When, during her short visit to Athens back in March 2006, US Secretary of State Condoleezza Rice declared Washington’s opposition to the potential utilization of the IGI (Italy-Greece Interconnector, known as the Poseidon Project) by Gazprom, she might not have anticipated Greece’s participation in a much more ambitious Russian scheme to reach Italy via a network of pipelines spanning Southeastern Europe. The USA’s objection to increased Russian hydrocarbon ― particularly gas ― exports to Europe is deeply rooted in the belief that Moscow could use its renewed energy-muscle to blackmail Europe in a potential energy crisis. This apprehension can be traced at least back to the early 1980s when the Reagan administration enraged all of its NATO partners, including Britain, with its decision to unilaterally impose extraterritorial sanctions on any European companies that might participate in the construction of exactly the same pipeline network that Russia is currently trying to bypass.

US sanctions were relatively quickly abrogated but the reflexive rationale behind Soviet hydrocarbon exports has evidently surpassed the end of the Cold War. To be frank, America’s uneasiness with the ever-expanding influence of Russian energy exports to Europe is not entirely unjustified, at least as far as many of Russia’s former satellites are concerned. Back in the early 1980s Washington could only evoke the specter of a Soviet ‘gas weapon.’ Today new EU and NATO member states such as Poland, Estonia, Latvia, Lithuania, Slovakia and the Czech Republic are claiming that Russia is already punishing them for joining what in their eyes remains the most credible long-term deterrent against renewed Russian revisionism.

Regardless of how parochial these fears may sound to the ears of many ‘Old Europeans,’ Russia’s recent transit crises with Ukraine (January 2006) and ― to a much smaller extent Belarus (January 2007) ― scared every European bureaucrat and politician east of the Elba and can still jeopardize the entirety of the EU’s hydrocarbon imports. Nevertheless, a closer analysis of what actually happened in January 2006 indicates that the real problem with EU import security does not lie in the unlikely event of a Russian gas embargo, but in the deteriorating condition of the Russian-Ukrainian ‘special relationship.’ Ever since the emergence of the Orange Revolution in late 2004, a political movement openly supported by Washington, the state of affairs between Moscow and Kiev has teetered on the brink of a disastrous breakdown. The country is itself deeply divided along linguistic, national and religious lines between a vehemently anti-Russian west and a pro-Russian and potentially secessionist east. The immense gas pipeline network that carries more than 70 percent of all Russian gas exports and more than 90 percent of Russian exports to Europe lies in the middle of this increasingly volatile area.

Regardless of who is to blame for this worrisome state of affairs, the fact of the matter remains that Russia’s willingness to diversify away from its transit dependence on Ukraine and its former Warsaw Pact ‘allies’ is much more justifiable and pragmatic than the specter of a Russian gas embargo. The recently announced (24/6/2007) 900-kilometer South Stream pipeline that could channel up to 30 billion cubic meters per year to Europe via Bulgaria and Greece is the southern equivalent of the nearly equal capacity North European Gas Pipeline (Nord Stream) linking Russia directly with its greatest European client, Germany.

This transit diversification constitutes a cardinal interest for Europe’s security of supply and does not necessarily increase the share of Russia’s control over European gas markets. It merely makes that critical supply more geopolitically secure. The idea that Moscow is somehow trying to pre-empt the construction of ‘antagonistic’ gas pipelines such as IGI and Nabucco does not survive closer scrutiny. Russia is not forcing anyone to accept its gas for very capital-intensive infrastructure projects. The European Commission, Italy, Greece and all European countries involved in IGI and/or Nabucco can exclude Russian gas from utilizing the EC-funded pipeline networks.

However, this does not mean that Moscow cannot come to terms with those same countries so as to construct an exclusively Russian network spanning the Baltic Sea as well as Southeastern Europe. More to the point, no one can exclude Russian gas flowing via privately owned networks such as the Trans Adriatic Pipeline (TAP) promoted by Swiss-based company EGL that would reach Italy via Albania and Greece. EGL is following an ‘open-access’ strategy that focuses on the volumes of exported gas, not its nationality.

Another important clarification is that the goal of Europe’s import diversification away from Gazprom is not served by the construction of alternative pipeline routes but by the monetization of available exports volumes from non-Russian producers. The critical problem for Europe is that there is no major alternative gas producer that could challenge Gazprom’s dominant position, other than Iran, at least not in the medium term.

Turkmenistan, the only major Caspian producer, as well as Kazakhstan have recently committed (May 15) the near entirety of their exportable volumes to the construction of an inter-Caspian pipeline connecting both countries to Russia. Uzbekistan, another major reserves holder in Central Asia, has been isolated from the EU after the Beslan massacre of May 2005 and lies well within Russia’s sphere of influence.

In this regard, US policy can prove decisive in altering its stance vis-a-vis Iran, the only world-class reserves holder and progressive producer that could seriously undermine Russia’s dominance. The prospective abrogation of US-imposed sanctions can surely accelerate the pace of Iranian output, thereby creating the necessary surplus, which could then be exported to Europe either via pipeline or by liquefied natural gas (LNG) tankers.

In conclusion, we need to underline the fact that the South Stream and other three alternative pipelines (IGI, TAP and Nabucco) are in the long term complementary. The former ― and to a certain extent TAP ― diversifies Russian export options away from increasingly volatile transit routes. The latter ― especially IGI and Nabucco ― keep the option open for an increased diversification of EU gas imports from potentially crucial medium-term sources such as Iran and Iraq.