Monday, February 16, 2009

EU losing its grip …

We actually knew this, but it is interesting to see a piece in The Financial Times with that as its headline. Actually, it then goes on to add, "…on Caspian gas corridor", but grip is grip. The EU is gradually losing it.

The focus of this piece is the Nabucco project to pipe gas via a southern corridor from the Caspian region and thus reduce western Europe’s dependence on Russian supplies. We have written on this before and the issue remains as murky as ever.

But what is really interesting is that the EU bully-boy days seem to be over. It can stamp its foot and make all sorts of threats and innuendoes, but it really isn't working any more.

At the moment, the EU seems to be exploring routes for its southern gas corridor and has been sounding out Recep Tayyip Erdogan's administration and the Turkish public, to see whether Turkish territory could provide an escape route for central Asian gas, by-passing Russia. Erdogan, though, is not playing ball. He does not see Turkey as a passive vassal state, merely providing transit facilities.

Rather, Erdogan has his own ideas about turning Turkey into a regional energy hub, buying and reselling Caspian gas to European customers. This is not at all what the euroweenies have in mind. They want to buy Azeri and Turkmen gas directly from the producers.

The problem is that Erdogan has them rather over a barrel – or a pipeline, which is just as uncomfortable. The euroweenies can't play hardball because, to get the Turks to co-operate on energy issues, they have to talk within the framework of the accession negotiations, specifically in the context of the "energy chapter" of the acquis communautaire.

Deliciously, however, it is the euroweenies themselves that are blocking these discussions, with the hyperactive M. Sarkozy rather in the frame, backed up by the ever-obstructive Cyprus. That leaves Turkey free to make its own deals, which could prove more attractive to gas producers than anything the euros have to offer – and certainly faster, leaving them high and dry.

To get round this, the euros have to do a deal, which means opening up sensitive areas of a accession talks, and getting serious about negotiations. But that is the last thing they will be able to do, which puts the Czech presidency in the interesting position of trying to broker a deal that will ultimately be sabotaged by France.

One way of other, the grand experiment really isn't working and, as reality continues to crowd in, this is becoming ever-more apparent.