FRENCH MFA ECON DIRECTOR ON ENERGY SECURITY

C O N F I D E N T I A L SECTION 01 OF 02 PARIS 001986 SIPDIS E.O. 12958: DECL: 10/29/2018 TAGS: ENRG ECON PREL FR SUBJECT: FRENCH MFA ECON DIRECTOR ON ENERGY SECURITY Classified By: Econ Counselor Stuart Dwyer for reasons 1.4 (b) and (d) ¶1. (C) Summary: In a 10/28 meeting MFA Economic Affairs Director Christian Masset provided an informal reaction to points contained in the President,s 10/21 letter to President Sarkozy on energy security issues. Masset said French and U.S. thinking was broadly in line on key issues. The French intended to boost the EU,s "political presence" in Central Asia during its presidency to encourage a supply shift towards European markets. France was "not giving up" on Nabucco, though finding sufficient production volumes remained a challenge. Sarkozy,s Georgia diplomacy had boosted EU credibility in the region in a way that might increase leverage with suppliers. Turkey remains a challenge and would have to prove it could be a "responsible hub" with appropriate tariffs and related policies. France supports opening the energy chapter in Turkish accession talks, but Cyprus has blocked the process. End summary. Boosting the EU,s Caspian Basin Profile - - - - - - - - - - - - - - - - - ¶2. (C) MFA Economic Affairs Director Christian Masset told EMIN October 28 that French thinking on energy security issues and the Caspian Basin is "fundamentally in line" with that of the United States. The French EU presidency had set out to boost the EU,s political profile in Central Asia, in part to draw energy supplies from other potential markets towards Europe. High- profile visits (in advance of, and during, the presidency),conferences and the September Central Asia ministerial in Paris were all intended to push in that direction. The European Council conclusions of October 16 -- including a call for a meeting with Caspian Basin and key transit countries during the Czech EU presidency -- reflected French thinking (though, Masset said, in somewhat "milder" language required for consensus). ¶3. (C) France and the EU have an ongoing dialogue with Azerbaijan and Turkmenistan to encourage those countries to "do business with the West," Masset said. President Sarkozy,s diplomacy during the Georgia crisis had boosted EU credibility in the region, he thought, and would be helpful to that process. ¶4. (C) France continues to support development of the Nabucco pipeline. Although production volumes remain a challenge, Masset said France was not giving up on Nabucco, and Europe needed to rearticulate its interest in the project. Turkey would be a critical piece of the puzzle and would have to prove it could be a "responsible hub," with appropriate tariff and other policies. Opening the energy chapter in EU accession negotiations -- which France favored -- could be helpful on that score, but Cyprus was blocking the process. Masset suggested the United States, with its influence in the region, could play a constructive role in cutting through the Turkey/Cyprus knot. Solidarity - - - - - - ¶5. (C) "Solidarity" was also a key feature of France,s approach to EU energy security. France had encouraged insertion in the 10/16 Council conclusions of a request for the Commission to study options for improving gas interconnections, notably in the Baltic States. Georgia was a wake-up call and had given this process a renewed sense of urgency. In addition, France was promoting "solidarity mechanisms" to ensure all member states had access to oil and gas reserves in the face of supply disruptions. Options might include creation of actual reserve stocks, or identifying swing volumes in existing contracts that could be designated for "solidarity" purposes in a crisis. Germany had resisted, Masset said, fearing it would end up footing a bill. But the 10/16 Council had resulted in an invitation to the Commission to develop proposals. France also wanted to continue work on boosting capacity of LNG shipments. Interdependence With Russia - - - - - - - - - - - - - - ¶6. (C) Developing an effective relationship of "interdependence" with Russia was the final, critical piece of France,s approach to EU energy security, Masset noted. The GOF hoped that current circumstances -- falling energy prices and a Russian economy heavily impacted by the financial crisis -- might encourage GOR interlocutors away from a zero-sum, "rapport de force" approach to the energy relationship. Energy would be part PARIS 00001986 002 OF 002 of Partnership and Cooperation Agreement negotiations, tentatively scheduled to begin at the November 14 summit. Discussions on ongoing investments and exploration of possible joint projects in the energy field would also be on the table. STAPLETON