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Nazarbaev faults Europe on Nabucco

President Nursultan Nazarbaev of Kazakhstan publicly endorsed the Nabucco natural gas pipeline earlier this month, then criticized Europe for putting too much talk into the project and not enough action.

Nabucco is projected to bring natural gas from the Caspian Sea basin to the Baumgarten gas hub in Austria via Turkey, Bulgaria, Romania, and Hungary. Putting his personal prestige behind the concept, Nazarbaev stated in Astana last week, at a joint press conference with visiting German Chancellor Angela Merkel that "Kazakhstan has never been against Nabucco; the issue is that in Europe there is a lot of talk about Nabucco, but in practice little is being done," he said. "The European Union could work more actively on this."

Kazakhstan's participation required either an undersea pipeline or, at a minimum, a gas liquefaction plant on the country's Caspian Sea coastline, he said, but "nothing is being done on either issue except talk". Beate Eschment, a leading German expert on Kazakhstan, told Deutsche Welle that she was "very surprised" by Nazarbaev's criticism of Europe's pace in moving the project forward, which she called a " new development".

Merkel was in Kazakhstan on her way to China. She had already visited Russia earlier in the month. The trips were undertaken mainly with a focus on economic diplomacy on behalf of German industry. In Russia, she was responding both to domestic critics who have disparaged her recent inattention to Moscow as an important German economic partner on the one hand and, on the other, to Russia's President Dmitry Medvedev's signature, in June, on a bill that reduced the number of so-called "strategic enterprises" in the country from 208 to 41 and "federal unitary enterprises” from 230 to 159.

This move is intended to increase opportunities for foreign investors to assist in Medvedev's economic modernization program, by which he intends, he said in a speech to the Russian Foreign Ministry two weeks ago, to promote modernization of the political system as well.

In that speech, which caused a stir in Moscow as reported by Kommersant, he emphasized the fight against organized crime and the strengthening of Russian democracy and civil society as tasks of Russian foreign policy.

Insofar as the modernization of the economy and production were concerned, he named Germany in the first rank of foreign partners, followed by France, Italy, the rest of the European Union and also the United States. Thus Merkel's delegation included over two dozen German business leaders and scored some successes. The German side had its eyes especially on renovation of the Russian industrial plant, with special attention to the energy sector.

Merkel was also concerned to promote economic ties in China, which is increasingly competitive with German imports of raw materials from Russia as well as exports of finished goods to Russia. China is also highly competitive with Europe for energy exports from Kazakhstan, where it has a strong presence in the sector and for nearly a decade has been building oil and gas pipelines into western China. From there, the resources are transmitted to the central and especially eastern coastal parts of the country to satisfy ever-growing demand.

Nazarbaev's criticism of the EU regarding Nabucco is also applicable to the Kazakhstan-Caspian Transportation System (KCTS) project, which is set to take oil from the huge offshore Kashagan deposit to Eskene, onshore near Tengiz, and on to the port of Kuryk, near Aqtau. From there, it will be shipped across the Caspian Sea to Azerbaijan for insertion into the Baku-Tbilisi-Ceyhan (BTC) pipeline from Azerbaijan to the eastern Mediterranean - the capacity of the pipeline would be increased for the purpose by up to 70% through the use of chemical additives and other technical means - or, alternatively, conveyed to the Black Sea coast for transshipment to Europe. (See Four-way street in Kazakhstan, 18 September 18 2009.)

France signed onto that project last year, a significant development in light of the French company Total's participation in the consortium developing Kashagan as well as in operating BTC pipeline. However, planning construction of this pipeline has hit snags, and it is possible that oil tankers will do the job of taking the crude to Azerbaijan in the beginning. Even that development, however, requires planning of construction facilities and logistical foresight. Initial start-up for the project, in whatever form it acquires, is still set for 2012.

A pipeline across the seabed would be most cost-effective. Some estimates say the tanker transportation will not be cost-effective after 2017. A gas pipeline for associated gas from Kashagan could also run to Azerbaijan, and a pipeline from Turkmenistan could be built to join that pipeline in the Kazakhstan sector of the Caspian Sea, obviating the need for a solution to the dispute with Azerbaijan over the offshore Kyapaz/Serdar deposit that has up until now blocked bilateral cooperation on energy matters between the two countries.

With investment decisions falling due within the next 12 months on a series of projects including Nabucco as well as the competing Russian-sponsored South Stream project, Nazarbaev's public statement should serve to help focus the EU's attention on the crucial window now approaching and threatening to close. Beginning about a year and a half ago, Merkel has been able progressively to increase her margin of maneuver vis-à-vis the German diplomatic tradition, reaching back into the 19th century, of centering its worldview on an entente with Russia. The movement from one coalition partner to another in the wake of the last parliamentary elections has facilitated that development.

If Germany is to have a truly global profile, and assist Europe in finding its place in the future, then it must not restrict its vision to partnership with Russia and Turkey, and instead go beyond them in both the metaphorical and geographical senses.

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URL:  http://www.robertcutler.org/blog/2010/07/nazarbaev_faults_europe_on_nab.html
First published in Asia Times Online, 29 July 2010.

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