Serbia, Bulgaria and the World

Vladimir Putin today racked up another in a string of unbroken victories in the European Pipeline War. Serbia has sold Gazprom a majority stake in the state oil company, NIS, and joined Russia's South Stream Pipeline consortium. Last week, Bulgaria signed onto South Stream as well.

The pipeline is part of Putin's strategy to cement Russia's domination of Europe's energy market, which receives around a third of its oil and natural gas from Russia. Ultimately at stake is political influence in Europe, as Andrew Ross Sorkin discussed today in The New York Times.

The United States and the European Union oppose Russia gaining more of a foothold in Europe, but Putin has far eclipsed their rival Nabucco pipeline project, which would feed natural gas from Turkmenistan to Europe.

Putin's triumphs stem from his personal role in the energy strategy. He himself has flown to Central Asia, to eastern Europe and elsewhere numerous times to court the presidents of the transit countries personally. He even got former German Chancellor Gerhard Schroeder to chair a companion pipeline, called Nord Stream.

Europe and the United States meanwhile have barely gotten started. In recent days, the State Department has discussed a new name to lead the Western effort -- Bush family friend Donald Evans -- but there is legitimate doubt that he has sufficient star power to upstage Putin. The U.S. presidential election may push the issue even further back on the Western agenda.

For a contrarian view of the issue, read this piece by Stratfor, which argues that the Bulgaria deal shows that Russia is actually losing the pipeline war. I personally think this analysis is upside down, but afficionados of pipeline politics should hear all sides.

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Rights: Creative Commons

Why Russia is Winning the Pipeline War

Vladimir Putin.

That's how Russia today made another advance in one of the most important battles under way anywhere in the world at the intersection of commerce and geopolitics -- for control of the natural gas market between Central Asia and Europe. This battle will decide who dominates the European energy market, and obtains commensurate political leverage in Europe and Central Asia. Russia already supplies more than 30% of Europe's natural gas and oil.

In another example of the role of personal diplomacy in the battle, Putin was in Sofia today and signed a deal nailing down Bulgaria's role as the principal transit point for the South Stream natural gas pipeline, which is meant to cement Russia's dominance of southern Europe's gas supply.

Putin had previously used the prestige of the Kremlin to push through plans for a separate pipeline serving northern Europe, called Nord Stream. And last month, he secured the natural gas supply required to feed the two lines. Turkmenistan and Kazakhstan sold a large portion of their natural gas supply for the next thirty years, and agreed to a third pipeline to take their natural gas to Europe.

One would hardly know that Russia has a competitor in this epic market battle. But it does -- the West, specifically the European Union and the U.S., which have advanced their own dual-pipeline idea. They are a proposed trans-Caspian natural gas pipeline, also starting in Turkmenistan, and hooking into a proposed Nabucco pipeline into Europe.

How is the Western effort faring? It's stalled at the starting gate. Indeed, while Putin personally jets around the world, wining, dining and flattering the presidents of other nations whose favor is required, no Western leader has invited any of them for a personal meal. The U.S. hasn't even managed to select a senior statesman to lead the effort since Thomas Pickering dropped out and decided to stay in the private sector.

If it were not for the way that post-Soviet history has been so topsy-turvy, with a winner one day ultimately losing, I'd say the battle is over. For starters, it's high time for Turkmenistan President Gurbanguly Berdymukhamedov to spend some time at Camp David.

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Russia: Note to Presidential Candidates

This week's U.S. reversal on Iranian nuclear aims is a wake-up call on multiple fronts for those who will run American foreign policy for the next few years.

Among them is this: Vladimir Putin isn't a simple gadfly. Instead, he's one of the most important leaders the U.S. can cultivate over the next few years. Why? Because he's engaging and challenging the U.S. on issues that both countries care about, and happens to get it right -- and the U.S. wrong -- at important times.

As we learned this week, Iran is one. For years the U.S. tried to stampede him into supporting ever-escalating sanctions, leading to possible war, against Iran. But he resisted, asserting that President Bush's claims about Iran's nuclear weapons capability were overblown, and according to the new U.S. intelligence estimate it is Putin's judgment that was correct.

The new Iran intelligence highlights another needed correction: Putin in fact isn't inaccurate -- nor belligerent -- when he asserts that the U.S. presumes to know the only way on foreign policy.

U.S. policy on Russia currently amounts to this: You hurt my feelings.

It would be better to focus on issues, and the main one is energy, the foundation of Russian -- and Putin's -- power, how he's asserting Moscow's prerogatives in Europe and elsewhere.

As readers of this blog know, I think that one of the most potent instruments of power in Europe today is control of the flow of oil and natural gas. Putin has learned the lesson of the momentous U.S. foreign policy triumph last year with the completion of the Baku-Ceyhan oil pipeline and is conducting his own, much more ambitious pipeline policy.

Putin's strategy is market-oriented -- to cement and increase Russia's current control of 30% of Europe's natural gas market. It so happens, in my opinion, that that aim is incompatible with European and U.S. interests in a more diversified natural gas supply so that no one can dictate terms.

The U.S. is attempting to counter the Russian pipeline thrust, but is late to the game. U.S. energy bureaucrats led by Steven Mann are meeting in Sofia tomorrow and Friday to talk over how the U.S. can polish its strategy, and it'll be interesting to know the outcome.

I personally think that the new intelligence assessment on Iran -- like the previous one -- sounds too smugly certain. Anyone who has read Tim Weiner's excellent Legacy of Ashes can see that the intelligence business is barely manageable at best, like herding cats as the saying goes. But the fact that the intelligence services did not have rock-hard evidence before on Iran's intentions gives little comfort to those reading this week's abrupt, contrary assertions.

And it's equally discomfiting to those who have watched American policy on Russia amount to finger-pointing.

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Rights: Creative Commons