The Maidan Revolution in Ukraine and the Russian annexation of Crimea have changed the geopolitical game in Europe. In many ways, the political conflict stemming from the demonstrations, pitting those favoring close ties with Russia against those interested in further integration into the European Union, represents a symbolic battle between the West and Russia for political influence in the nation. Embedded in this shifting geopolitical landscape are the energy politics that lie at the intersection of European and Russian interests. Europe is largely dependent on Russian gas, but since conflict in Ukraine intensified in 2014, the European Union has not only sought to become less dependent on Russian gas but has also blocked further advancement of Russian gas into the European market. This strategy has led to the cancellation of the South Stream pipeline that had been planned to transport natural gas from Russia to Italy and Austria through the Balkans.
The United States, the European Union, Japan, Australia, and other Western allies have imposed economic sanctions since the Ukraine crisis erupted in 2014. Russia has responded accordingly with its own sanctions, including a total ban on imported food from the European Union. Such reciprocal actions have caused a deterioration in trade, harming both the European and Russian economies. It has been estimated that sanctions against Russia have cost the European Union around 100 billion euros. There is considerable internal opposition to these actions, particularly on behalf of businesses that are directly dependent on Russian trade and countries traditionally close to Russia such as Bulgaria, Greece, and Hungary. On the other hand, the sanctions imposed on Russia have certainly taken a toll on the country, plunging its economy into crisis. The ruble has lost significant value, and with it domestic confidence in the Russian economy. Growth has been choked, jobs have been lost, and prices have become inflated. In this context, it seems as if Russia has clearly taken the bigger hit, outweighing any costs that Europe has suffered due to the sanctions.
In addition to trade dependency in other sectors, Europe relies highly on imports of Russian oil and natural gas. With a market share of 33 percent of total oil imports and 39 percent of total gas imports (and as high as 100 percent in the Baltic countries), Russia is the largest exporter of both fuels to the EU. The current volatility of EU-Russia relations has only deepened fears that Russia might cut its supply to pressure the European Union. These fears are not unfounded.in the past. Last year, in an attempt to gain greater gas independence in the aftermath of the Crimean Crisis, the Ukrainian gas company Naftogaz signed a pipeline contract with the Slovakian Eustream. Citing unpaid debt, Russia responded by cutting off gas supplies to Ukraine while maintaining its supply to the European Union. Because of the fear that Russia might similarly use its resources to wield political influence in the European Union, there has been a concerted push to ease dependency on Russian natural gas.
One example of the European Union’s aggressive efforts is the Nabucco gas pipeline, planned to transfer natural gas from Turkey through Bulgaria, Romania, and Hungary to Austria. Potential supplying countries include Iraq, Azerbaijan, Turkmenistan, and Egypt. The pipeline is meant to diversify natural gas suppliers and supply routes. The project is backed by several EU countries as well as the United States.
Further to the North, Lithuania is leading the push for energy independence in Europe. With its recently completed gas terminals, it aims to make Eastern Europe independent from Russian gas. Lithuania’s gas company Litgas is currently under contract with Norway’s Statoil in pursuit of a viable alternative to Russia’s Gazprom gas. In addition, Lithuania is one of the driving forces behind the EU Gazprom antitrust case, a contested political case that blamed Gazprom of breaking EU antitrust laws in eight member countries where it allegedly hindered competition and demanded unfair prices.
Such political developments have ultimately led to the failure of the South Stream pipeline. Beyond economic considerations, the project was seen as a potential extension of Russian political influence in the Balkans. The Balkan countries — most of which are not part of the European Union — have traditional, cultural ties to Russia. Bulgaria and Hungary were communist, Soviet satellite states. Hungary’s Victor Orban and Bulgaria’s Boiko Borisov have been two of the harshest opponents of the EU sanctions on Russia. What’s more, Greece and Russia share cultural ties through the Orthodox Church, a very influential political factor in both countries that has undermined Greece’s loyalty to Europe on many occasions. Earlier this year the new Greek government under Alexis Tsipras prepared to veto EU sanctions on Russia, only to later claim that Greece will seek to mend ties between the European Union and Russia through the Union’s institutions. In addition, anti-European (and especially anti-German) sentiments have been on the rise in Greece during the financial crisis. Finally, although on a path towards EU membership, Serbia shares strong cultural and political ties with Russia. A recent military exercise between the two countries upset members of the EU and revealed that Serbia may not be as dedicated to EU integration as it claims. Considering Russia’s pervasive political and cultural influence in the Balkans, the EU saw the South Stream as a direct threat towards its political dominance over the Balkan sphere.
Despite commencing construction in 2012, Russia suspended South Stream development in December 2014 in the face of opposition from Bulgaria and the EU. The Russian project created controversy not only because of its political and economic implications in a rapidly shifting political landscape but also because it allegedly violated European competition and energy regulations. Under these auspices, the European Union has sought to stop more generally the import of Russian gas. Russian president Vladimir Putin has said that Russia will direct gas to other regions due to the European Commission’s non-constructive, opposing approach to the South Stream project. It is likely that such divergent incentives will shape the energy politics of the European and Russia for some time to come. Although Putin has still not definitively quit Gazprom’s South Stream pipeline and EU-Russia relations might improve, it is very unlikely that the European Union will allow the South Stream project to resume. Russia’s use of Gazprom as a political tool to threaten the European Union is a major threat to the Union’s independence and political and economic values, and we can expect the European Union to continue its push towards independence from Russian gas.