By Panos Chatzinikolaou
Over the past six months, Ukraine has seen a crisis unprecedented in the nation’s post-Soviet era, one that has put into question the relations between Russia and its estern counterparts. Of course, Moscow is no stranger to international tensions; in the 21st century Russia has been involved in crises: Ukraine in 2006 and Georgia in 2009.
But the Ukrainian crisis and Moscow’s annexation of Crimea have drastically changed Europe’s energy relations with Russia. In light of the dire political crisis, the EU is faced with a demanding task—to reduce its previously growing dependence on gas coming from politically unstable Russia.
As the EU diversifies its energy sources, an unlikely actor has come to the forefront of the economic discussion. Greece, the most economically challenged state in Europe, is poised to step up as a prominent actor in Europe’s energy industry and ease Western reliance on Russian gas.
In the 2006 Ukrainian crisis, Russia halted gas supplies to Ukraine, a country through which 15 percent of EU gas demands pass. Although a political majority in the West prompted the European Union to condemn Russian actions in Ukraine, the EU was more cautious than its Western partners. This is understandable, since by then it was experiencing the closest economic and political relations with Russia in over a century.
In an effort to encourage business with Russia, the EU repeatedly loosened regulatory measures on investments. At the same time, technology transfers between Moscow and EU member states was at a historic high. Russian gas exports to the EU were gradually and steadily rising, making the region progressively more dependent on Russian energy.
At the time, purchasing more Russian energy seemed to be an advantage for the EU, since Russia offered relatively discounted prices. As a result, some of the most economically important member states of the EU, such as Germany, have developed an unparalleled dependence on Russia's gas.
But the Ukrainian crisis and Putin’s swift political (and military) action proved too bold for the EU to stand idly by. In reaction to Russian instability, several EU summits were held that aimed to diversify energy suppliers. The summits focused on encouraging consuming energy produced within the EU, so as to minimize Russian influence.
These new goals were particularly tough on states that relied on Moscow for the majority of their energy imports (mainly states in Central and Eastern Europe). Thus, it has become even more important for the EU to find solutions to this challenge. Reversing the trend of growing dependence on Russian gas is not something that can be done overnight.
The question has become: Who will reverse this energy deficit, and how?
Surprisingly, Greece, a country that appeared to be near the exit of the Eurozone less than two years ago, is taking center stage in the European energy discussion.
During a 2011 summit in Cannes that was called to sustain what seemed like a collapsing European market, several leading European figures discussed a plan, nicknamed ‘‘Grexit.’’ The plan involved a potential Greek exit from the Eurozone, so as to protect other member states from getting contaminated with what was considered to be a terminally ill Greek economy. Two years later, Athens is becoming one of the most important actors in energy, a vital sector of the EU economy.
The Emergence of Athens
The two major goals of the EU remain supplier diversification and a reduction in energy imports. Both of these changes mean a reduction in Russian energy imports and, perhaps surprisingly, an increase in the role Athens will play in regional energy politics. A development called the Southern Corridor project has become very important in the objective of decreasing demand for Russian gas supplies. The venture in question would include the Trans-Adriatic Pipeline (TAP) that would originate in Baku, Azerbaijan, and cross the entire northern part of Greece and Albania before reaching its final destination, Italy. Athens is vital to the success of the project, since the largest part of the pipeline crosses through Greece.
Several intergovernmental agreements have been signed between the countries involved in the project. The venture relies on the stability that Greece can offer as a mediator country. The pipeline would diversify suppliers of energy to Europe by passing from Baku, Azerbaijan—thus bypassing Russian gas supplies.
Although Moscow has made several attempts to undermine the project, it seems that it will proceed.
Athens will also be critical to the second goal of the EU, increasing consumption of energy that is produced within the continent. Last year, almost 20 blocks eligible for oil drilling were discovered in the coast of Crete, the largest island of Greece.
Following a presentation of these blocks by Greek officials in London last week, global oil giants such as BP, Shell, Chevron, ExxonMobil, and many more are interested in forging alliances with Greek companies to explore and start drilling in these newly-discovered areas. The projected investment required to exploit the area in question would range between 2.5 billion and 6 billion euros, a noteworthy sum considering Greece’s financial standing.
It is clear that the crisis in Ukraine, and Russia’s subsequent involvement, has radically changed the EU’s approach to energy. Out of this change comes into sight Athens, a newly emerging actor in the European energy market. Although immediate detachment from Russian gas is impossible, the following years will mark a new policy course for both Brussels and Greece.
Panos Chatzinikolaou is a student of Politics and International relations at the University of Reading in the UK and currently a stagiaire at the European Commission, Maritime Affairs Cabinet.