Dangers and Strategic Mistakes from the Burgas – Alexandroupolis Agreement

Security of energy supply has emerged as the key issue of the twenty-first century. Nowhere is it more important than in Europe, where debates about future energy policy have become particularly intense—especially in Greece, due to its location along key energy transit routes into Europe. Greece had the potential to feature prominently in the EU’s strategic plan. Instead, however, the Greek government signed an agreement with Russia on the construction and operation of the Burgas-Alexandroupolis (B-A) oil pipeline—thus committing a significant strategic blunder.

Although the construction of the B-A pipeline has been a strategic objective of several successive Greek governments, the agreement that Greece was pressured to accept by the Kremlin neither serves the interests of the country nor strengthens its strategic role. Instead, Greece has become a Trojan horse in the European Union’s plan to diversify its energy supply and thereby free itself from Moscow's control.

By far the biggest outrage is that the Greek government acquiesced to Russian demands that it surrender a 51 percent ownership in the B-A pipeline to Moscow. Bulgaria, Greece’s other partner in the project, initially objected, requesting equal shares for all three partners. However, the pressure (political and otherwise) exerted by the Kremlin proved effective and the Bulgarian government caved in, accepting Moscow’s terms. It is also instructive to consider who will control the territory on which the pipeline will be built in Greece, and who will enjoy ownership of profits from the infrastructure.

A recent statement by the Russian Deputy Minister of Industry and Research, Andrei Dimitrov, regarding the pipeline is more than revealing: “With Transneft as a manager of this pipeline, we foresee that Burgas–Alexandroupolis will be a de facto part of our pipeline system.”

Although these facts are very serious, even more disturbing is the behind-the-scenes pressure exerted on Athens regarding the Turkey–Greece– Italy (TGI) natural gas pipeline. Moscow is attempting to coerce the Greek government to accept the involvement of the Russian gas giant Gazprom—a state-owned monopoly that the Kremlin wields as a tool of political pressure—in this crucial diversification project intended to bring Azerbaijani gas to Europe. If the Greek government, because of its eagerness to see the B-A pipeline succeed, decides to give in to the Kremlin on this strategically important pipeline, it will deal a critical blow to the EU’s plan to lessen its dependence on Russia—a plan for which the Greek government voted in the most recent EU summit.

In fact, if Greece submits to Russian pressure, it will be the second EU member country to ally itself with the Kremlin and Gazprom against European interests. The Hungarian government recently signed an agreement with Moscow to extend Gazprom’s Blue Stream pipeline through Bulgaria and Romania, and into Hungary. This decision seriously undermines the future of the EU-backed Nabucco pipeline, which is intended to provide a non-Russian-controlled route for Caspian gas to reach Europe.

The construction of the B-A pipeline will exacerbate already-rising tensions between Greece and Turkey, since Ankara supports the Samsun-Ceyhan pipeline. Moreover, because of the Greek government’s agreement with Moscow on the construction and operation of the B-A pipeline (and because of its likely surrender on the TGI pipeline), Greece is now in the middle of a strategic conflict between the West and Russia. Athens should instead be using the B-A and TGI pipelines as a means of enhancing cooperation with Turkey and, most of all, as a way to contribute to the EU’s strategic plan for energy security.

It will be illuminating to close with a recent statement by Vagit Alekperov, president of the Russian oil giant Lukoil. It reveals quite well the thinking behind the Kremlin’s strategic energy plan: “Bulgaria, whose oil sector is almost entirely owned by Russian companies, will not conduct an anti-Russian foreign policy in the foreseeable future.”

Published in “Investor’s World”, Greece, March 17-18, 2007.