In Between the Major Powers (II)

Liquid Gas from Qatar

The most recent Polish-German dispute is over Warsaw's plans to build a liquid natural gas (LNG) terminal in Świnoujście, close to Poland's border with Germany. The terminal is set to go into operation by mid-2014 and be capable of transferring initially approximately five billion m3 and later 7.5 billion m3 of LNG. Poland's LNG consummation this year is estimated at around 14 billion m3. Perspectively the Świnoujście terminal could account for one-third of Poland's gas needs. The terminal can, in principle, receive LNG from any liquid gas supplier, with Qatar being most often mentioned. With this project, Poland is seeking to extract itself from German-Russian control over its energy supplies. The "Baltic Pipeline" (Nord Stream), currently in construction, has devalued Poland, as a transit territory and entrusted Germany with the apportionment of Russian natural gas to the rest of Europe. In Poland, this power leverage raises historically based fears of a German-Russian pincer - as long as Poland has no alternative to Russian natural gas.[1]

German Veto

According to US media, Berlin is seeking to sabotage the construction of the Świnoujście Terminal. In the German capital, it is said that the terminal could endanger ecological interests of the Federal Republic of Germany, which is why its construction must be immediately submitted to a careful inspection. This conforms to the regulations of the so-called Espoo-Convention, a United Nations agreement signed in 1991. Countries bordering along the Nord Stream pipeline evoked the Espoo Convention to have the "Baltic Sea Pipeline" inspected for its ecological compatibility, which resulted in a clearance certificate. Berlin has vetoed Poland's rightful EU subventions for the terminal. According to Warsaw, the German objections are a pretext. The most important effect is that construction will probably not begin on schedule this month and delayed several years. This would provide Germany and Russia enough time to complete Nord Stream forcing Poland into total dependence on the pipeline. It is being reminded that the EU Energy Commissioner is Günther Oettinger from Germany.[2]

Delays

The German chancellor's trip last week to Lithuania and Latvia was overshadowed by dubious procedures, which could also make the energy policies of the Baltic countries dependant on Berlin. The focus was on the plans of the government in Vilnius to build a new nuclear power station. Under EU pressure, the old nuclear power plant, Ignalina, which insured 70 percent of Lithuania's energy, had to be permanently shut down by December 31, 2009. The Lithuanian government, insisting on remaining as independent as possible from Moscow, plans to build a new nuclear power station in Visaginas, close to Ignalina. This places Vilnius in competition with Moscow, which is also planning a new nuclear power plant in Kaliningrad that could supply electrical power to the entire region, like the planned plant in Visaginas. This is why it stands in competition with the Lithuanian project. The stalled dismantling of the Ignalina plant is a grave setback, because some of the structures are badly needed for waste storage from the Visaginas nuclear power plant. As the Lithuanian government angrily pointed out, the Nukem Company is responsible for those dismantling delays. Nukem had been a branch of the German RWE energy corporation until 2009, when it was sold to the Russian Atomstroyexport. Atomstroyexport is also involved in the planning for the Kaliningrad nuclear power plant, as is the German Siemens Corp. (german-foreign-policy.com reported.[3])

In a Comfortable Position

Chancellor Merkel's agenda on her Baltic trip last week included a visit to the construction site of the new Visaginas nuclear power plant. Lithuania's government is counting on Germany to help end the delays caused - according to observers - by the German Russian Nukem. "It would be nice if Germany would seriously be interested in getting involved in the construction of the power plant," President Dalia Grybauskaitė declared to the press with a bit of skepticism, estimating that "the support of a country like Germany, in a question like this, is very important for us."[4] Berlin is therefore in a comfortable position. Germany can take part in the Visaginas power plant, under conditions favorable to German companies, thereby practically bringing the Lithuanian energy sector under its control. And if the conditions do not satisfy the aspirations of German companies, Lithuania would become dependant on the German-Russian nuclear power plant in Kaliningrad. In Vilnius, Chancellor Merkel, therefore, left her answer open: The plant's financing, construction and operation were not clarified, but "if necessary," Berlin would "lend a helping hand" if "certain investors would be asked."[5]

List of Proposals

During her visit to Vilnius and subsequently to Riga, Merkel underscored the importance of the Baltic countries' integration into the European energy market. This would also demand the networking of the Baltic countries' energy infrastructure with Poland and the Western European electricity grids - possibly with EU financial support. German energy companies are thus hoping to expand their markets in the East. The Latvian government's far reaching concessions toward German enterprises show to what extent Baltic States are willing to satisfy German interests to reduce their dependence on Russia. Last week, the Latvian Prime Minister Valdis Dombrovskis gave Chancellor Merkel a list of "proposals" for profitable endeavors for German firms in his country. Today, Germany is the third largest investor in Latvia - behind Estonia and Sweden - and only second largest supplier - behind Lithuania. In Riga, Merkel critically remarked that "economic contacts" could be "intensified."[6]

Resistance

Up to now Poland has refused such submissive gestures. The LNG terminal in Świnoujście is to be constructed not by German companies, but by a consortium including the Italian Saipem (43 percent owned by the energy company ENI), a French Saipem subsidiary and the Italian Argentine Techint. US companies are producing so-called shale gas in Poland. French companies are involved in the planning for constructing new nuclear power plants.[7] How long this type of resistance to the European hegemonic power can be maintained, will also be seen by the success or failure of the Polish LNG terminal in Świnoujście.

[1] see also 4,500 Kilometers Around Berlin and A Question of Orientation
[2] The Russo-German Energy Pincer; The Wall Street Journal 08.09.2010
[3] see also In Between the Major Powers
[4], [5] Pressestatements von Bundeskanzlerin Merkel und der litauischen Präsidentin Grybauskaitė; www.bundesregierung.de 06.09.2010
[6] Die europäische Energiezusammenarbeit intensivieren; www.bundesregierung.de 07.09.2010
[7] see also Erdgaskooperation