By: Andrej Nosko
The following review was originally published in the CEU Political Science Journal Vol. 4, Issue 2, April 2009.
Balmaceda, Margarita M.: Energy Dependency, Politics and Corruption in the Former Soviet Union: Russia’s Power, Oligarch’s Profits and Ukraine’s Missing Energy Policy, 1995-2006. London: Routledge, 2008, 222pp; includes tables, maps, ISBN: 978-0-415-43779-0 (Preview at books.google.com)
Orbán, Anita: Power, Energy, and the New Russian Imperialism. Praeger Security International, 2008, 264pp, includes tables, maps, chronological timeline, ISBN: 978-0-313-35222-4
The year 2009, unsurprisingly, started with a traditional gas row between Ukraine and Russia. What was surprising, however, was that it was not only a mild nuisance as in prior years. This year, for the first time in the 40-years history of gas trade between Russia and Europe, there was no gas coming from Russia through Ukraine. As a result of dependence on the single supplier, and the single supply route, for the first time in history two EU member states, Bulgaria and Slovakia, were on the brink of a comprehensive blackout. Politicians in the affected countries were competing in blaming either Ukraine or Russia, or those more diplomatic blamed them both. Blame helps no one's understanding of the problem, and it always takes two to tango, not only in the Russian-Ukrainian energy relations, but also in the wider post-socialist-bloc energy dependence. Students of Central Europe who want to understand how Russia and her former vassals in Central and Eastern Europe (CEE) have been dancing now have a unique opportunity to find answers to these questions in two books published last year.
Two knowledgeable experts on the CEE region, Margarita Balmaceda, associate professor of International Relations and Diplomacy at Seton Hall University, and an Associate of the Harvard Ukrainian Research Institute and of the Davis Center for Russian Studies at Harvard University (PhD from Princeton University); and Anita Orbán, director of Constellation Energy Institute in Budapest, (PhD from Fletcher School of Law and Diplomacy at Tufts University in Boston), in their books provide complementary views on the underlying aspects of energy policy in the region. These two books are excellent guides not only for students of international relations or transition studies wanting to understand energy policy in CEE region, but also for policymakers, journalists, or practitioners in the energy business and PR companies.
There are two major questions to the post-socialist tango. First, how is it possible that these countries, which share part of their history, large sections of energy infrastructure, and set out on the path of transition at around same time, differ so much in how they manage their energy dependency? Why some are very picky about dancing with Russia, while others dance just like Russia wants them to? Second, why is it that Russia has been more assertive in this dependence tango at some times and not others? At times being very pushy about dancing in Central Europe, while at others minding just its own business? Answers to these questions are not only relevant to understanding relations between Russia and Ukraine, which is the focus of Balmaceda’s book; or relations between Russia and Poland, Slovakia and Hungary, analysis of which is offered by Orbán. Answers to these questions can help us not only for better understanding of post-cold-war (some say resurgent) Russia, but these answers help us also to understand the broader intricacies of post-socialist transition east of Berlin.
The presented books, despite using different cases and different theoretical approaches are exceptionally complementary in tackling these questions. Orbán on the case of economic relations between Russia on the one side and Slovakia, Hungary, and Poland on the other, focuses on the reasons why Russia, through its energy companies, succeeded in moving into Central Europe in certain times, while not in others. Since she argues that for Russia today the primary means to achieve power in international relations is through its energy companies, this perspective focuses primarily on explaining the conditions for the outcome of Russian foreign policy through economic means. She thus provides analytical means for understanding temporal variation in the relation of dependency in the theoretical context of neoclassical realism.
Balmaceda, on the other hand, using a modified institutional approach, analyzes effects of the domestic political circumstances on the management of Ukraine’s energy dependencies on Russia. The puzzle that she researched evolves around “domestic factors that stand behind Ukraine’s continued energy dependency on Russia and its apparent inability to escape it.” Balmaceda criticizes the state-as-actor perspective, which is traditional to realism, (and is modified by Orbán to include perception of elites), and offers an incentive to rethink both interest representation and policy-making in the post-soviet transition. Balmaceda points out that it is not sufficient to look at policy-making only in terms of ‘state’ vs. ‘private’ but the role of specific interests and actors should be analyzed especially in the post-soviet transition.
Orbán looks at states as influence maximizers, guided by the perceptions of their elites. Balmaceda does not question the final outcome that Orbán offers, but goes deeper and opens up the black-box-of-state for further analysis through focusing on the internal interest formation, and cross-border elite collusion, which is unthinkable in the classical realism school. While Orbán’s perspective explains well the perspective of Russia’s foreign policy goals and its variation on the side of Russia, it does not aim to explain the responses of target countries. Therefore, reader might be wondering, why is it that Russia’s foreign policy outcome in, for example Slovakia, was 1 out of 2 times Russia-friendly, even if the government was “Russia-skeptical” and the outcome was not necessarily in the interest of influence maximization for the Slovak state? The analysis offered by Balmaceda in the case of Ukraine offers a good explanation of why Ukraine was unable to rid itself of this dependency. Through extrapolation, this analysis also offers an opportunity to understand why ridding of Russian influence in the energy sector was such a rare incidence among former socialist countries.
According to Orbán’s argument, Russian energy companies expand in Central Europe, if and when Russian elites perceive Russian influence in the world as being low – giving them the will to act – and the Russian state has enough power to mobilize the necessary resources, thus providing Russia with the ability to act. Orbán tests this hypothesis during six periods, between 1991 and 2008. In the three empirical chapters, she walks the reader through six periods of Russian activity in three countries – offering together 15 events, which form the core cases. Balmaceda’s argument, on the other hand, is that the domestic political system of Ukraine created certain “windows of opportunity” for access to energy rents, which created also incentive for the involved actors to preempt changes in the system of existing suboptimal institutions that were intertwined with rents distribution. The central role in the interest formation in Ukraine, according to Balmaceda, was played by competition, struggle and accommodation between intra- as well as inter-state economic groups. This happened in the context of conflict and reintegration-attempts with Russia, over access to energy markets, supplies, transit and distribution of economic rents. The surprising conclusion that Balmaceda offers is collusion between the Russian and Ukrainian elites, which explains why Ukraine was unable to form independent energy policy, and set out on a genuine reform path. Her detailed account of the 2006 gas row sheds strong light also on the Orange-revolutionaries. After reading the accounts of gas trade and allegations of involvement of the highest political leaders, (which have also partly reemerged in the context of the 2009 gas row) the sweet ideals of the anti-corruption ticket of the pro-western Orange revolution have a somewhat bitter aftertaste. It is nonetheless important to note that author is cautious and presents publicly available allegations and supports the claims with many references to original sources in Ukrainian media or publicly made proclamations.
The research design Orbán employs is simple yet robust. The effects of the independent variable of relative distribution of power in the international system are catalyzed by two intervening variables. The domestic perception of the international system, measured through the analysis of a wide-array of media sources, and interviews; and the level of state power available for the country’s leaders, operationalized as state’s ability to collect recurring revenues, as second. She chooses to use share of tax revenues on total GDP to measure this variable. The dependent variable of the book is foreign political outcome, which is operationalized as the behavior of Russian energy companies in Central Europe. The Russian strategy, as Orbán argues, was in securing the monopoly position in the energy supply; this by first entrenching in the role of the monopoly supplier, and second by preventing diversification attempts. Russian companies were trying to gain leverage over the whole value chain through controlling companies with import rights, transmission owners, and wholesale companies, or refineries in the case of oil.
When summarizing Orbán’s results, Poland can be portrayed as Russia’s ‘bad neighbor’ with only 50% of Russian attempts to gain stronghold in its energy sector succeeding, followed by a 75% success rate in Slovakia and Hungary. Orbán further differentiates the results according to the stance of the domestic government. Thus, if a Russia-skeptical government is ruling the country, Russia still had 50% chance of getting its goals in Slovakia, while it had nil chance in Hungary, and only one out of three attempts could succeed in Poland. What is lacking in Orbán’s book, and the theoretical school that she is embedded in, is the explanation of the internal mechanics of the domestic receptiveness towards Russia. This is precisely where Balmaceda fills the gap.
Balmaceda operationalizes her variables carefully, offering a precise working definition of energy dependency (p. 16) as well as management of it, which she conceptualizes as way of handling energy supply diversification, organization of energy trade with main supplier, and energy-policy-making. The primary interest aggregators that she works with are the “Business-Administrative Groups” (BAGs, sometimes referred as ‘clans’). Balmaceda’s analysis is organized into three parts. In the first part, she sets the context and frame of reference of the interest formation, focusing on the role of energy in the relations of Ukraine with the main international partners, including EU and Russia, and provides the historical evidence for her argument. In the second part of her book, she further analyzes president Kuchma’s period and introduces the reader to the intricacies of the energy dependency rent system from 1995-2004. In the third part of the book, Balmaceda looks at energy policy and energy dependency after the Orange revolution. In the final chapter she focuses on an in-depth analysis of energy policy during Yuschenko’s rule.
An important policy conclusion that Balmaceda comes to is that the international community should not look at the problem in terms of Ukraine vs. Russia, but rather as a problem of corruption and lack of transparency. As a way out Balmaceda suggests eliminating innate features of the post-soviet energy market, such as lack of transparency, attractive arbitrage opportunities, difference between near-abroad export prices and lack of liberalization of domestic markets. She further notes Russia’s refusal to ratify the Energy Charter Treaty and her control over the exports of energy among additional problems. Finally, (p. 143) she puts energy in the context of transition, pointing out that raising energy prices and the pressure on the reform of the energy-inefficient economy could be a blessing in disguise. The feasibility of this is, nonetheless, even more questionable in the current economic situation in Ukraine.
The conclusion offered by Orbán is somewhat more alarming and sobering. She vividly demonstrates the relationship between the Russian corporate activity and the Kremlin’s foreign policy. In addition to Moscow's already observed attempts to build-up a neo-mercantilist empire in the so called near-abroad, as recently demonstrated also by the adventure in Georgia, she presents persuasive evidence of similar strategies pursued in the eastern part of the EU and NATO.
Both books are quite ‘readable,’ with sufficient theoretical basis, but not too much to ‘put-off’ the less theory-informed policy practitioners. In order to keep the depth of theoretical discussion, Orbán even offers an extension of it via 43 pages of endnotes. Both books are well illustrated with a number of lucid maps to walk even an untrained eye through potentially confusing meshwork of pipelines crossing the region. The annex of Orbán’s book also includes chronologies for her case countries, listing the most important political, and economic milestones. What might be surprising is that 68 pages of endnotes accompany Balmaceda’s book, which is all together 145 pages long. This only further exemplifies the level of detail with which she researched her case.
There are only few, forgivable beauty spots that one can notice. In Orbán’s book, due to perhaps a typographic mistake, the introduction of the main argument confuses reader, when in the introductory chapter (p. 5) the main hypothesis is introduced reversely from what the she later illustrates in a table (p. 32), and what she proceeds with testing, and concluding. It is also regretful that many of the hyperlinks listed in Balmaceda’s endnotes do not work, which might be partly because they are ‘dynamic’, stretching over many lines, and thus more susceptible to typographic errors. The solution, useful also for other authors wishing to list the complete uniform resource locator (URL) to the electronic source they are citing, could be in using ‘URL shortening services’.
Overall, both books are well-researched works, enriching not only understanding of energy policymaking in CEE, relations between Russia and its western neighbors, but also transition studies in general. Both books significantly contribute to their respective theoretical schools, while also generating new research avenues to be followed. Either on the side of neoclassical realism, where Orbán’s research design could be replicated in the so-called near abroad, and tested on the case of Ukraine, or Balmaceda’s research design which could be tested on the cases of Poland, Slovakia and Hungary.
It is also pleasantly surprising for a well-informed student of CEE region to find two books presented in English that master the local cross-country context and empirical evidence with such a high level of detail and insight. Both of these books not only offer ready-to-use policy advice for the governments of the case-study countries, EU as well as USA, they also stand as an excellent reference for journalists covering Central and Eastern Europe, and Russia. Finally, thanks to their academic rigor, well-grasped theoretical context, and empirical richness, they are an indispensable resource for students and researchers of economic relations in the CEE region during the first two decades of transition.
May 6, 2009
Two new books on energy in Central Europe
Jan 8, 2009
Russians are strangling Europe
[Original published in Slovak on 7.1.2009, translated by Andrej Nosko. Translated and republished with the permission of the author.]
January 2009 marks the end of 40-years-long fair and mutually beneficial energy cooperation between Moscow and Europe. From now on, European customers must be well aware that the Russian partner is not only trading with them, but his priority is promotion of geopolitical interests of the Kremlin. Vladimir Putin, already in March 2000 declared, that "Our work (meaning the export of oil and gas) will be driven by our geo-strategic interests!" Since then, in a targeted and very effective way, the Kremlin uses energy cooperation and the supply of raw materials for the promotion of its foreign policy interests. Brezhnev's doctrine of limited political and [national] security sovereignty for Eastern Europe was replaced by Putin's doctrine of limited energy sovereignty.
The argument that it is primarily a trade dispute between inadequately paying Ukraine, and tough Russia is ultimately wrong and misleading. Regular followers of these issues known, that these tensions have always been present between Ukraine and Russia. But it is only since February 2004, when Gazprom for the first time deliberately disrupted gas supplies to Belarus, as well as a further transit to Poland and Germany, that switching off gas and oil pipelines has become a regular Russian practice. This has nothing to do with civilized business, because the question of price and the letter of the agreement is always a matter of agreement of both parties, and the third parties cannot suffer due to this. THE KREMLIN AND GAZPROM VERY WELL KNOW THAT WHENEVER THEY CLOSE VALVES TO UKRAINE OR BELARUS, THEY ARE CLOSING THEM FOR EUROPE AS WELL. The subsequent Russian "P.R." aerobics about how evil Ukrainians steal transited gas are spiteful, because in the given technological circumstances, Ukrainians simply do not have enough gas to power their transit compressors, and at the same time to balance their pipeline system. Targeted and repeated discrediting of Ukraine as a reliable transit country for gas and oil, should compel the Europeans to swiftly agree, and primarily to foot, the huge and unnecessary bills for the construction of new pipelines through the Baltic and Black Sea.
Are today's events surprising? For a considerable part of the EU they certainly are. European leaders, particularly those from key countries such as Germany, France and Italy, often prefer narrow commercial interests over international security interests of not only their EU partners, but even of their own citizens.
The real shock is experienced by those countries and governments that still have not done anything for the diversification of gas and oil, and remained totally dependent on the Russian supplies. All Slovak governments, and managements of SPP [Slovak Gas Company] up to date, have failed in this area. Let me be personal. For the past ten years, I have repeatedly emphasized the gravity of this situation in my various articles, analyses, as well as numerous speeches at various conferences, and personal meetings with various politicians.
For years, I have been frustrated over the fact that almost none of them considered this a problem. I was disappointed that representatives of investors repeated phrases about the reliability of Russian supplies, while they knew that the absolute priority of their domestic companies has always been diversification of supplies so that no supplier could blackmail them.
The responsibility for the situation in which we had to declare the emergency, and a real energy crisis is around the corner, is not borne only by Gazprom, but also by all responsible in Bratislava, because they were not properly prepared for this situation.
The hard lesson for citizens and businesses is, that not artificially low domestic prices should be the priority, but fair prices reflecting the highest possible reliability and continuity of supply from abroad.
What's the use of low price, if the pipe is empty? The case of diversification is similar to insurance. It is costly, but if my life, property or business is to be ensured against unexpected events and unfair partners it's a necessary expense. This is one but not the only reason why we have to urgently review the reality of our recently approved energy security strategy.
Sep 12, 2008
The Economics of Energy Security panel
Freedom House Europe, with support from the embassies of the United States, the United Kingdom, the Czech Republic, the Netherlands, Norway, and Central European University, organized a roundtable series focusing on energy security in Europe.
PERG section editor Andrej Nosko moderated the first of the series, The Economics of Energy Security panel. The proceedings of the panel are now fully available in flash video format on the Freedom House Europe website. In addition, downloadable versions of select presentations are also available.
Video of Andrej Nosko introducing the Freedom House Panel on The Economics of Energy Security and the first speaker Professor Alan Riley from City University in London discussing the challenges posed by Russia’s inefficient gas industry to Europe’s long-term energy supplies:
More videos are available directly from the Freedom House Europe website.
Aug 27, 2008
Energy and the South Ossetian War: the BTC as the Main Casualty?
By Vladimír Šimoňák, PERG guest author
For the first time in the nearly twenty years since it began, the events in and around South Ossetia hit the world´s media landscape, almost overshadowing even the massive spectacle posed by the beginning Beijing Olympics. A peculiar tragedy of the events consists in the fact that this one has been regarded as the „friendliest frozen conflict“ in the South Caucasus. Intermarriage rates between Ossetians and Georgians and the density of contacts between ordinary citizens on both sides, the frequency and ease of travelling between the regions had been much higher than in Abkhazia and Nagorno Karabakh. Yet, few people ever assumed any degree of hostility between the two peoples might have caused the events of August 2008. It is equally evident that NATO´s interest in Georgia is to a major degree substantiated by the hydrocarbon transport routes running through the small and poor nation.
Being a part of a prolonged and rather complicated conflict, this full-scale war broke out after a shock-and-awe onslaught by Georgian forces on Tskhinvali, the separatist capital of South Ossetia located some five kilometres away from the de facto border. Even though the swiftness of Russia´s response has been interpreted as the corpus delicti of its evil intentions, it took a less than vigilant observer to see something was to come. Over the past months, tensions between Georgia and its breakaway regions had been rising and military confrontation had become a common sight. Immediately before August 8th, South Ossetian leadership decided to evacuate a part of its population, by itself an unprecedented step. By early August, signs of immediate escalation had become ubiquitous and Russia was certainly well informed and ready for action. The initial Georgian advance was halted and reversed after some three hours. In a nutshell, more than five years of intense and costly U.S.-led foreign military aid to Georgia produced an advance by less than twenty kilometres for a couple of hours. Afterwards, with the Georgian military effectively dissolved in thin air, the Russian troops took their time to complete what business their leadership wanted to get done. Russian forces took their time to inflict as massive a damage as they could to Georgia´s strategic infrastructure, the seaport of Poti and the only trans-Georgian railway being just examples. The next occassion for the Russians to roam about freely in Georgia might take years to come. With the fog of war dissolving, what is the impact on the energy market?
Regarding the oil transport, the Baku – Tbilisi – Ceyhan (BTC) pipeline had already been put out to a halt. Two days prior to the Georgian assault on Tskhinvali, a bomb exploded near the BTC on Turkish soil, forcing the operator to shut down oil transports for weeks. The Kurdish PKK claimed responsiblity, shifting the event out of focus. During the fighting, the BTC was also allegedly targeted by Russian jets, which the Georgian side swiftly interpreted as an attempt to destroy the facility. This isolated incident may be explained rather as a sort of message to the BTC operators, as nothing could have prevented the Russian forces from destroying the pipeline, had they intended to do so. The oil transport via the Black Sea port of Supsa has come to a halt on August 12th, the operator citing „security concerns“. Russian troops making themselves at home in the narby Poti have probably been thought to be more dangerous than the intense fighting itself, as August 12th was precisely the day on which Medvedev announced the end of Russian military actions.
The Baku – Tbilisi – Erzurum gas pipeline was working until August 12th and resumed functioning only two days later. No direct threat to the pipeline has been reported, not even by hysterical Georgian officials. Rather than the weapons used in the conflict, what we may find surprising are the ones actually not used: Russia never cut its gas supply to Georgia during the fighting, albeit it had done so several times in recent years. A possible explanation is the intention not to harm natural gas supplies to Armenia, Russia´s ally already put in a difficult position by the events.
Quite remarkably, the global oil market showed no perceivable reaction, even though the events effectively stopped Azerbaijani and Kazakh oil from using the „Georgian passage“ bypassing Russia´s pipelines. Russian troops have effectively stopped this highly valued transport routes from working for weeks, and showed a good deal of reluctance to leave central Georgia, the pipelines´ most sensitive point. Despite such tangible insecurity, the world markets recorded a decline in crude prices, actually quite a sharp one, compared to the record of several recent years. The bottom line is, there is no reason at all to claim that the energy industry in the region was caught by surprise by the events and that the war affected its business-as-usual. But are there consequences in the long run?
Not only have the Russians physically occupied territories adjacent to the highly valued and strategically important pipelines, forcing them to shut down. They even declared their firm intentions to establish a permanent presence in extensive „buffer zones“ close to South Ossetia and Abkhazia. Such a step would basically remove the advantage gained by forcing Russian troops from their cherished bases of Viazani and Akhalkalaki in recent years. What had been cited as an unacceptable threat to the BTC project in construction is escaping all attention as it is functioning.
The United States have reacted in perhaps the least self-confident way since 9/11. Strong rhetorics and high-profile visits (including the quite riduculous use of a destroyer for carrying „humanitarian aid“, instead of a freighter) are clearly less than expected by anyone, including the nervous Georgian president. The lack of a clear preference regarding the future of the region in general and of Saakashvili´s leadership in particular (accentuated by the forthcoming U.S. presidential elections) remind of Shevardnadze´s last years in office. South Ossetian war may well be the point when a replacement has to be found to overcome the barrier so painfully hit by Georgia.
In the eyes of the public, the only goal not attained by the Russians was their supposed interest in removing Saakashvili from power. A feasible explanation might be the simple remark that leaders are removed from power by being replaced by another ones and the Russians clearly had not had a full-fledged “liberation“ scenario including an alternative leadership. But, is there an option to regime change when the Russians leave? Georgian society will be left in deep depression, both economically and psychologically, with its leadership´s emblematic policies having suffered the most evident and complete defeat and foreign investors´ confidence plunging into the abyss. The opposition, once suppressed by Saakashvili´s regime, might come to pose a serious alternative.
The rhetoric confrontation accompanied by a striking lack of actions may be indicative of a change in direction. As almost anybody is more acceptable to Russia than Saakashvili, it should not be difficult to find an alternative acceptable to NATO. Such a person may also prove to be more predictable and controllable in his or her (let´s not forget several important female figures of Georgian politics) actions. The sight of a ruined and defeated important U.S. ally may lead to a number of conclusions, including the one that Saakashvili has been quite more of a maverick than fitted his role. Given Saakashvili´s deep-rooted Russophobia, almost anyone can be expected to understand the simple fact of Russian neighborhood more than he had.
As a conclusion, the recent events may well result in o certain sharing of influence in Tbilisi, or rather an acknowledgement of legitimate Russian interest in the Southerm Caucasus. Under such terms, the BTC may well lose most of its political appeal to potentially independent-minded leaders around the Caspian Sea, a signal that has probably already been understood in Astana. A partial gain of influence of Russia over the BTC means more of a loss for the others, depriving the region of the only way of exporting its oil and gas (by far largest source of income for any of its governments) without Russia´s interference. The „buffer zones“ and Russian posts along the pipelines may well be just the first steps of putting this emerging reality on the map.
August 26th, 2008
May 14, 2008
Reversing of oil pipelines
By Andrej Nosko
“Slovaks want to import oil from Czech Republic” reads the headline of a news feature, run on April 15, 2008 by a Czech daily E15. This story has been copied by all major Czech and Slovak news hubs. Even if one subtracts the bombasticism and ‘exclusivity’ common to the lay journalists, this news is surprising and makes one wonder about three things: authenticity of the news on ongoing negotiations, relation of this news to the wider context, and timing of this message.
Authenticity of news
It is difficult to question the authenticity of the information, whether any negotiations are ongoing between Czech and Slovak administrations, since usually these kinds of negotiations are kept confidential. Tomáš Bartovský, the spokesperson of Czech ministry of Industry and Commerce was quoted by E15 as affirming the ongoing negotiations. The direct quote refers to the situation that “would concern solving of potential supply outages,” no further context of this comment is provided. The daily further quotes director of Czech oil pipeline operator MERO ČR a.s . Jaroslav Pantůček, as saying that reversing of pipeline would cost couple of tens of millions CZK (10M CZK approx. 400k EUR), and that Slovaks would have to finance this operation. The daily further notes, unavailability of any further information on negotiations between Slovaks and German operator of TAL pipeline which feeds in the IKL from the Mediterranean port of Trieste, and which would be a necessary condition for the Slovak-Czech deal to have any substance.
Relation to the wider context
The context and timing of this message is rather bizarre. First of all, the idea of reversing Druzhba to supply Slovakia through TAL-IKL is not novel. When the IKL has been conceived in what was back then called Czechoslovakia, it was a preferred project over an idea of connecting refinery in Slovak capital of Bratislava (Litvinov 5.4 MT/yr, Kralupy 3.3 MT/yr.) to the AWPpipeline (annual capacity of 10 MT/yr) leading to the refinery close to Austrian Capital in Schwechat. (capacity of 9.6 MT/yr) which is also supplied by TAL, but unlike the branch leading to the refinery in Ingolstadt, the capacity of AWP is projected only for the needs of Austrian refinery, and thus rather limited for transporting additional supplies. It was preferred, because connector to Ingolstadt would provide for the possibility of supplying also Slovak part of the federation. Nonetheless, this possibility has to be seen in the wider context. The supplying of Slovakia through TAL-IKL would mean prolonging the transit from the oil exporting country, than loading of oil to a oil tanker, offloading the tanker in Italy, shipping it through Italy, Austria, Germany and Czech Republic further to Slovakia. When one puts this barrel of oil into such a globetrotter context, other reversing plans come to the picture as well.
The most interesting is the possibility for Ukraine to reverse its pipeline between Odessa and Brody to supply its western neighbors with oil from the modern port of Odessa should the exports of Russian oil through Druzhba cease.
Furthermore, the context of the reversing of pipelines has the other side or rather, other direction, as well. Czechs are discussing reversing of IKL to export Russian oil since the early times of IKL has been put into operation, and its capacity has been rather underutilized. This would nonetheless entail changing the technology of the Kralupy refinery, since it is currently unable to process high-sulphuric sorts of pipeline-Urals oil from Russia.
Additional option, envisaged by Transpetrol (owned by Jukos Finance) and OMV already in 2003 is the possibility of building the connector to Schwechat, this option is still on the table.
Timing of the message.
Another question that one can be wondering about, is why has this information been released now? Is it just a coincidence, or is it a part of some information game? Just few days before this message was released, Russian PM visited Slovakia, and a major Slovak daily Sme juxtaposed coverage of his visit in Slovak and Russian media. On the first sight it is quite clear, that Mr. Fico (Slovak PM) met a different Russian PM and Mr. Zubkov has apparently met a different Slovak PM than Mr. Fico, since these two people referred about their meeting in such a different ways. Nonetheless, this question should be dealt with in a different post.
by Andrej Nosko
May 12, 2008
Coping with the energy import dependence - Problems of economic security in Czech Republic, Hungary and Slovakia
By Andrej Nosko
Decade after the Cold War ended, the first three post-communist countries join North Atlantic Treaty Alliance, epitome of their former enemy. Ceremony in the city of Independence , Missouri was not only to mark the end of the bipolar world, but also the regaining of political independence of the post-socialist countries. The first three forth-runners were joined by others and not long after the EU15 have grown to EU27, with all but two of the new member states remembering COMECON .
Nonetheless, Independence is a bit more than a name of a city in the Midwest United States. It is also bit more than political declarations. Although nobody doubts that EU8 are politically independent, their common historical legacies are haunting them where their economies are sensitive the most. They all share almost complete dependence on the imports of energy supplies. To add to the seriousness of their situation, they are all dependent on the imports of these crucial resources from their eastern neighbor, under whose patronage they lived well over half of the century.
In this blog section, you are invited to follow stories of coping with energy import dependence in the three landlocked countries of Czech Republic, Hungary and Slovakia, which have all started their transition paths in relatively comparable situation, but since have gone a long way in different, but often replicating directions – sometimes learning from each other, sometimes replicating the same mistakes.
The goal of this blog is to offer theory-informed commentary, focusing on the current events, asking tough questions, formulating hypotheses, and putting them into the historical perspective. The sources are listed with each post, some of the general sources will include company and local news, primarily from ISI Emerging Markets, LexisNexis® Academic Country specific news will be derived from Slovak economic weekly Trend with its excellent energy specialist Karel Hirman and his blog, in the Czech republic, the news will be followed from the Portal of Economic Daily iHNed.cz, the Hungarian news will be processed from international and domestic English sources like Budapest Sun and Caboodle . The stories from the EU will be followed in general news, official institution websites and Euractive.com website. The sources for the theoretical aspects of the blog will be elaborated in a separate post.
by Andrej Nosko
views since October 22, 2008.
