THE Russian invasion of Georgia – for it was nothing less – is about Europe's oil and gas. This explains why the European Commission and the French president, Nicolas Sarkozy, who is the current head of the Council of Ministers, were galvanised into
action to try and get the Russian army back to base.
The Russians always invade small European countries around this time of the year – Poland, Estonia, Latvia, Lithuania and Finland in 1939, Hungary in 1956 and Czechoslovakia in 1968. No wonder the leaders of Poland and the three Baltic states – all European Union members – rushed to Tbilisi last week to show solidarity with the Georgians, who were earlier invaded and annexed by Lenin in 1921.
The subtext of the Russian invasion is the so-called Nabucco pipeline. This is a project being promoted by the EC to run natural gas from Azerbaijan, through Georgia and Turkey, and thence into the EU, via a major natural gas hub in Austria. Nabucco would by-pass Russia, relieving Europe of its risky dependence on Russian gas. The EU gets around 40 per cent of its gas from Russia, but this will rise to well over half as energy demand intensifies. Unfortunately, Moscow is prone to turning off the gas tap if it does not get what it wants politically.
In July, just before the Georgian affair, Russian oil supplies to the Czech Republic were suddenly cut by 50 per cent. Moscow claimed "technical difficulties" with the pipeline, but Prague believes this was punishment for agreeing to host part of the American anti-ballistic missile system.
Fortunately, the Czechs have another oil pipeline connected to Germany so they could do without Russian supplies. But this only goes to show the need for the Nabucco project, which has received funding support from the EC under the Trans-Europe Energy Network programme.
On 2 July, barely a month before the Russian tanks rolled south, Mathias Ruete, the EC's director-general for energy, together with senior executives from OMV, the Austrian firm leading the construction consortium for Nabucco, made a public call for faster action on constructing the pipeline. Building Nabucco is supposed to begin in 2010 provided agreement can be secured with Turkey, which may use the deal as a bargaining chip in its own campaign to get EU membership. The cost is estimated at some £6.5 billion.
Understandably, Moscow is very keen to kill off the idea of Nabucco. So Russia is offering to build a new gas pipeline of its own to the EU. This is called South Stream and would run under the Black Sea to Bulgaria, and then into central Europe. But South Stream would be hugely more expensive than Nabucco – perhaps three times as much – which suggests it is politically motivated. It is significant that Vladimir Putin's last act as Russian president was to sign a deal on the South Stream pipeline with Bulgaria (an EU member) and Serbia.
How does the invasion of Georgia affect Nabucco? The pipeline will only be built if gas customers think the pipeline is safe from interruption. Clearly, Moscow is intent on signalling that Georgia can't protect the line. The Russians are also leaning on Turkey, which gets two-thirds of its gas from Russia, to block construction.
The odds seem to be lengthening against Nabucco. The rise in steel prices has already added 60 per cent to the cost, while environmental issues have delayed the start date by a year. And now the Russians have re-exerted political control over the oil-rich Caucuses. No wonder Mr Sarkozy was willing to give up his traditional French August holiday.
