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Russia Strikes Back Against EU’s Energy Union

Europe is starting to play hardball with Russia on energy — and the Kremlin is fighting back writes Kristine Berzina. For years, the European Union was highly dependent on Russia’s natural gas and was unable to exert any influence on its supplier since it is the world’s largest energy importer. This spring, the European Commission launched an EU Energy Union to finally bind the 28 countries into a single energy market.

The three Baltic States — previously linked only to each other and to Russia — have been instrumental to this new era of EU energy policy. Last December, Lithuania leased a floating liquefied natural gas terminal, and now buys Norwegian natural gas from Statoil that it can share with Latvia and Estonia. Electricity is Lithuania’s other major vulnerability, but with the EU’s support, it will soon complete grid connections to Poland and Sweden.

Lithuania also initiated a European Commission investigation of Russia’s state-owned gas company Gazprom in 2011, arguing that it should not have to pay significantly more for natural gas than EU member states further away. Not only did the Commission agree, but last month, it charged Gazprom with hindering competition in eight Central and Eastern European member states. Gazprom could now face up to $10 billion in fines.

Russia may be losing its commercial levers over Lithuania’s energy sector, but it is beginning to intervene militarily in the region’s energy sector. In the past few weeks, Russian naval vessels in the Baltic Sea have chased and disrupted ships in Lithuania’s exclusive economic zone that are laying the NordBalt electricity cable, intended to create an integrated Baltic electricity market. These Russian naval actions present a new military threat to energy in Europe. The EU needs to be aware that actions against Russia’s commercial practices may risk escalating conflicts across Europe.

Other forms of Russian political interference could also increase. The prospect of greater political maneuvering against vulnerable EU member states — such as Greece — is especially worrisome. Russian President Vladimir Putin has proposed a new pipeline, Turkish Stream, which may deliver gas to Greece as well. The pipeline bypasses Ukraine and is a political tool for the Kremlin. Putin has directly courted Greek Prime Minister Alexis Tsipras, describing the economic benefits of the pipeline just as Greece struggles to repay its debts.Conveniently for Moscow, Turkish Stream could also interfere with the EU’s long-supported Trans-Anatolian pipeline, which is slated to bring gas from Azerbaijan to European markets.

The EU and the United States can expect the continuation of such political, military, and economic maneuvering from Moscow on energy issues. In the past, the transatlantic partners have focused largely on gas pipelines rather than on other aspects of the energy sector as levers for Russia’s political influence. But energy security risks are no longer confined to one single area of the energy industry. With a more aggressive European energy policy, threats to energy security may come in the form of military and cyber moves against electricity as well as oil and gas infrastructure.

Appropriately, the G7 expanded its understanding of energy security to include sustainability and cybersecurity concerns at an energy ministers’ meeting in Hamburg last week. This updated concept of energy security acknowledges the increasing importance of renewable electricity sources and digital technologies in the energy sector. The G7 should match its new-found awareness of these energy vulnerabilities with adequate resources and coordination to protect both traditional oil and gas supplies along with electricity and digital infrastructure.

If Russia views energy relations as a strategic priority, it would be prudent for NATO, the EU, and the G7 to do so as well.

Kristine Berzina is a Transatlantic Fellow for Energy & Society, based in the Brussels office of The German Marshall Fund. You can follow her on Twitter @kristineberz.

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