Wednesday, 10 December 2014

Why should Bulgaria pay an exorbitant price for European solidarity?

After Vladimir Putin had said that Russia would abandon South Stream Pipeline, the headlines have appeared in news media: "The South Stream is breaking against the wall of European solidarity". However, this is obviously the point of view of those European countries that were not directly related neither to the construction, nor even to a future gas consumption to be delivered by the "South Stream". There should be entirely different public opinion in Austria, Serbia, Hungary, Bulgaria and other countries - in fact, public expectations of economic growth and dreams of a better and stable life in general crashed against this wall. Meanwhile in return these countries have received only compliments from Brussels and Washington.

Bulgaria happened to be the number one loser, although as in sign of encouragement this country has been promised speeding up the process of accession to the Schengen area. Visa abolition by the EU can really become for somebody an emergency exit for avoiding future problems. After all, in any case it would facilitate a relocation from the warm countries of South-Eastern Europe where gas usage is extremely low, to the North Europe with high per capita energy consumption.

About three months ago in the blog post on September 1, I already wrote about the "Bulgarian bastion", at that time expressing the hope that it will be a temporary obstacle on the way of real strengthening the European energy security. Unfortunately, the "Bulgarian bastion" was turned into the wall of European solidarity. Now Bulgaria is nailed to this wall by the entire power of transatlantic allies' influence. It is resulted in that one of the European countries much more than most of others requiring an economic assistance was deprived not only of new revenues but also in the long term of those revenues, which now Bulgaria is permanently earning from gas transit.

Brussels has always shunned issues related to economic losses of Bulgaria in case of cancellation of the South Stream project, replacing the assessment of such a pessimistic scenario with the stress tests campaign in case of emergency caused by interruption of Ukrainian transit this winter. Most probably, they should be nervous because the calculation of missed benefits and other losses resulting from failure of the South Stream project logically would lead to a discussion of the need to compensate for the economic losses of Bulgaria, which sacrificed their sovereign rights to make decisions in national energy industry.

As Vladimir Putin pointed out at the press conference in Turkey: “If Bulgaria is deprived of the opportunity to act as a sovereign nation, then they should at least demand money from the European Commission to compensate for their lost profits, because direct revenues to Bulgaria's budget alone would have been no less than 400 million euros a year”.
In addition, the South Stream project would bring over 5 billion euros of investments in Bulgaria, which would provide over 6 thousand of new jobs. Now at the beginning of the preparatory phase of construction 800 people were already employed on the offshore part of the project, 80% of them - Bulgarians.
It was expected that the project would ensure a significant increase in gasification of the residential sector in Bulgaria. In fact, now only 2-3 % of Bulgarian households are taking advantage of natural gas usage, this is compared to the average number in Europe, which stands at around 50%. This highlights an actual opportunity for growing in regards to energy efficiency as well.

Our mass media is widely disseminating an idea that the main reason for the cancellation of the South Stream project was not at all the EU-US policy aimed at building an opposition to the project and forcing Bulgaria to join it, but that because of steadily falling oil prices, this project has become prohibitively expensive for the Russian company "Gazprom". However, the argument allegedly concerning the high cost of the project completely collapses if we take into account that Botas Petroleum Pipeline Corporation signed in Ankara a Memorandum of Understanding on constructing an offshore gas pipeline across the Black Sea towards Turkey. The new gas pipeline will have the same capacity of 63 bcm, with 14 bcm scheduled for Turkish consumers. It is necessary to draw a special attention to the fact that now this volume is being delivered via the Balkan Corridor. Another part of nearly 50 bcm will be transported to the Greece–Turkey border, where a gas hub will be arranged.

It actually reveals that, firstly, in the future, Turkey will not need supplies of Russian gas via Bulgaria. Therefore, besides the above mentioned losses caused by termination of the South Stream project there will be the loss of existing transit payments in Bulgaria as soon as a new gas pipeline to Turkey is constructed. That is what is now Bulgaria annually receives about 60 million euros for the transit of 14 bcm.

Secondly, in future it will be unlikely possible for Bulgaria to purchase gas from Turkey at the same prices as it would be in the case of direct supplies from Russia.
Nevertheless, it is evident that Europe's efforts are contributing a great deal to the establishment of Turkey's position as a leading transiter of gas on the EU southern borders. How it can affect gas supplies to the EU, obviously, deserves a special consideration.

Ultimately Brussels will have to continue searching excuses and trying to shift off responsibility from themselves for consequences of the destruction of the gas infrastructure agreements.
The following quotation from the novel of famous English writer Elizabeth Bowen as an epigraph could set a non-biased coverage of these events of the EU gas market: “Sacrificers are not the ones to pity. The ones to pity are those they sacrifice”.

Why did it happen to Bulgaria? Why did a leading role of the victim of European solidarity fall to Bulgaria despite the fact that according to a survey of the Institute of Modern Politics carried out in this country in September 2014, South Stream project enjoyed the greatest level of public approval amongst all current energy projects, 51% survey respondents indicated that they supported the project?

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