'Thirteen Days' of the gas crisis: lessons in the East

By Vessela Tcherneva - 20 Jan 09

"Sir, I am prepared to wait for your answer till Hell freezes over, if that's your decision," says the US Ambassador to the UN to his Russian counterpart in the movie 'Thirteen Days'. The film is set during the Cuban Crisis, the height of the Cold War. The temperature today in Eastern Europe created by the current Russian-Ukrainian gas war comes close - even physically - to the diplomatic frost depicted in the film. In Bulgaria - like in the rest of Europe - the Russian gas still does not flow, but we have already started counting the lessons we've learned in the past 13 days.

The first lesson sounds almost trivial today, but it was a rather extreme, politically driven statement a week ago: No bilateral solutions are good solutions, no matter how privileged a country's bilateral relations with Russia might seem. The Bulgarian government relied happily on its agreement with Gazprom and was totally unprepared for the crisis. Unlike Hungary, who after the first crisis in 2006 started building an expensive storage facility, or Latvia, who decided to pay above the market price for gas in order to keep Russia off their back, Bulgaria - almost entirely dependent on Russian gas - expected both lower gas prices and security of the deliveries from Gazprom.

"We scored a Grand Slam", announced Bulgarian president Parvanov exactly a year ago at the signing ceremony of the South Stream project with then-President Putin. The victorious tone was triggered by the Bulgarian government's belief that it had pressured Gazprom to concede 50% of the local company created to operate South Stream. But the current crisis demonstrated that gas security means both diversification of the transit routes and of the sources. With South Stream diversifying only the route but not the source (Russia), the government should have also attempted connections to other networks such as the Turkish-Greek-Italian pipe or to the LNG terminal in Thessaloniki.

The second lesson of the gas saga reads short: No intermediaries. The surprising fact that all Gazprom's delivery contracts with other national gas companies go through intermediaries became clearly visible through the crisis. As with Ukraine, the mediating companies in Eastern Europe are the other name of a corruption opportunity that can include high-ranking government officials. In the Bulgarian case the intermediaries do not have sufficient capitalization to answer possible damage claims from Bulgargas, the state-owned gas company. And it is doubtful whether they would, in turn, raise claims against Gazprom, the head company.

Now for the third lesson: Even the Russophile Bulgarians can easily turn to Russo-skeptics, if not Russophobes, within days. For the last decade, European polls have pictured the Bulgarian public opinion as the most Russia friendly (fluctuating in the margin 66-68% support for Russia). Even though the country's policies did not qualify it quite as a Russian ‘Trojan horse', it was often regarded as Moscow's trusted partner. But the past 13 days seem to have changed public attitude. Latest polls show that the crisis has worsened the public opinion towards Russia. A poll by Market Links agency taken 12-14 January shows that 49% of the respondents share negative attitude toward Russia due to the gas crisis, with only 32% having a positive attitude. Bulgarians now realize that relying on Russian gas - and compassion - is a tricky game. The Bulgarian economy has halved its gas consumption in the last week, and some factories have shut down. According to official data from the Ministry of Economy and Energy, the economic losses to date exceed 50million euro, and the gas reserves will only last for another week.

The early hours of 13 January gave hope that the gas would flow soon following the interventions from the European Commission and the Czech EU presidency. The fourth lesson arrived soon thereafter: the EU did not act decisively and was not considered an actor to be taken seriously by Russians and Ukrainians. At the outset of the crisis the Czech Presidency declared that it was a bilateral trade dispute and thus weakened the EU's chances to put political pressure on the parties involved. The big member states in the West did not intervene for the first two weeks - neither politically nor through the big companies like E.On, Gaz de France or ENI, who are close partners of Gazprom. The lack of even a verbal reaction by the leaders of Germany, France or Italy sent a bad signal - and it was heard by Prime Minister Putin. He summoned the leaders of the countries who have suffered the most from the crisis - Bulgaria, Slovakia and Moldova. Filling the vacuum of decisive international actors, Putin appeared almost as a referee in the dispute trying to help those in need.

The gas crisis was the EU's chance to show leadership in its Eastern fringe, and it has failed so far: according to the poll quoted above, the public attitude towards the EU has experienced a decline of 20%. Bulgarians, Slovaks and others realized that the gas problem was perceived as much more Eastern Europe's than a concern of the rest of the EU. Solidarity remained an empty word during the last 13 days - they left behind the impression that the new members are not worth being defended in times of trouble, that they are second-class club members.

Mid-term steps in setting minimum standards for gas security in the new EU member states, as well as political intervention for a long-term solution to the problems that originate in Gazprom, would be adequate measures to overcome the EU's credibility crisis in the East. The EU should alter its Gas Security Directive (2004) and make it compulsory for the new member states to keep their reserves at certain standards, while offering them financial support to build the necessary infrastructure. And, in more general terms, having a common European position on the relations with Russia and the Neighborhood will be helpful for countries that due to their geographical proximity risk turning into a collateral damage.

To use another quote from Thirteen Days: "[Aid] You're in a pretty bad fix, Mr. President. [President] Maybe you've forgotten, but you're in it with me."

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