Thursday, December 04, 2014

“The reaction to the cancellation of the South Stream project has been a wonder to behold and needs to be explained very carefully. . ."

The Importance Of The Cancellation Of South Stream 

By Alexander Mercouris

December 03, 2014 "ICH" - "The Saker" -

"...Russia has dealt a devastating blow to the energy future of the EU. A few years down the line Europeans will start to discover that moralising and bluff comes with a price..."

It is definitely worth reading all this excellent article, (and the comments at the original source), which explains the situation very well, but here are some more helpful extracts:

. . .By redirecting gas away from Europe, Russia by contrast leaves behind a market for its gas which is economically stagnant and which (as the events of this year have shown) is irremediably hostile. 

No one should be surprised that Russia has given up on a relationship from which it gets from its erstwhile partner an endless stream of threats and abuse, combined with moralising lectures, political meddling and now sanctions. 

No relationship, business or otherwise, can work that way and the one between Russia and Europe is no exception. . .

The point is it was Russia which pulled the plug on South Stream when it had the option of going ahead with it by accepting the Europeans’ conditions. . . 

The Russians decided they could afford to cancel it because they have decided Russia’s future is in selling its energy to China and Turkey and other states in Asia (more gas deals are pending with Korea and Japan and possibly also with Pakistan and India) than to Europe. 

Given that this is so, for Russia South Stream has lost its point. That is why in their characteristically direct way, rather than accept the Europeans’ conditions, the Russians pulled the plug on it. 

In doing so the Russians have called the Europeans’ bluff. So far from Russia being dependent on Europe as its energy customer, it is Europe which has antagonised, probably irreparably, its key economic partner and energy supplier. . .

All the EU countries, even those with historic ties to Russia, have supported the EU's various sanctions packages against Russia notwithstanding the doubts they have expressed about the policy. 

Last year Greece, another country with strong ties to Russia, pulled out of a deal to sell its natural gas company to Gazprom because the EU disapproved of it, even though it was Gazprom that offered the best price. . .

Whenever the Russians act in the way they have just done, the Europeans respond with bafflement and anger, of which there is plenty around at the moment. The EU politicians who make the decisions that provoke these Russian actions seem to have this strange assumption that whilst it is fine for the EU to sanction Russia as much as it wishes, Russia will never do the same to the EU. When Russia does, there is astonishment, accompanied always by a flood of mendacious commentary about how Russia is behaving “aggressively” or “contrary to its interests” or has “suffered a defeat”. None of this is true. . .

In July the EU sought to cripple Russia’s oil industry by sanctioning the export of oil drilling technology to Russia. That attempt will certainly fail as Russia and the countries it trades with (including China and South Korea) are certainly capable of producing this technology themselves. 

By contrast through the deals it has made this year with China, Turkey and Iran, Russia has dealt a devastating blow to the energy future of the EU. A few years down the line Europeans will start to discover that moralising and bluff comes with a price. 

Regardless, by cancelling South Stream, Russia has imposed upon Europe the most effective of the sanctions we have seen this year.

No comments: