Russian strategy leaves EU in the cold

Whatever passes for the current Russian establishment - be it the elite of the security services, Putin-faithful politicians or his close circle and loyal oligarchs - must have been popping champagne over the past week - and quite rightly too.

The two deals signed by Gazprom last Friday (25 January) - with the Serbian energy monopoly (NIS) and with OMV, the Austrian oil and gas company - assured the state-controlled Russian giant near perfect control over energy supplies to Europe. It also effectively restricted the EU’s room for manoeuvre in the Balkans, including on Kosovo.

Gazpromneft, Gazprom’s oil subsidiary, bought 51% of NIS for €400 million - which was a bargain price, given that the company was valued at close to €2 billion - alongside a number of guarantees on transit revenues and infrastructure developments. The deal effectively ensures Serbia’s energy needs for years to come and could make it the main energy hub for the Balkans and possibly a crucial transit route into western Europe.

The deal with OMV gives Gazprom a 50% stake in a strategic gas trading hub in Baumgarten, the third biggest in Europe, which already handles about a third of Russian gas exports to western Europe. The two companies said that they aimed to develop the hub into the largest trading platform in continental Europe.

These are two extremely beneficial developments for Russia and they come on the back of a crucial deal the Russians signed with Bulgaria the week before, under which the newest EU member state would become the gateway for Russian gas piped under the Black Sea to western Europe. Apart from enabling another route direct to Europe, so bypassing more problematic states such as Ukraine and Belarus, this deal brought the Russian vision of the pipeline network known as South Stream one stage closer to realisation.

As Gazprom has already secured the route known as Nord Stream - the controversial pipeline between Russia and Germany beneath the Baltic Sea, which bypasses Poland and the Baltic states - Russia has more or less encircled Europe. And it has done it through clear and penetrating strategic thinking, which only highlights the appalling inadequacies of its European counterparts.

For the past two years many voices in western Europe have been warning that Russia was using energy as a tool of foreign policy and that it was playing divide and rule between EU member states. Unfortunately, apart from provoking interesting academic debates, much European hand-wringing and the odd angry outburst from Putin, no one in the EU had taken the issue sufficiently seriously. The strategic thinking behind the Russian moves had been ignored.

Russia has always had an inclination to amass issues rather than deal with them one at a time. In the past few years this has been apparent in the way it put Kosovo, Iran, the Middle East, energy, missile defence, Polish meat and Georgia in the same basket. These issues do not have much in common, other than reflecting disputes between Russia and the West. Nonetheless, by throwing them out in confusion and profusion, Russia managed to keep the West dancing between the issues rather than focusing on its priorities - while at the same time going about its business of leveraging the immense rise in energy prices to buy its way into and around Europe.

Most significantly, Russia managed to keep the focus on its willingness to veto Kosovo’s independence in the United Nations Security Council, while in parallel negotiating its deals with Serbia, Bulgaria and Austria. As a result, regardless of whether Kosovo now declares independence, the Union has lost a huge amount of leverage to Belgrade. If Serbia does become the energy broker for the Balkans and an energy route to the West, will the EU be able to put it under significant pressure?

There are many more questions to be asked, not least concerning the willingness of Austria and Bulgaria - bolstered by the Italian energy giant ENI, Gazprom’s partner in South Stream - to team up with Russia in the face of EU interests. But the really relevant question is: why can the EU barely handle tactical developments, let alone strategy? Its citizens deserve better.

• Ilana Bet-El is an academic, author and policy adviser based in Brussels.

Whatever passes for the current Russian establishment - be it the elite of the security services, Putin-faithful politicians or his close circle and loyal oligarchs - must have been popping champagne over the past week - and quite rightly too.

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