LONDON — As the lights of Southeast and Central Europe go out and gas supplies dwindle, leaders of these vulnerable countries must be wishing they had listened to Margaret Thatcher long ago.
In 1981 the British prime minister warned then German Chancellor Helmut Schmidt about the extreme danger of over-reliance on Russian gas as a major energy source. This was at a dinner party held at the German Embassy in London’s Belgrave Square.
All this was long before the Berlin Wall came down and Germany was re-united. The German chancellor revealed at the dinner table that the Bundesrepublik (West Germany) had entered into contracts with the Soviets to supply more than 20 percent of his country’s daily gas needs and Thatcher thought this was madness. Her concerns were dismissed by Schmidt, who said the Communists were reliable suppliers and anyway needed the Germans as customers.
Now, almost three decades later, the Thatcher warnings are coming home with a vengeance. At the very moment when Europe is in the grip of one of the coldest spells for many years, pipeline gas supplies to the whole of Continental Europe have fallen drastically, down from 300 million cubic meters per day to 65 million cubic meters per day.
Russia supplies about 25 percent of Europe’s gas needs overall, but for many countries, such as Greece, Romania, Bulgaria, Hungary, Austria and Poland, the percentage is far higher — up to 90 percent. They have been hit in a devastating way by the sudden reduction in Russian supplies. These economies have come to rely overwhelmingly on gas as their energy source, both for home heating and cooking and for industrial and power production. Even Germany, France and Italy have suffered significant reductions.
Some of these countries have several weeks’ gas storage capacity, so the immediate impact can be cushioned. Others, like Bulgaria and Hungary, are not so fortunate. For them there is a prospect of real suffering from the freezing cold and huge economic disruption.
Admittedly the current European gas crisis may last only a few days, but it has happened before and will certainly happen again. The immediate cause is blamed on Russia’s dispute with Ukraine about gas supply prices. It seems extraordinary when oil prices have collapsed and gas prices should be coming down everywhere as well, but the Russians have proved both greedy and ruthlessly ready to cut supplies as part of their hard bargaining.
Gas destined for Western Europe passes in pipelines through Ukraine, and somehow when Russia cuts Ukraine supplies, this has a knock-on effect on gas passing through to the West.
It all seems part of Vladimir Putin’s policy of showing Russia’s toughness as a force to be reckoned with, and a demonstration that Russia’s near neighbors should fall into line or face the consequences. But as Russia itself plunges into deep economic recession, there are growing signs that this Putin strategy is losing its appeal.
In the meantime, how should Europe cope with an increasingly erratic and unreliable supplier of vital energy?
One answer is that the European Union should form a common front against Russia and bargain from strength with Gazprom, the main Russian gas supplier (in effect the Russian government). But different EU countries have different needs and prefer to deal direct with Moscow on a bilateral basis.
In particular, Britain takes only 2 percent of its gas requirements from Russia, as it gets most of the rest from Norway and its own North Sea fields, plus some frozen gas (LNG) from the Middle East. So it would be well advised to stand well clear of attempted pan-European deals with Russia. A safer course for the British is to follow the Japanese pattern and expand LNG imports substantially from a variety of sources.
The core medium-term strategy for Europe must be to reduce its energy reliance on Russia as quickly as possible. One way of doing this would be to press ahead with pipelines that skirt round the bottom of Russia and bring gas direct from Central Asia into the European heartland via Turkey, Georgia and Azerbaijan. A major project to do this via a new gas supply pipeline is called Nabucco, but it is still in the talking stage. No pipeline is yet being built.
Another way would be to go ahead as fast as possible with sensible alternatives. Unfortunately the alternative currently favored by the EU high authorities in Brussels is not so sensible. It is to scatter environmentally ugly wind farms round the European landmass. But when the wind drops, these have to be backed up by electricity from gas turbines, thus increasing, rather than reducing gas needs. Vast wind farms are also miserably uneconomical, both on land and even more so when sited offshore. When oil prices slide and all fossil fuels become cheap, as is now the case, wind power looks like an expensive and not-very-green folly.
The only commercially and environmentally realistic alternative to gas reliance for Europe is nuclear power. But most European governments (except France) have dithered fatally over nuclear power and it could take eight to 10 years to get nuclear expansion programs going again.
So in the meantime, gas demand will be dominant and reliance on unpredictable, and possibly unstable, Russia will remain very heavy. It would have been better if the Europeans had never let themselves become so dependent on Russia in the first place all those years ago. But then, as Margaret Thatcher would no doubt say, it’s no use crying over spilled milk.
David Howell is a former British Cabinet minister and former chairman of the Commons Foreign Affairs Committee. He is now a member of the House of Lords. (www.davidhowell.squarespace.com)
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.