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09USEUBRUSSELS1338 2009-10-02 09:36:00 CONFIDENTIAL USEU Brussels
Cable title:  

JOSCHKA FISCHER DISCUSS NABUCCO WITH AMB.

Tags:   ECON EPET EUN 
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1. (SBU) Summary and Introduction: On September 17, Special
Envoy for Eurasian Energy Richard Morningstar, DoE PDAS for
Policy and International Affairs Jonathan Elkind, and Charge
d,Affaires a.i. Christopher Murray met with former German
Foreign Minister Joschka Fischer, now a special advisor to
RWE for Nabucco, and RWE,s CEO for Trade and Supply Stefan
Judisch. Judisch was optimistic about the Nabucco gas
pipeline project. He dismissed the notion that Nabucco lacks
gas and recounted RWE,s prospects for securing 9.8 bcm/a
from Turkmenistan, 8 bcm from Azerbaijan and 15 bcm from
Northern Iraq, which would bring Nabucco to full capacity and
make it the most economical pipeline to Europe, compared to
the alternatives. However, securing these supplies will
require a series of complex arrangements between the
unaccommodating states of the region. Fischer played his
role, describing the dynamics between the States and their
leaders, and warned of Russia, s influence through Italy and
at one point intimating that the Turkey-Greece-Italy pipeline
would be an extension of Gazprom in Europe. Both he and
Judisch requested U.S. support with the EU, Turkey, Cyprus,
Iraq, and Azerbaijan and insisted the U.S. do more to
publicly support Nabucco, not just the Southern Corridor. A
humorous moment occurred when Fischer admonished Judisch for
mentioning the word "curveball." End summary.

Connecting Turkmenistan and Azerbaijan


--------------------------




2. (SBU) Judisch said Turkmen President Berdimuhamedov was
poised to sell gas to the Nabucco consortium: "In the past,
he said only that gas would be delivered to the border. Now,
he has twice said publicly that he would deliver gas to
Nabucco." Judisch added that Turkmenistan is losing $1
billion a month -- half of its annual GDP of $24 billion --
due to the April explosion in the CAC-4 pipeline that
transmits gas to Russia. He called Berdimuhamedov "a brave
man" for withstanding Russian pressure for so long at such
high costs and said the Turkmeni President is now anxious to
conclude a deal with the West. According to Judisch, all it
would take to link Turkmeni gas to Nabucco would be a
"technical tie-in" between the Petronas platform, which is in
Turkmeni waters (Block 1), and the BP platform over the ACG
field. Turkmenistan continues to lay claim to the ACG field,
which straddles the Azeri-Turkmen border. Judisch claimed
that since both fields are in Turkmenistan, no formal
agreement would be required. (Note: A BP executive opined
that this is a poor solution given that Azerbaijan would be
reluctant to give up any claims to the field. He said merely
running a pipe along the seabed between the two fields would
not require approval from the other Caspian States - Iran,
Russia, and Kazakhstan. End note.)



3. (C) Both Fischer and Judisch believe that Azeri President
Aliyev is amenable to a transit arrangement with
Turkmenistan. Fischer said it will increase Azerbaijan,s
"importance and political weight" in Europe: "Aliyev wants
more European security beyond Greece, Austria, and Bulgaria."
Judisch added that Aliyev has twice said ",we are alone
under Russian pressure and need solidarity with
Turkmenistan.," He said Aliyev and Berdimuhamedov believe
each other to be "a coward," and "they need (to be
encouraged) to stand together." Fischer said the Russian
pressure on Azerbaijan and Turkmenistan underscores the need
to move forward on Nabucco.



4. (C) Ambassador Morningstar noted that in addition to the
Turkmenistan-Azerbaijan issue, an agreement between Turkey
and Azerbaijan is also a priority. Fischer called on the
U.S. to "focus on" the Nagorno-Karabakh dispute. While
relations between Turkey and Armenia are "encouraging,"
Aliyev has warned that the "energy deal will blow up" if the
Turkey-Armenia border is opened. Amb. Morningstar said the
Administration has been and will continue to reach out to
Aliyev to give him comfort on this issue.

A New Ottoman Era


--------------------------





5. (C) Judisch said Turkey is not a credible player. It
wants 8 bcm/a from Nabucco and another 8 bcm from
Azerbaijan,s Shah Deniz II field: "The Turks have
overestimated their demand, and they risk the inability to
fulfill their contracts." He said Energy Minister Yildiz is
"an improvement" over his predecessor, but "he is a Gul man"
and there is a "rift between Yildiz and Erdogan." Fischer
advised that while Erdogan and Gul "are different, they are
on the same page," but he added that "Erdogan is the true
decision-maker."



6. (C) Fischer urged close cooperation with Turkey,s Foreign
Minister Davutoglu, noting: "He is a strategist who seeks to
develop a new Ottoman foreign policy." He said Turkey seeks
to become an "energy hub" and cited Turkey,s discussions
with the Iraqi Kurdistan Workers' Party (PKK) on this issue.
Indeed, he said "Barzani (President of the Iraqi Kurdish
Regional Government (KRG)) feels he must rely more and more
on Turkey." Judisch said that Northern Iraq is primed to
export gas through Turkey if only the GoI would "recognize
the DNO deal" as a basis for future contracts. (Note: The
deal with Norwegian DNO was signed in 2004 before the
handover. It calls for 17 percent of the revenues to be
distributed to the KRG with the remainder to the GoI. End
note.) He said if we succeed, "we can build Nabucco without
Caspian gas and put pressure on Azerbaijan and others." In
this context, he asked for U.S. intervention with the GoI.
Fischer added that given Iran,s influence in Baghdad, a
European connection "would be perfect for Iraq."

Fischer Talks Politics/Games


--------------------------




7. (C) Returning to Turkey, Fischer said it would be possible
to mobilize the next (Merkel) government "to be more forward
on accession, but it will take time." He said the "new
Commission and German government need to settle in, and they
need the UK,s support. It would be helpful if France could
moderate its behavior, and let things happen." The Turks do
not trust the Europeans" they need "emotional support and
Putin recognized this. There is a perception that Russia
gave Turkey a lot, and the message for Europe is that Turkey
is drifting towards Russia." He continued that the EU "could
have answered Putin,s visit by opening the Energy Chapter."
He said the U.S. should engage the EU and large member states
on Cyprus, which should not be allowed to hold Turkey,s
accession process hostage.



8. (C) Judisch warned that the Russians are trying to
outflank Nabucco through German, French, and Italian joint
ventures on the Nord Stream, South Stream, and TGI projects.
Fischer noted that the difference between France and Germany
on one hand and Italy on the other is the personal
relationship between Putin and Berlusconi: "I worry that
Putin is making decisions through Berlusconi" and added that
only (Speaker of the House) Fini can stand up to Berlusconi
but not (Foreign Minister) Fratinni." Fischer said the
Russians are very worried about the lack of progress on Nord
Stream. He said their anti-Nabucco propaganda "Nabucco has
no gas" - led in part by their Ambassador to Berlin, has been
very effective. "We must get the gas to market, and Turkey
and Azerbaijan are the key." He said Nabucco "must be a
strategic priority" and asked for the "full and public
backing of Nabucco from the new Administration."



9. (SBU) Amb. Morningstar said the USG is trying to
constructively engage Russia, but this does not mean a change
of policy on all other areas. He said the administration
continues to strongly support a Southern Corridor, which
includes Nabucco but needs to avoid over-publicizing its
support: "it is only one part of the (energy security)
puzzle," albeit "a critical piece." He said Europe needs to
approach its energy security in the context of its overall
security and needs to take a collective approach. He said
that "we are doing everything we can behind the scenes, but
you cannot expect the U.S. to be more European than the
Europeans."



10. (SBU) Fischer concurred and said the Nabucco partners

"must continue to lobby for European support." He said "I
will work with the new German government to correct the
impression about German support and in Brussels, where we
need more visibility from the large member states." He
concurred that Spain could play a constructive role during
its EU presidency. Towards the end of the meeting, Judisch
urged continued cooperation and cautioned against those who
would throw "a curveball" into the effort. Fischer cut him
off and said in all earnestness "don,t ever mention the word
Curveball to the Americans!"


11. (SBU) Comment: We sensed the pressure on RWE to get
Nabucco going. Fischer,s plea for the USG to support
Nabucco explicitly rather than the broader concept of the
Southern Corridor indicates they may feel that TGI is pulling
ahead in the race for Azeri gas. End comment.



12. (U) Amb. Morningstar and PDAS Elkind have cleared this
cable.

Murray
.