ENERGY SECURITY: FRENCH GOALS ON CENTRAL

UNCLAS SECTION 01 OF 02 PARIS 001777

SENSITIVE
SIPDIS

STATE FOR EEB; EUR/WE; SCA

E.O. 12958: N/A
TAGS: ENRG ZK PREL FR EU
SUBJECT: ENERGY SECURITY: FRENCH GOALS ON CENTRAL
ASIA/CASPIAN


1. (SBU) Summary. In a September 17 meeting with MFA
Director for Economic Affairs Christian Masset,
Special Envoy for Eurasia Energy C. Boyden Gray shared
concerns over Caspian Basin supply diversification
issues and the need for greater EU engagement with
Central Asia. Masset told Gray the issues were
priorities for the French EU presidency, and were part
of the rationale for the September 17-18 EU-Central
Asia Ministerial Forum on Security Issues in Paris
(which would feed into a Baku Initiative meeting
scheduled for late November). Masset said France
wanted to pursue a balanced, "triangular" relationship
among Russia, Central Asia and the EU. Should Russia
fulfill the Georgia ceasefire conditions, the November
14 Russia-EU Summit could provide a roadmap for the
energy portion of a new Partnership and Cooperation
Agreement. An MFA official debriefed econoff
separately on the outcome of the EU-Central Asia
Ministerial Forum. End summary.
Turkey and Iraq
--------------


2. (SBU) In a September 17 meeting with MFA Economic
Affairs Director Christian Masset, Special Envoy Gray
shared observations on the challenge of securing
Caspian Basin energy supplies for Europe. Effective
engagement with Turkey would be critical, given its
key transit role, its challenging domestic politics
and its own energy needs. On the latter, Turkey's
interest in securing energy supplies from Northern
Iraq would be complicated by the lack of hydrocarbon
legislation in Iraq and complex Kurdish relations with
the Iraqi authorities.

3. (SBU) Masset said the events in Georgia justified a
new assessment of Turkey and its role as a hub, a role
which the French support. While the EU needed a "good
dialogue" with Turkey on energy, Turkey had made a
"big mistake" on Nabucco and generally had an inflated
sense of its bargaining power. Masset agreed with
observations on Iraq, and noted in an aside that
France "wanted to be present" economically in Iraq and
would engage the U.S. further to that end.
Central Asia
--------------

4. (SBU) Masset said France shares U.S. views on the
need to address security of energy supply in Central
Asia and the Caspian countries, and had made the issue
a priority for its EU presidency. Energy security in
Central Asia would be a theme of the first EU-Central
Asia Ministerial Forum hosted by the French (para 7),
and would be a topic for discussion at the European
Council meeting in October.
Russia
--------------

5. (SBU) Masset said France will pursue a balanced
triangular relationship among Russia, the EU, and
Central Asia. President Sarkozy had made it clear to
the Russians that either they fulfill conditions of
the Georgia ceasefire by October 10, or face
suspension of negotiations on a new strategic
Partnership and Cooperation Agreement (PCA). If
Russia complies, energy would be an important
component of the November 14 discussions on a PCA.
France envisions an "energy roadmap" with Russia based
on the St. Petersburg principles that would also
include concrete joint energy sector projects to
highlight common interests.

6. (SBU) To strengthen its position with Russia,
Masset underscored the importance for the EU to
implement available "solidarity mechanisms" to better
cope with energy supply crises and other eventualities
that may hit member states asymmetrically. France
realizes that Europe cannot do without Russia to meet
energy supplies. It is also clear Russia will face a
production shortage in the next decade. France will
pursue a relationship of interdependence with Russia
and push the GOR to approach energy security with a
long-term perspective, he said.


PARIS 00001777 002 OF 002


First EU-Central Asia Ministerial Forum
--------------

7. (SBU) Although presumably the elephant in the room
at the EU-Central Asia Ministerial Forum, held in
Paris on September 18, Russia did not come up in
discussions, according to MFA desk officer Christophe
Sammartano. The Forum included participants from the
EU 27 member states, Kazakhstan, Uzbekistan,
Tajikistan, Turkmenistan and Kyrgyzstan, as well as
the IEA and EBRD. The main subjects were terrorism
and non-proliferation, human and drug trafficking, and
energy and environmental security. Energy security
discussions were designed to inform a meeting of the
Baku Initiative (end November in Brussels),which will
look at energy market conditions including energy
resource management, infrastructure issues and routes,
and energy efficiency.

8. (SBU) Sammartano noted that most participants
assumed Central Asian energy interests were oriented
toward the EU. Bulgaria reminded participants that
the Central Asian countries are not limited to EU
markets and would consider selling to other countries
(China, Parkistan) in accordance with market
principles. Romania expressed its desire to act as a
link to the region. Hungary proposed to hold a
conference on the Nabucco project in early 2009 (to
which the U.S. will be invited) with the EU consortium
members and producer, consumer, and transit countries.

9. (U) The declaration of the Forum included the
following points, inter alia:
-- reinforce cooperation in energy and harmonize
interests of consumers and suppliers, transit states,
and transnational companies to strengthen
international energy stability;
-- encourage diversification regarding potential
transport options involving all the countries
concerned and develop different hydrocarbon transport
corridors to ensure energy supply for European markets
and other international markets;
-- in light of the conclusions of the energy
ministersQ conference in Baku in November 2004, focus
on the development of regional energy markets and
financing capacities for new infrastructure;
-- implement forward-looking energy policies and
create an investor-friendly environment with an
appropriate role for market mechanisms;
-- develop collaboration to exploit hydro-energy
resources, taking into consideration the interests of
all the regionQs countries;
-- provide EU support to the development of hydro
energy in Central Asia to reduce greenhouse gas
emissions without prejudice to the regionQs
environmental security.
STAPLETON