TURKISH AMBASSADOR POSITS GAZPROM PLANS TO

C O N F I D E N T I A L ASHGABAT 000140 SIPDIS SIPDIS SECSTATE FOR DAS BRYZA, EUR/CACEN, SA DAS GASTRIGHT E.O. 12958: DECL: 01/27/2016 TAGS: ECON ENRG EPET GG KZ PGOV PREL RS TX UP US SUBJECT: TURKISH AMBASSADOR POSITS GAZPROM PLANS TO ESTABLISH A MONOPOLY IN EUROPE Classified By: Ambassador Tracey Ann Jacobson for reasons 1.4 (b) and ( d) ¶1. (C) During a lunch he hosted for Georgian Ambassador Petriashvili, Ukrainian Ambassador Mayko, and U.S. Ambassador, Turkish Ambassador Hakki Akil argued passionately (with the help of visual aids) that Gazprom is intent on establishing a monopoly of gas supply to Europe. Akil argued that Gazprom is doing its utmost to gain control over the "upstream" -- ie., gobbling up Central Asian gas supplies (witness recent deals in Uzbekistan and Kazakhstan and approaches to Niyazov to buy all Turkmen gas). Further, Gazprom is pursuing pipeline purchases to control the midstream, and is even pushing deals in Europe to buy into distribution networks to influence up the downstream. Akil believed that a secondary goal of Russian pipeline projects (Baltic, Yamal 2) is to bypass Ukraine. Akil, Mayko and Petriashvili agreed that Russia would use any such monopoly to "blackmail" Europe politically as well as economically, but lamented that the EU either did not yet recognize the danger, or was unwilling to confront it given economic links with Russia. Akil was particularly concerned that Russia was preparing to make some political concessions to Turkey (eg., agreeing to approve the UN SecGen's Cyprus report, which it is currently blocking) in order to get approval to double the capacity of Blue Stream -- which Akil argued would kill any real chances for a new Trans Caspian project. ¶2. (C) Akil identified Kazakhstan and Turkmenistan as the only potential "weak points" in Gazprom's strategy. Mayko and Petriashvili opined that Kazakhstan was already "lost" and said "only the USG" could give Niyazov the support he would require to break away from Russia. Ambassador reviewed the problems with the first TCP, and noted that even if the situation now was more positive, it would be difficult for the USG to give Niyazov the real strategic partnership he believes he needs to balance Russian pressure without more progress in other areas of the bilateral relationship (eg., human rights) and a more compelling indication of his interest in the project. Ambassador noted that Secretary Rice has spoken quite clearly on the unacceptability of Russia's use of energy policy to pursue its political agenda, and also that the USG remains interested in multiple export routes for Turkmen gas and diversification of gas supplies for Europe. However, the USG has not yet committed its resources, and cannot commit U.S. business, to a single trans-Caspian option. ¶3. (C) Mayko left the lunch early for a meeting with Foreign Minister Meredov to receive the GOTX's formal response to Ukrainian President Yushchenko's proposal of a Trans-Caspian/Black Sea export option to Ukraine; he had "preliminary information" that the response would be negative (ie., "we are interested and will study further.") Akil argued that even a rejection of the somewhat grandiose Ukrainian proposal would not imply an unwillingness to pursue the smaller TCP-only option. Mayko hoped to receive a readout of Niyazov's meetings with President Putin this week, which he promised to share (Note: the GOTX, to our knowledge, has not given any mission a readout of these meetings.) ¶4. (C) Comment: Petriashvili said during a meeting with Georgian President Saakashvili yesterday, the Vice Chair of the Russian Duma, in reference to the current gas crisis in Georgia, said: "We already warned you. Either you are on your knees to us, or your people will freeze every winter." Regardless of the veracity of this anecdote, the Russians have already made clear that they're willing to use their control of energy supplies to pursue their political agenda, at least within the near abroad. The implications of Russia establishing this kind of influence in Europe are worrying. What role Niyazov will play in the development of this game remains unclear. JACOBSON