KABUL, Afghanistan

What little-known international issue is key to our relationship with Afghanistan, Iraq, China, Russia, Turkey, the countries of Central Asia and our European allies? Eurasia’s energy geopolitics cut across more U.S. foreign and energy policy priorities than any other topic of discussion in Washington. The problem is that energy in Eurasia is not receiving the kind of high-level attention it deserves from this administration. While Moscow, Beijing and Tehran take the nexus of energy and foreign policy very seriously, Washington is playing catch-up across the Eurasian continent.

Since World War II, European countries and even the substantial bloc of the European Union have not had much of a policy toward China. But over the winter holidays, China’s state-owned energy company, CNPC, completed a natural gas pipeline across Central Asia to Turkmenistan on the eastern shore of the Caspian Sea. An EU-backed consortium is at the same time working on the Nabucco gas pipeline, to reach Turkmen gas reserves from the west. Energy has brought China to the EU’s neighborhood. Energy geopolitics have forced our NATO allies to consider a China policy for Eurasia.

China’s Central Asian coup also has jeopardized plans for energy development in NATO’s other theater of operations, Afghanistan. U.S. companies and the Asian Development Bank have long advocated a gas pipeline from Turkmenistan through Afghanistan to consumers in Pakistan and India. Afghan officials had touted the project as a potential facilitator of stability and rural development, a catalyst for more than 3,000 energy-related small businesses across the country. Now it looks much more likely that Pakistan and India will get their gas through a pipeline from Iran, enriching a regime that may well send the region into a tailspin if its nuclear ambitions are fulfilled.

In mid-January, the EU signed an energy deal with Iraq’s central government that could see gas from the country’s Kurdish areas supplement the gas for Nabucco that was supposed to have to have come from Turkmenistan. It is urgent that consumers in EU and NATO countries gain access to new gas resources because of the West’s relationship with another major Eurasian power, Russia. Much of Central and Eastern Europe is dependent on Russian gas for winter heating, but Moscow has tried to use that uneven relationship to its advantage, splitting energy and foreign policies within the EU and NATO. Russia’s disputes with its neighboring transit states – Ukraine and Belarus – have caused annual gas crises for European consumers since 2006. For key U.S. allies like Poland and Romania, energy security and national security are one and the same.

Three successive U.S. administrations have, in fact, acknowledged the enormous importance of Eurasian geopolitics. President Obama’s point man for the issue is Richard L. Morningstar, special envoy for Eurasian energy. It would be difficult to find anyone with a better background for the job: Mr. Morningstar played a key role in the Clinton administration in opening up the oil and gas fields of the Caspian after the collapse of the Soviet Union. Turkmenistan is on the global energy map largely because of U.S. efforts in the Clinton and George W. Bush eras. In 2010, Mr. Morningstar’s job could not be more challenging.

Russia, China and Iran are all more assertive in their foreign and energy policies across Eurasia. The U.S. and Turkey once walked in lockstep on Eurasian energy issues, but now Ankara seeks to carve out its own regional influence as a global energy hub. NATO allies, uninvolved in the 1990s are interested, but not unified. And major technological and policy changes are tearing old assumptions asunder.

The development of previously inaccessible shale gas deposits in the U.S. has revolutionized the North American energy market. American consumers probably are sitting on 100 years of domestic gas supplies. So all of the liquefied natural gas shipments originally bound for the U.S. are heading to Europe and East Asia. This could tamp down Eurasia’s energy geopolitics – if consumers’ needs are met by sea. But it is more likely to intensify the cross-continental competition as both producing and consuming countries will be looking to find and develop the same kind of shale deposits across Eurasia.

While Mr. Morningstar so far has done yeoman’s work, the White House would do well to acknowledge the escalating severity of Eurasia’s energy geopolitics with the appointment of a National Security Council director to focus solely on the issue. This effort must be complemented by high-level diplomacy to shore up key energy relationships in Eurasia. Energy Secretary Steven Chu should make a point of visiting Turkmenistan, and Secretary of State Hillary Rodham Clinton would do well to step up coordination on energy-security policy with our European allies – and China. Finally, our relationship with Russia must address head-on the issue of oil and gas as geopolitical tools. If its focus remains on strategic arms reduction, it will have skirted the most contentious issue in Eurasia.

Energy is not just about conservation or climate change. In Eurasia, it is about power politics at a strategic level. Better policy on most U.S. national security priorities – Afghanistan, Iraq, Russia, China – depends on better understanding of Eurasian energy geopolitics.

This post first appeared in the Washington Times.

This winter may not see a natural-gas crisis in Ukraine, but then again, the country’s presidential election isn’t over. The outcome of the February 7 second round runoff may well determine whether the gas crises continue, and by extension, shape the future of European energy consumption.

President Viktor Yushchenko, the dioxin-scarred pro-Western reformer, is not only out of the race, but never had a chance. A combination of Russian meddling and EU apathy transformed Orange Revolution hopes for sweeping reforms and Western integration into the desperate situation we see today: a bankrupt government begging the International Monetary Fund to float another loan so that it can pay Moscow for last month’s gas bill. This after gas cutoffs by Gazprom in 2006, 2008, and 2009 that saw Ukraine’s geopolitical woes passed on to freezing consumers in central Europe.

But fault does not lie only with external actors. Yushchenko’s principled, yet uncompromising approach to governance inspired historic protests in Kyiv’s Independence Square, but found him few friends in Ukraine’s tumultuous political arena. Hence the final round between Yushchenko’s two political rivals: Prime Minister Yulia Tymoshenko and former Prime Minister Viktor Yanukovych.

Conventional wisdom dictates that should Yanukovych — Russia’s man during the 2004 election — come out on top this time, the pressure from Moscow on Kyiv to pay its bills to Gazprom will dissipate. Ukraine’s leadership will prize its special relationship with Russia over NATO and EU membership, reforms will be put on the back burner, and the opaque, corrupt practices of Ukraine’s energy sector will continue, benefitting government-tied oligarchs in Ukraine and Russia alike. This geopolitical and governance “reset” will mean that Gazprom’s Kremlin leadership will no longer seek to use energy as a weapon against Ukraine — and thus EU consumers will not experience natural-gas cut-offs down the pipeline.

But 2010 is not 2004. Moscow’s lesson from the Orange Revolution was that it cannot put all its eggs in one basket, so Russian President Dmitry Medvedev and Prime Minister Vladimir Putin have cozied up to both contenders, with particular attention paid to Ukraine’s perennial political question mark: Tymoshenko. Famous for her braids and political brawn, Tymoshenko was originally Yushchenko’s Orange ally, but broke from that coalition to cultivate her image as a middle-ground pragmatist with particular expertise in the energy sector.

That image paid off in November when Tymoshenko, as prime minister, worked out a deal with Putin to reform and regularize the energy relationship between Ukraine and Russia. In the process, she lessened the likelihood of a 2010 gas cutoff significantly and garnered praise from both Brussels and Moscow. That arrangement could collapse on or after February 7, depending on Gazprom’s whims. But, it is the closest to a stable energy relationship that the two countries have had in the past six years. And Tymoshenko showed that she could negotiate practically with Putin. That cannot be said of Yanukovych, because he owes too much to his Russian backers.

Most importantly, because of the political ground she has carved out, Tymoshenko is probably the only leader in Ukraine who can negotiate on good terms with Putin and also live up to her promise of implementing EU-backed energy-sector reforms, specifically to bring in a Western company to run the country’s transit system.

Functional ties between Kyiv and Moscow and increased transparency in Ukraine’s energy sector is exactly the combination needed to avoid future gas crises. The energy opacity and uneven power relationship that would characterize a Yanukovych presidency is probably more likely to produce more of the political and business wrangling within Ukraine that formed the context of the last three gas cutoffs. And in the midst of another such crisis, Yanukovych would be a lot less likely to heed Brussels’ warnings.

Therefore, a Tymoshenko victory on February 7 is most likely to ensure EU energy security this winter and in winters to come. But that stems from the fact that a Tymoshenko presidency will not necessarily be a pro-Western affair. That spells trouble for the EU’s long-term energy security, which can only be achieved with comprehensive political and economic reforms in Ukraine, the kind only realized during an EU accession process. With the opportunity of the Orange Revolution passed, any future Ukrainian president will have to see clear incentives from EU member states to make the concerted effort necessary to join the club. Unfortunately, such incentives are not likely to be forthcoming any time soon.

This post was previously published by RFE/RL.

APA’s interview with Alexandros Petersen, senior fellow of Eurasia Center at Atlantic Council in Washington DC

- Europe still depends on Russia in terms of energy, NABUCCO is still not there, while Turkey and Iran are planning to cooperate in the energy sphere, how do you estimate Azerbaijan’s this situation? How stable is Azerbaijan as a gas supplier for Europe?

- Azerbaijan is still a pivotally important energy player in Eurasia and an indispensable producer country for EU natural gas consumers. That said, uncertainties about Turkmenistan’s role in the Nabucco project, the gas transit dispute between Azerbaijan and Turkey, and lack of initiative on the part of the EU and its member state governments to push for alternative routes to alternative sources of natural gas in the Caspian, has caused the Nabucco consortium to plan for initial gas to be sourced in northern Iraq, with potentially more gas coming from elsewhere in the Middle East. That decision could mean that Azerbaijan becomes the end of the line for gas to be supplied to Nabucco, as opposed to both a supplier and a bridge to the resources of Turkmenistan. This is of course not certain, but it could be the case. This decision, combined with the potential for unconventional gas development within the EU, and lower demand at the moment, means that European decision-makers feel that Caspian reserves are not as important as they once were. For Azerbaijan, the question is whether it will remain just an important gas supplier, or become to key to the riches of the Caspian.

- In your view, what should be the primary factor in the gas price talks between Azerbaijan and Turkey?

- It is tempting to say that the deciding factor in the gas price talks between Azerbaijan and Turkey should be commercial concerns. Ideally, both sides would be able to come to a workable agreement based on a win-win business deal. That said, since we are talking about natural gas in the geopolitically-charged Black Sea-Caspian region, it is inevitable that strategic realities will enter into the negotiations. In this case geopolitical considerations present a solution. When looking at the bigger picture, it is clear that Caspian gas going to EU markets through Turkey is in the interests of both Baku and Ankara. This is one energy discussion that should be elevated to the high-political level to be resolved on the basis of strengthening Turkey’s status as an energy hub and Azerbaijan’s role as a key supplier of gas for the EU.

- Recently, Azerbaijan and Iran also have agreed to establish cooperation in gas sphere. In your opinion, can this agreement be considered long-term? Wouldn’t this transport of Azerbaijani gas be negative for the NABUCCO project?

- Azerbaijan will most likely export gas not only to Iran, but also to Russia this year. This is a direct result of Western inaction in realizing the Southern Corridor, the central project of which is the planned Nabucco pipeline. It is a testament to the rapid and comprehensive energy development of Azerbaijan that it is exporting to Iran, which holds far greater gas reserves but does not have the necessary infrastructure to supply its own population, and Russia, which only a few years ago used to export gas to Azerbaijan. So far, however, it looks like the Azerbaijani gas exports planned for this year will not be at volumes large enough to threaten the planned supply of Nabucco. But, Western policymakers should not take comfort in that fact. Baku can step up its exports north and south and will do so if action is not forthcoming from Turkey, the EU and the U.S.

This post previously appeared on the APA website.

Azerbaijan’s ongoing dispute with Turkey about transit terms and revenues for natural gas heading to Europe across Anatolia, as well as uncertainties about the Nabucco pipeline project, have compelled highest-level officials at Azerbaijan’s State Oil Company (SOCAR) to publically consider the option of exporting hydrocarbons eastward, potentially to China and other East Asian markets. However, as Baku would have to surmount significant hurdles to make that proposition a reality, it remains to be seen whether a reorientation of Azerbaijan’s energy posture is in the cards, or whether this is just rhetoric to spur the development of Western-oriented projects. That said, the prospect of increased Azerbaijani gas exports to Russia and Iran supplanting westward flows should not be ruled out.

BACKGROUND: Since independence from the Soviet Union, Azerbaijan’s energy policy has largely been Western-oriented. Former president Heydar Aliyev’s energy and foreign policies were closely linked. Their common objective was to bolster Azerbaijan’s independence and diversify its international links away from Russia and the post-Soviet space, to Western and world markets. The “Contract of the Century” to develop Azerbaijan’s Caspian hydrocarbons and the construction of the Azerbaijan-Georgia-Turkey (AGT) projects, including the famed Baku-Tbilisi-Ceyhan (BTC) oil pipeline, were keystones in an energy posture that not only afforded land-locked Azerbaijan the opportunity to export its natural resources, but did so in a way that allowed Baku to garner new international partners and greater independence of action in Eurasia and on the world stage.The logical continuation of this trend was to do with Azerbaijan’s gas what had been done with its oil. The European Union’s vision of a Southern Corridor for energy would link EU consumers to Azerbaijan and potentially other Caspian producers of natural gas through Turkey and Georgia. The most discussed project of this Corridor was and is still the Nabucco gas pipeline, which would link Turkey’s border with Georgia to Austria’s European gas hub at Baumgarten. However, the geopolitics of gas are very different from those of oil, and power politics in Eurasia have drastically altered from those of the late 1990s when BTC was on the table.

The Southern Corridor faces a number of challenges: slow-motion progress on Nabucco due to political and commercial concerns, competition from Moscow-backed projects such as the South Stream and Nord Stream pipeline projects, and lackluster diplomatic support from the EU itself. However, the most pressing obstacle at the moment is the dispute between Baku and Ankara regarding transit revenues and gas pricing for Azerbaijani gas transiting Turkey to fill another Southern Corridor pipeline: the Turkey-Greece-Italy Interconnector.

This frustrating picture recently compelled highest-level SOCAR officials to publically air the option of exporting gas eastward, across the Caspian to China. SOCAR’s President, Rovnag Abdullayev, said on November 20 that Azerbaijan is seriously considering exports to China as part of the country’s energy diversification strategy. This is a direct message to the Nabucco consortium and Western companies and governments involved in the development of the Southern Corridor to step up their game and achieve results, such as a coordinated strategy with Turkey, along with project financing and comprehensive and clear offers to producers such as Azerbaijan. Also speaking in mid-November, SOCAR Vice President Elshad Nassirov could not have put it more clearly: “If Europe takes too long putting together a solution, then all the gas in the Caspian will go to Asia. It’s more serious than it seems”.

IMPLICATIONS: The situation is undoubtedly serious, but can Azerbaijan reorient its energy strategy in the face of Western reticence? The China National Petroleum Corporation is set to finish its record-setting pipeline across Central Asia to Turkmenistan early next year, four years ahead of Nabucco’s unlikely stated completion date of 2014. At first blush, it would seem that if SOCAR concentrated its resources on building a Trans-Caspian pipeline heading eastward, it could begin exporting to Chinese consumers. However, both technical and geopolitical obstacles outweigh those facing the Southern Corridor.

First, the feat of extending China’s pipeline, already set to be the longest in the world, across the Caspian, would approach the impossible given technical restraints on the length, capacity and complexity of natural gas pipelines. The project would almost certainly not be cost-effective, especially as it would also have to include a segment across Turkmenistan. Other less likely options through Iran or Kazakhstan are even more far-fetched. Second, the ongoing dispute between Baku and Ashgabat about the Serdar/Kyapaz gas field in the Caspian rules out serious Azerbaijani-Turkmen energy cooperation until it is resolved. Finally, such a reorientation would mean that Azerbaijan would give up its strategic position in terms of Eurasia’s energy geopolitics. At the moment, it stands not only as a formidable producer country, but as a gateway for the West to Kazakh oil and Turkmen and potentially Uzbek gas. That advantage would be reversed if Baku looked to Beijing.

Far more likely is the prospect of Azerbaijan increasing its gas exports to Russia and Iran in response to a sagging Southern Corridor. Russia’s state-controlled gas monopoly Gazprom has offered to import all of Azerbaijan’s remaining gas reserves for Russian consumers and for further export at inflated prices to EU countries. As part of an agreement signed in June, Azerbaijan will begin to export 500 million cubic meters of gas to Russia. This is a small but symbolic amount, and the option of export increases was part of the agreement. At the same time, demand for gas has increased in Iran, even as it has ebbed in Europe due to the global economic downturn. With support from either of its large neighbors, it is likely that it would be simpler for Azerbaijan to drastically increase the capacity of North-South pipelines to Russia and Iran, rather than contribute to the Southern Corridor. Baku’s decision not to do so yet has been due to diversification of links in its foreign policy as much as in its energy decisions.

These realities, as well as others suggest that SOCAR may be overplaying its hand by publically airing the prospect of gas exports to China. While progress may be slow, the dynamics of the Southern Corridor are changing rapidly. Due to two of the Nabucco consortium’s companies recently investing in gas production in northern Iraq, it seems increasingly likely that the pipeline’s first gas will come from the Middle East, not the Caspian region. While the plan is still to link Azerbaijan’s Shah Deniz II gas into Nabucco’s first phase (to fill about half of the pipeline’s eventual capacity), more supplies may well be available from gas-rich northern Iraq in five years’ time, and the possibility that Egyptian gas could be linked to Nabucco is increasingly gaining credence after it was first mentioned publically by Cairo this July.

Finally, while demand for natural gas in Europe is set to increase significantly in four to five years, Caspian decision-makers should not underestimate the market-changing force of unconventional gas development, for which there are serious prospects within the EU. It is telling, for example, that ExxonMobil has chosen to invest in unconventional gas development in Hungary, but has conspicuously ignored the Eurasian pipeline game. Unconventional gas development has already drastically altered the North American market, to the point that Liquefied Natural Gas (LNG) projects globally have already been reoriented toward the European and East Asian markets. In short, while it remains supremely important for European energy diversification, Caspian gas is no longer the only game in town.

CONCLUSIONS: Unless Baku chooses to invest heavily in a complete reorientation of its energy and foreign policy, Azerbaijani natural gas exports to China do not seem a likely prospect in the near or middle term. Western decision-makers, however, should be cognizant of the relative ease with which Baku could increase energy cooperation with Russia and Iran. That said, if the Nabucco project continues its Middle Eastern reorientation and unconventional gas development in Europe picks up, Caspian gas and Azerbaijan’s strategic position could become less salient for EU decision-makers. SOCAR has and should continue to have major leverage over the construction of Nabucco and the direction of the Southern Corridor, but time is not on Azerbaijan’s side.

This post was previously published in CACI Analyst.

The following are my Nov. 16, 2009 remarks at the 4th Energy Forum in Budapest.

Panel 6: Russian Energy Strategy and the New Economic Realities

The financial crisis hit Russia much more than expected. How did the crisis affect major Russian energy companies and planned investments? Will Nord Stream and South Stream go ahead? Do Russian energy companies have enough capital to invest in the Central European energy industry? How long it will take for Russia to recover from the crisis?

Alexandros Petersen:

I’m afraid I’ll have to dispute to some extent the thesis of the panel topic. The topic implies that Gazprom and Russian energy strategy has suffered from the global economic downturn. Gazprom and Russian energy concerns are subject to financial crises or economic downturns to the extent that the Russian government is – because Gazprom is an arm of the Russian state – not only that, but it is a prioritized arm of the Russian state that will not be allowed to suffer the same way that other Russian businesses, or even ministries, might be allowed to suffer.

In fact, since Russia’s national security doctrine defines Russian energy resources as a major foreign policy asset, andhighlights the possibility of resource conflicts – not only the phony gas cut-offs surrounding Ukraine, but real resource wars in Eurasia as a distinct possibility, Gazprom, I would argue, is likely to suffer the least of any arm of the Russian state.

If this were not the case – as the panel topic implies, Gazprom’s major pipeline projects when it comes to the EU market: Nord Stream and South Stream, should be suffering. Yet, Nord Stream, as we have seen in flurry of activity in recent weeks, is proceeding apace. It has received approval from Denmark, Sweden and Finland and will almost certainly begin construction in the new year.

South Stream is a different story – so far it has not been a realistic or serious project. It has served mainly as a geopolitical gambit to undermine the Nabucco project and the EU’s Southern Corridor more generally. South Stream would technically be enormously difficult and at the moment, judging by the statements of Gazprom officials, would be prohibitively expensive – even in times of an economic boom or very high energy prices. The purpose of South Stream, as I see it, is to emerge as a realistic project, with far more limited scope, if Nabucco falls apart. Or, most likely, the pressure that South Stream poses on Turkey and other Nabucco partners, will eventually mean that Russian gas will become part of the Nabucco project – thus undermining its entire purpose.

So, Gazprom’s real project, Nord Stream, does not seem to have suffered due to the economic downturn, and South Stream, the phantom project, continues to serve its purpose of undermining the EU’s Southern Corridor.

Now, I would like to expand this more broadly:

Russian energy strategy:

1. is and will remain primarily geopolitical – just look at who the decision-makers are in Moscow – they think in geopolitical terms – and particularly paranoid ones at that

2. Russian energy strategy seeks to exercise as much control over European and Eurasian energy markets as possible – increased market access for international companies and market openness and transparency are seen as a threat

3. Russian energy strategy is not motivated primarily by profits – for the state or individuals – but by the Russian national security priority of control and influence of Russia’s neighbors and other great powers

So, what are the conclusions to be drawn from these observations?

1. The idea that the solution to Europe’s energy security woes is to find a way for Gazprom to operate as a “normal company” is fallacious

2. The key to understanding Russian energy moves is analysis of Russian foreign policy goals

3. The imperative of reaching and exploiting alternative energy sources – everything from Caspian and Middle Eastern gas to renewables, is paramount

4. Most importantly – it is increasingly clear that this is not just a pipeline game – the immense potential of unconventional gas resources in Europe is about to dramatically change the continent’s energy picture – as it has begun to do in the North American market – that said, I think it is entirely realistic, given the control that Russian energy concerns seek to wield inside the EU, that Gazprom and other Russian concerns will attempt to exert control over the future development of unconventional gas in Europe – the reason this has been a game-changer in North America is because the gas market is open – these new resources may not end up being a game changer in Europe because the gas market is opaque and Moscow wields inordinate influence

Rügen is best known as a popular German tourist destination. But now the Baltic Sea island has taken on a new role as staging point for an energy project that is as ambitious as it is controversial: the Nord Stream gas pipeline from Russia to Germany. Next spring the first pipeline segments will likely be dropped to the sea floor in a line that will wind through Russian, Finish, Swedish, Danish and German waters—conspicuously avoiding the Baltic states and Poland.

This is because the Nord Stream project is part of an exclusionary agreement between Moscow and Berlin—nicknamed in circumvented Warsaw the “Molotov-Ribbentrop Pact,” after the 1939 Soviet-Nazi deal to carve up Poland. It would have been much cheaper to build an overland pipeline through Eastern Europe, but the purpose of Nord Stream from the beginning was to bypass countries Moscow still considers to be part of its sphere of influence.

Russia’s geopolitical message here is clear: It doesn’t trust the new EU member states as transit countries or even as energy consumers and is willing to incur enormous costs to bypass them. The other message—or implied threat—is that Nord Stream will allow the Kremlin to cut off gas deliveries to Eastern Europe through current pipelines without reducing energy supplies to Germany. But what sort of message does Germany, a fellow EU member, intend to send to its neighbors?

Nord Stream was championed by former German Chancellor Gerhard Schröder, who now serves as one of its executives. From within her previous coalition government, current Chancellor Angela Merkel lobbied successfully for EU endorsement of the project even though the pipeline consortium is registered in Switzerland and controlled by Russia’s Gazprom. Of the dozens of companies involved in the pipeline’s construction, not one is from the Baltics, Central or Eastern Europe.

Germany’s recent election results produced a ripple of hope among the countries on Russia’s periphery. With the traditionally pro-Moscow Social Democratic Party out of the governing coalition, would Mrs. Merkel perhaps seek to change the terms of the Nord Stream agreement and push Russia to alter the route so that the pipeline would cross the waters or territories of Eastern EU members? Perhaps she would lobby Moscow to include also East European companies in the Nord Stream consortium? At least, it was hoped, Berlin would throw its weight behind the Nabucco pipeline, which seeks to improve Central and Eastern Europe’s energy security with the help of Caspian and Middle Eastern gas. After all, Germany’s RWE is part of the Nabucco consortium and Mr. Schröder’s pro-EU former foreign minister, Joschka Fischer, is now a lobbyist for the project.

Recent progress on Nord Stream, however, has dashed those hopes. The Nordic countries had until now delayed the project’s approval, raising environmental concerns, which most interpreted as unease about the pipeline’s geopolitical implications. Last Thursday, though, Finland and Sweden—which holds the European Union presidency until the end of the year—joined Denmark in signing off on the project. It is this political momentum that has spurred the rush to get pipeline segments out to Rügen and other staging points. The very realistic prospect that construction on Moscow’s pet project might begin early next year is a symbolic blow to those seeking to reduce Europe’s energy dependence on Russian gas. Most of all, it is a blow to any semblance of EU unity on energy security. Russia’s neighbors, both within and without the EU, are already reeling from a sense of Euro-Atlantic abandonment following Washington’s “reset” policy toward Russia and the EU’s lackluster outreach to its Eastern neighbors.

It would be unrealistic to expect Berlin to change tack on Nord Stream so late in the game. But a newly re-elected Angela Merkal should carefully consider the foreign policy messages that come with laying pipe on the Baltic Sea floor.

In order to reassure fellow EU members and the institution as a whole, Berlin would do well to support what the European Commission considers its “strategic priority”: The so-called Southern Corridor, which includes Nabucco and several smaller pipeline projects. As a European heavyweight, Germany’s mere rhetorical and diplomatic support would go a long way in encouraging EU energy unity. Most importantly, it would send the message to Moscow that its “divide and conquer” energy policy has its limits.

This post was previously published in the Wall Street Journal.

If EU policymakers and companies are not going to go to Caspian energy producers with serious offers for their hydrocarbons, Caspian producers will just have to come to the EU. That seems to be the message being sent by Azerbaijan and Kazakhstan as their state energy companies partner to build an oil pipeline heading West-ward. Plans for the so-called Baku-Black Sea pipeline were announced at the Atlantic Council’s Black Sea Energy and Economic Forum in Bucharest on Oct. 2 by Vitaliy Baylarbayov, Deputy Vice President of SOCAR, the state oil company of Azerbaijan. Kazakhstan’s KazMunaiGas and SOCAR will build the new route to connect Kazakhstan’s increasing oil shipments across the Caspian to tankers in the Black Sea, which will likely disgorge their black gold in Romania to be fed into the planned Pan-European Pipeline (PEOP) from Constanta to Trieste. Rompetrol is one of the major European companies that could contribute to the PEOP project, and KazMunaiGas just bought 100% of Rompetrol. In the face of EU reticence about engaging the countries of the Caspian for fear of angering Russia, Kazakhstan has effectively arranged for its own delivery of oil to South-Central Europe.

When it comes to Caspian oil, the mountain has come to Mohammed. But European decision-makers cannot expect the same to happen for the Caspian’s far more strategic resource: natural gas. Not only is it the EU that is desperately in need of alternative sources of gas to diversify away from dangerous dependence on Russia, but the biggest gas player in the Caspian, Turkmenistan, has a strict policy of only selling its gas on its borders. Turkmenistan’s Director of the State Agency for Management and use of Hydrocarbon Resources, Yagshygeldi Kakaev, underscored that point at the Bucharest Forum, amongst counterparts from Bulgaria, Georgia, Romania and Turkey. In practice, this means that Western companies would have to build a Trans-Caspian gas pipeline from Baku to Turkmenbashi, on the Caspian’s eastern shore, to connect with the planned Nabucco line to Central Europe. China, the EU’s primary competitor for Turkmen resources, has almost finished its own pipeline across Central Asia to Turkmenistan’s borders, and despite a dispute with Ashgabat, Russia will seek to resume importing Turkmen gas in early 2010, some of which will be resold in Europe for inflated prices.

Kazakhstan has taken the initiative to string together its own pipeline network. Azerbaijan is positioning itself as a key energy producer and pivotal transit bottleneck between the Black and Caspian seas. Turkey is busy signing contract after contract to live up to its name as the world’s largest energy hub. Turkmenistan is courting consumers in Iran and South Asia, while Russia and China muscle in. The EU’s neighboring energy players are busy. Only Europe, the beggar, not the chooser in Eurasia’s energy game, is inactive. While the Lisbon Treaty and a new EU Commission have drawn the Union’s attention inward, neither Brussels, nor European capitals should expect to have their energy security handed to them.