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    What Might a US-Russia Showdown Mean for the Balkans

Summary

“Moscow invests a lot of money here. Without that money, Bulgaria would struggle even more” an expert told Natural Gas Europe.

by: Sergio

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Featured Articles, Pipelines, Interconnector Greece-Bulgaria (IGB) , Trans-Adriatic Pipeline (TAP) , News By Country, Bulgaria

What Might a US-Russia Showdown Mean for the Balkans

Colliding international interests with respect to the Balkans and the weaknesses of the South Eastern European countries might pave the way for a destabilisation of the region. Experts from BulgariaSerbia, and Macedonia agreed on Wednesday that there are reasons to worry - not only for the gas markets - as structural problems might increase the impact of the “US-Russia confrontation in the region.” 

“We are not independent” Nina Dyulgerova, Professor of International Relations at the Varna Free University Chernorizets Hrabar, said in a conference on Wednesday.

The point here is that, according to experts gathered in Sofia, South East Europe is increasingly the battleground of the showdown between the United States and Russia. Washington, Moscow and Brussels reportedly impose their interests, limiting the countries’ leeway to take autonomous decisions.  

Several panelists said on Wednesday that “external influences” are heaping pressure on governments. Also for this reason, political leaders  often fail protecting national interests.

All in all, it is clear that the geopolitical arm-wrestling will first hurt weaker countries, with political political rhetoric stealing the show from factual discussions. South East European countries might be part of these weaker countries, and might be left out of the important negotiation tables. 

“Macedonia is too small to influence any decision making process” Konstantin Dimitrov, Professor at University of Sts Kiril and Metodij, commented. 

In May 2015, tens of thousands of protesters swarmed Skopje, angered over alleged frauds. Ethnic tensions, the role of external influences and a heated debate on the role of the European Union (EU) are other factors that ignited controversy. The Republic of Macedonia (FYROM) has been a candidate for accession to the EU, but has not yet entered into accession negotiations.

In March, Russia’s Stroytransgaz, controlled by Gennady Timchenko, said it would start building a gas pipeline in Macedonia. On October 1, Stroytransgaz wrote it has welded more than half of the gas pipeline in the country.

RUSSIAN LEANINGS?

During the conference organised by the Institute for Balkan and European Studies, several experts in Sofia made the case for limiting interference from the United States, and maintaing strong relations with Russia, at least in the gas industry. 

“Projects that exclude Russia are unreal and cannot, in the long run, solve the question of energy security of Balkan countries” Dušan Proroković, Executive Director at Serbia’s Center for Strategic Alternatives, commented during the debate. 

Russia is one of the major trading partner of the region. Tourism and investments from Russia are important sources of revenues for several countries in South Eastern Europe.   

BULGARIAN CASE: RIGHT IN THE MIDDLE 

Experts said that Bulgaria continues to suffer, with the decrease in the country’s population showing the country’s complexities. The population steadily declined over the next 25 years. According to Bloomberg, Bulgaria is the fourth fastest-shrinking country after Japan, Ukraine and Georgia. 

In the energy sector, the European Commission (EC) wrote that “Bulgaria is among the most vulnerable Member States,” adding that Sofia has yet to develop a transparent wholesale and retail market for electricity and natural gas. 

Brussels stated in its 2014 country report that the delays observed in developing interconnections with neighbouring countries should be resolved. The Interconnector Romania-Bulgaria (Giurgiu-Ruse) was expected by the European Commission to be completed in 2013. The Interconnector between Bulgaria and Greece (IGB) was equally postponed several times. 

According to statistics released by DG Energy in June 2015, natural gas accounted for 14% of Bulgaria’s energy mix. Despite this low figure, the country’s gas sector is of strategic importance. Logically, the EU is paying close attention to developments in this part of the continent.

The EC promoted in February 2015 the High Level Group on Central and South Eastern Europe Gas Connectivity ‘to ensure that interconnector projects already underway in the region but facing implementation difficulties are finalised quickly.’ 

In July 2015, European institutions also selected for funding two projects involving Bulgaria - the construction of an electricity internal line representing around 19% of the total €150 million package for the 20 projects across the EU. Brussels also shortlisted the 3D seismic surveys as a part of the Chiren UGS expansion project. 

WHAT’S THE PROBLEM?

On Wednesday, some experts said that these delays have also to do with the meddling of several actors. Experts recalled the negotiations held by the Bulgarian government with several US officials over the last 16 months, ranging from Assistant Secretary Victoria Jane Nuland to Secretary of State John Kerry, passing through Amos Hochstein.  

Over the last months, the United States made the case of TAP and IGB projects. 

At the same time, Russian influence remains strong. 

“Moscow invests a lot of money here. Without that money, Bulgaria would struggle even more. We are kind of torn between the US, and Russia. We would actually like to work with both and be more active in Europe, but this does not seem possible” an expert told Natural Gas Europe on condition of anonymity.  

Current market conditions aggravate the situation even more, as the low oil price environment decreases the likelihood of significant investments of ShellTotalOMV, and Repsol in Bulgaria’s waters.  

With regards to gas, despite its marginality in Bulgaria’s energy mix, market conditions add to geopolitics and “normal” internal complexities. 

For instance, on November 3rd, hundreds of Bulgarian policemen, firemen and prison guards protested against cuts to their pensions and benefits. The fact itself is nothing unusual and dangerous per-se, but it could be easily used for geopolitical reasons especially in case local politics failed understanding and/or protecting the interests of their countries.

Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci