Fri, 12/01/2006 - 14:38

Bulgaria deepens its dependence on Russia, but plays a key role in the Nabucco pipeline project

The Russian company AtomStroyExport has won the tender to design, construct and commission Bulgaria's Belene Nuclear Power Plant. A month away from being a member of the EU, and only days after the release of the new European Green Book for Energy that calls for the diversification and security of supply, Bulgaria is increasing its energy dependence on Russia - a very delicate issue for the EU.

Merely taking numbers into account, and assuming the result was based on the business plan only, the Russian bidder was the natural winner over Czech Skoda Alliance, the other main contender for the concession. But there is a lot more to energy than the price tag. In fact, since the 1972 oil crisis, energy resources have been perceived as political tools rather than mere commodities.

The European energy market is second only to that of America - and Russia is its main supplier. Russia is an energy superpower and acts accordingly, adopting the bullyboy attitude characteristic of most big oil and natural gas producers.

Vladimir Putin's government has exploited the potential of energy as a political bargaining tool and, some critics have argued, a political weapon. Although the Kremlin claims that it is motivated purely by business, the truth is that the 2005 Ukraine gas shortage, that also affected several EU countries, showed how dangerously dependent on Russia Europe is. Andrei Illianov, a former Kremlin advisor, recently told the BBC that, being energy reliant on Russia, "Europe could expect a dark and cold future".

By giving the Belene project to a Russian contractor, Bulgaria, soon to join the EU, increased not only its own, but the whole of the European family's vulnerability towards Russia. Bulgaria is almost completely dependent on Russia for electricity generation, for both industrial and household consumption. Domestic natural gas production meets only about 10 percent of Bulgaria's needs, the rest coming from Russian imports. Bulgaria imports 100 percent of its oil, while hydro-electrical plants produce only eight percent of its electricity, and depend 70 percent on Russian and Ukrainian coal. Nuclear energy produces 44 percent of Bulgarian electricity, but depends solely on Russian nuclear fuel and technology, as well as Russian waste recycling and storage facilities. Renewable sources, which are highlighted as being crucial in the Green Book, are marginal.

Liberals such as Georgi Ganev from the Centre for Liberal Strategies accuse the Bulgarian Government of having strong connections with the Russian nuclear lobby and even of persecuting critics, some of whom have allegedly had to move abroad as a result of political pressure. Russia also gives Bulgaria preferential gas rates in exchange for the use of its pipeline system to reach other European countries.

Ahead of the G8 summit last summer, the EU and the United States drew up a list of priorities to confront Russia with. One of them was Russia's aggressive energy policy. However, rather than tempering its policy, Russia intensified it by giving, for instance, the gas export monopoly to state-controlled Gazprom, or by striking long-term deals with individual EU members in exchange for special relations.

In October, when he presented the new Green Book, the President of the European Commission Durao Barroso spoke out against "energy coercion" and called for a coordinated energy policy. Nevertheless, countries see energy as an issue of national security and are not likely to hand it over to Brussels any time soon.

Diversifying producers is a priority for the EU, and Bulgaria is strategically positioned in this respect. The Nabucco project is a 3,000 km pipeline that will transport natural gas from Azerbaijan through Turkey and Bulgaria to the heart of Europe, namely Hungary and Austria. Of course, this means that the southern Caucasus area needs be kept stable, through measures such as the NATO integration of Georgia and the European Neighbourhood Policy for Georgia, Armenia and Azerbaijan. Russia, however, appears to be bent on spoiling these efforts by fuelling the South Ossetia, Karabakh and Abkhazia conflicts.

The "father" of the Nabucco project is Milko Kovachev, former minister of energy in Bulgaria and, along with the capacity to export electricity, the project was a key card for Bulgaria in accession talks. If construction of the pipeline starts in 2008, it should be fully operational by 2011. Just like the Babylonian king in Verdi's opera who frees the Hebrew slaves, the Nabucco pipeline intends to free Europe from Russian control over the gas sector.

Issue 3

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