing to extend money to Greece in return for Greek participation in the Turkish Stream project into the EU. The Kremlin statement said, “In that context, the Russian side confirmed its willingness to consider the issue of extending financing to state and private companies that will cooperate in the project.”
In Tsipras’ April 8 meeting with Putin Russia denied it had made a deal on energy; that all changed on May 7 after Turkey finalized Turkish Stream
After Tsipras’ talks with Putin in Moscow on April 8, the Kremlin spokesman, Dmitry Peskov, issued a denial of Der Spiegel reports that the two had come to an agreement in which Moscow would advance the cash-desperate Greek government with an immediate €5 billion cash advance from Russia based on expected future profits linked to the pipeline. The Greek energy minister said at the time that Athens would repay Moscow after 2019, when the pipeline is expected to start operating.
That was on April 8. Flash forward to May 7 and the finalization of the Russia-Turkish Stream deal, and it seems now that there is also a Russia-Greece deal to advance Athens the sizeable cash sum, just before Athens must come up with large sums to repay IMF and EU loans in order to get more senseless EU and ECB “support.” The difference was clearly the finalization of the Turkish Stream. Now EU bureaucrats in Brussels have new gas pains as Putin puts a Greek cherry atop Moscow’s Turkish geopolitical deal on gas.
If the Russia cash advance to Tsipras comes to pass, not only will Athens be able to dance a Sirtaki. This time it will be a dance in which the role of Zorba is played by a Russian, Vladimir Putin, not the Mexican, Anthony Quinn.
Wolfgang Schaüble, Angela Merkel, EU Commission President Jean-Claude Juncker all will have three options. They can decide to stand on the sidelines and clap to the sensuous rhythms of the new Sirtaki. They can join in the dance by refusing Washington blackmail on renewing EU economic sanctions against Russia. Or they can go on to boycott the dance and sink deeper into a new crisis of the Euro.
The ongoing panic selloff in German bond markets over recent days suggests it might be wise for the Berlin government to consider an entire new choreography for its European Grand Strategy. The old Atlantic NATO dance is rapidly becoming a Danse Macabre for Germany and for Europe. Putin’s Sirtaki would be far more fun for Europe and the world.
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.