The German Crunch Point        
By Ron  Fraser    

March  2006   
   
During January, in the dead  of winter, Germans watched as their gas supplies 
fell markedly. When they  suddenly realized that Russia had screwed down the 
tap,  they stood wide-eyed at the sudden realization that  Germany may have 
placed too many  eggs in the Russian energy basket.

What happened is that, using a  spat with the Ukraine over gas prices as the 
excuse, Russia deliberately  cut gas supplies to Ukraine, knowing full-well 
that by so doing the  pressure would drop all the way across the chilled 
landscape of Central  Europe to its main customer: Germany. It is through  Ukraine 
that much of  Germany’s gas flows from its source  in Russia.

The fact is that  Germany presently relies on  Russia to supply a whole third 
of  its oil and gas supplies. Such a level of dependence provides a nice  
bargaining tool for Russia—but it poses a significant  geopolitical conundrum for 
Germany.

Pipeline  Politics

During Gerhard Schröder’s  chancellorship, Germany enjoyed warm and close  
relations with Russia’s President Vladimir Putin.  It was a convenient 
politico-economic relationship.  Russia got German investment to  kick-start its ailing 
economy, and in return  Germany got preferred access to  Russia’s massive 
energy  resources.

This relationship culminated in the Germans negotiating  a clever strategic 
energy deal with  Russia intended to meet the German  and Western European 
demand for energy. This agreement, once carried to  completion, will link Russia 
to  Germany by routing a pipeline  directly from the Russian distribution point 
in the town of  Babayevo, 800 kilometers east of  St.  Petersburg, to the 
coast at  Vyborg, thence undersea to the town  of Greifswald in northeastern  
Germany.

Bypassing the  overland pipeline routes through Central and Eastern  Europe, 
this northern pipeline will  also avoid a more direct land route via the 
Baltic  states by routing around them,  under the Baltic  Sea.  Although this adds 
considerably to costs, in terms of German strategic  interests this is a 
classy move. Not so for the rest of the European  Union. This undersea pipeline 
will give  Germany direct control over the  distribution of gas flowing from  
Russia to the principal EU  nations. In  this plan, Germany becomes the gateway 
between  Russia and other EU  nations.

Not only will this pipeline bypass the Baltic and Central  European member 
nations of the EU, it deliberately avoids the aspiring EU  member nation of 
Ukraine. Thus, regardless of the  winter shenanigans involving Russia’s 
demonstrated power to turn off the  gas to Ukraine and break the will of its government, 
Russia will no longer  need Ukraine’s cooperation in distributing gas 
unhindered to the EU, by  far its largest customer. By 2010, when this undersea link 
between Russia  and Germany is due for completion, Russia will be able to hold 
Ukraine to  ransom by turning off the gas tap with no effect on the rest of 
Europe,  which, it is planned, will receive gas routed through Germany  instead.

But, as Hamlet said, there’s the rub.

As long as  Berlin and  Moscow remain friends,  Germany will have the power 
to  control the gas flow from Russia to EU nations, which draw a  quarter of 
their energy needs from Russian sources.

So this is a  powerful strategic tool for Germany to use in bargaining with  
other EU nations if they do not follow  Germany’s will on the future  
direction of Europe. Just as the Germans have  ensured that they control the gates on 
the much-used canal and river  routes from East to West  Europe, they will 
hold the whip  hand when it comes to controlling much of the supply of gas to the 
EU as  well.

If this project proceeds,  Ukraine will be left out in the cold  by both 
Germany and  Russia, for  Ukraine is the bargaining chip  within the whole 
scenario.

The deal is this. Behind the scenes,  Germany has quietly agreed to trade  
off Ukraine’s efforts to join the EU for  access to Russian energy. In exchange 
for  Germany’s energy deals,  Russia gets its massive breadbasket  of the 
great Ukraine plain returned to its orbit,  and a buffer zone to boot between an 
eastward-spreading EU and a  historically unpredictable ally,  Germany. The EU, 
on the other hand,  courtesy of Germany acting as the gateway to  Western  
Europe, gets access to Russian  gas.

By the year 2010, when the Baltic Sea pipeline is completed  under the 
guiding hand of chairman Schröder (who, after leaving the German  chancellorship, 
accepted a controversial job offer by Putin to oversee the  project), Germany 
will strategically control the flow of gas to the  principal EU powers. As 
Russia demonstrated in January,  that leverage can make or break a government’s 
will, or bend it to the  power of the controller.

The problem is, as  Berlin discovered this winter, this  still leaves Germany 
vulnerable to the whims of  its major energy supplier, Russia. It is obvious 
that the  German-dominated EU, not least Germany itself, urgently needs an  
alternative source of energy in order to minimize the risks imposed by  
dependency on a single major supplier,  Russia.

This situation has  only served to underline that Germany, and, by 
definition, the EU,  can ill afford any prospect of failure in its energy diplomacy. 
This is  why Germany has sought a leading role in  the Middle  East  peace 
process. After January’s wake-up call, watch as its efforts to  secure sources in 
Latin  America, Africa and the Middle East  intensify.  


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