German Chancellor, Angela Merkel, has declared today after the informal EU summit called by the current Czech Presidency of the European Union and the Presidency of the European Commission in concern with the effects of the economic crisis and possible remedies, that Germany is against any public funding for the Nabucco project. This means that any hopes for EU funds to help develop this alternative energy route have been dashed. Without German support it is doubtful than any funding will be released in order to give the go ahead for this long delayed pipeline that would have circumvented the Russian monopoly on gas deliveries to Europe.
The statement comes as more voices warn of a possible collapse of Central and Eastern European emerging markets amid the global recession. However I have reasons to doubt that Angela Merkel’s statement has to do only with economic considerations on how the German taxpayers’ money should be spent. Her statement should be viewed instead from the perspective of Russo-German relations.
Germany is indeed heavily dependent on Russian gas; however the Russo-German relationship is not restricted to energy matters. Germany does not want to repeat the situation of the twentieth century when it fought the Russians in two world wars and was the likely place of confrontation with Soviet Union, if the Cold War ever got hot. After the Cold War Germany developed a working relationship with the weakened Russia in order to avoid becoming a possible place of confrontation between the United States and the Russian Federation or merely to avoid footing the bill for the security of Central and Eastern Europe. The new relationship manifested itself publicly early in 2003 when Germany and Russia opposed the American invasion of Iraq and again, more poignantly, in 2008 when it opposed at the Bucharest Summit, NATO’s expansion into the former Soviet Union.
Furthermore there is a broad consensus within Germany’s political elite regarding its relationship with Russia. The Right favors its relationship with Russia due to strong business interests, while the Left for ideological reasons, as a counterweight to American influence in Europe. Chancellor Merkel’s statement is meant therefore to show it will not support any energy project that will compete with Russian energy projects – Nabucco was designed just to do that.
Today’s statement shows also the effectiveness of Russian foreign policy of dividing the countries of the European Union. Romania, and for that matter any other Central and Eastern European country, cannot count now on Germany’s support for any actions or projects aimed at decreasing their dependency on imports of Russian gas. Germany’s attitude also compromises European Union’s effort of creating a common European energy security policy.
What are the hopes then for Nabucco? Without EU funding there are few hopes that the project will finally get under way. Private financial institutions are unlikely to finance this project in times of economic crisis. The World Bank has said it will analyze a possible loan to finance the project only when the question of who will supply the gas for the pipeline, will be resolved. Without a strong financial backer and the question of supply solved, the project will be probably superseded by its Gazprom rival: Southstream.