EU/RUSSIA/UKRAINE - THE DIFFERENCE A DAY MAKES

UNCLAS SECTION 01 OF 02 BRUSSELS 000013 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EPET EUN SUBJECT: EU/RUSSIA/UKRAINE - THE DIFFERENCE A DAY MAKES REF: BRUSSELS 6 Sensitive but Unclassified - not for Internet distribution. ¶1. (SBU) Summary and Introduction: Over the past 24 hours the mood in Brussels has shifted from concern over how to get Ukraine and Russia back to the negotiating table to concern over gas supplies for EU Member States. A Commission contact told Econ Officers this morning that the Ukraine/Russia situation has entered the "crisis stage" and that Slovakia, the main point of Russian gas transiting through Ukraine, has registered a reduction of more than 80 percent in gas volumes. He also said that gas to Bulgaria has already been completely cut off. Some 80 percent of the EU's Russian gas imports (about 140 bcm per year) normally transit Ukraine with the other 20 percent routed through Belarus. Russian gas represents 42 percent of EU imports and 24 percent of EU consumption. The Czech Presidency and the EU Commission criticized Russia and Ukraine in a joint statement for cutting gas supplies without warning despite assurances otherwise. They went on to demand restoration of supplies and a resumption of talks. EU foreign ministers, along with Energy Commissioner Piebalgs will convene in Prague on January 8 to address the crisis. According to several interlocutors, today's events have underscored the need for a common energy policy and diversification of gas supplies and routes. End summary. ¶2. (SBU) Polish PermRep Ambassador Jan Tombinski told Ambassador Silverberg today that the EU has been reluctant to mediate the gas dispute because it does not have the facts and cannot ascertain wherein fault lies. The fact-finding mission will clarify things, and he expects activity to significantly increase after the mission reports back. He attributed the EU's limited reaction to the fact that none of the larger Member States have been severely impacted; "some are more equal than others" he continued. Interestingly, Poland noticed increased deliveries to Germany before the crisis. Tombinski thinks this crisis could spur progress on energy reforms and increase outreach to Caspian suppliers. He added that the GoP feels vindicated for the hard line it took on internal EU climate change negotiations. If Poland were required to shift reliance from coal to gas as originally proposed, it would have become dependent on Russia. ¶3. (SBU) In contrast to the Polish PermRep, Romanian PermRep Mihnea Motoc told the Ambassador that the EU was "sufficiently proactive" largely due to the Czech presidency. Motoc does not consider the Czechs to be impartial, but believes this is irrelevant as they are not likely to mediate. He is optimistic that this crisis will spur progress on Nabucco. ¶4. (SBU) Econ Officers met separately with Bulgaria's Deputy PermRep, Ambassador Mario Milouchev and representatives from the Czech mission. Milouchev said that all gas supplies from Russia, Bulgaria's sole supplier, had been cut-off leaving Bulgaria in crisis mode. He said that Bulgaria has no leverage over Russia and stressed the need for the Member States to speak with one voice. During the January 5 COREPER I, he urged a common reply to a letter from Ukraine President Yushenko to President Barosso and Member States. (See reftel.) Instead, the member states agreed to send individual replies with "common points." The EU will continue to treat this as a commercial matter, but he indicated that political undertones are beginning to surface. In addition to issuing a statement, he said the EU should pressure the parties to negotiate and "trigger solidarity mechanisms." Once this crisis is resolved, he said the EU needs to reduce its dependency on Russia by developing Nabucco, and if sufficient supplies exist, South Stream. He added that Bulgaria will look to build LNG terminals on the Black Sea and connectors to the TGI pipeline in Greece. ¶5. (SBU) Czech officials do not intend to mediate this dispute although not all Member States agree with this position. At this point they are still trying to gather information. They noted that Russia has spun this much better than the 2006 shut-off, but the public relations facade was starting to wear thin. They then described EU efforts underway saying that Commission officials are discussing solidarity mechanisms for member states. The COREPER II ambassadors will meet on January 7 to prepare for BRUSSELS 00000013 002 OF 002 the January 8 meeting of foreign ministers, which we understand the Czechs want to focus on transparency among Member States re gas deals and support for the Southern Corridor (in the run up to the March Southern Corridor Summit in Brussels). On January 9, the fact-finding mission will report to the COREPER I Ambassadors. This meeting will be followed by the Gas Coordination Committee (a committee of Member State officials from the energy ministries) to assess the situation and discuss how to cope with disruptions. They plan to utilize this crisis advance their energy security agenda. ¶6. (SBU) Comment. By all indications, the Member States approve of the Czech Presidency's approach. It is clear from our discussions that new Member States will seek to use this crisis as a catalyst to diversify sources and transmission of energy resources with projects such as Nabucco and to promote EU competency over energy policy. However, they remain acutely aware that the implications are not the same for all and are wary of alienating the larger member states from this objective. In 2006, following the first Russian gas cutoff to Ukraine, the EU decided it need a common energy policy to enhance its energy security. Three years later, it finds itself in a similar position, and the dream of a common energy policy is still far from reality. End Comment. ilverberg .