NY Times: U.S. Urges Greece to Reject Russian Energy Project

NY Times: U.S. Urges Greece to Reject Russian Energy Project
Amos J. Hochstein, left, a State Department envoy, met with Nikos Kotzia, the foreign minister of Greece, in Athens on Friday.
ATHENS
— The United States, wading into the international efforts to shape
Greece’s economic and geopolitical orientation, is pushing the leftist
government in Athens to resist Russia’s energy overtures.
A
State Department envoy in Athens on Friday planned to urge Greece to
embrace a Western-backed project that would link Europe to natural gas supplies in Azerbaijan, rather than agree to a gas pipeline project pushed by Moscow.


The
dueling sales pitches, reminiscent of a Cold War struggle, come as
debt-burdened Greece is desperate for new sources of revenue of the sort
that a gas pipeline could bring.

In
an interview in Athens on Friday, before meeting with Greek officials,
the State Department envoy, Amos J. Hochstein, said that Greece would
increase its appeal to Western investors and would help reduce the
Europe Union’s dependence on Russian gas supplies if it declined to host
gas from a pipeline proposed by the Russian state-controlled energy
giant Gazprom.

Timeline: Greek Debt Crisis

Washington’s
push against the Russian pipeline project follows a stalemate in
negotiations between Greece and its international creditors aimed at
unlocking further loans. Even as Greece’s European neighbors are focused
on the country’s ability to repay its debts, the United States is
intent on addressing Greece’s geopolitical value as a NATO outpost at
the southern tip of the Balkans and as an important gateway for energy
from Central Asia.
Mr.
Hochstein said Moscow’s interests were not aligned with Greece’s
financial needs. The Russian pipeline plan, he said in the interview,
“is not an economic project” but is “only about politics.”
The geopolitical tug of war over Europe’s energy supply is growing increasingly intense.
The Russian president, Vladimir V. Putin, spoke by telephone with Prime Minister Alexis Tsipras
of Greece about the Gazprom pipeline project on Thursday. And Mr.
Tsipras’s office has confirmed his country’s readiness to participate in
the construction of a Greek pipeline to transfer Russian natural gas
from the Greece-Turkey border to Europe.
The
Greek foreign minister, Nikos Kotzias, has said that the Greek portion
of the Russian-backed project could be worth billions of dollars to his
country.
The
cozying-up between Moscow and Athens comes as Greece’s coffers are
running dry and as it desperately seek new investment. Without new
revenue or additional loans, Greece risks defaulting on billions of
dollars of foreign debt in coming months. That could force a Greek exit from the euro currency union, and would have unpredictable implications for financial markets in Europe and beyond.
Athens is expected to be able to pay
an installment of about 750 million euros, or about $850 million, that
is due on Tuesday to the International Monetary Fund. But when eurozone
finance ministers meet on Monday in Brussels, there will be urgent
questions about how long Greece can manage without fresh funds.

European
and international lenders continue to hold back on releasing €7.2
billion in funds from a bailout program, demanding economic overhauls in
Greece that the Tsipras government has so far been reluctant to adopt.
Although
the Greek news media reported on Friday that Greece and its creditors
were edging closer in their negotiations, with a series of tax increases
under consideration, the contentious issues of pension and labor
overhauls continued to hamper progress. Mr. Tsipras said in Parliament
on Friday that he was optimistic that there would be a “happy end” to
the talks soon. But he also emphasized that Greece was sticking to its
“red lines” of protecting pensions and workers’ rights.
While
revenue from a new gas pipeline could be years away, such a project —
whether with Russian or Western backing — would have obvious allure for
Greece.
The Russian proposal is for a pipeline called Turkish Stream. It is intended to replace an earlier Russian initiative for a pipeline to Europe called South Stream,
which Mr. Putin was forced to abandon late last year because of
European Union rules that would have made the project unpalatable to
Moscow by requiring Gazprom to share the pipeline with other suppliers.
The South Stream pipeline, running under the Black Sea, would have
brought gas into the European Union through Bulgaria.
Mr.
Hochstein, the American envoy, said on Friday that the pipeline he was
promoting — called the Southern Gas Corridor project — was farther along
in construction. It would involve multiple companies, including the
Britain energy giant BP, and countries including Georgia and Turkey, and
it would bring together a series of pipeline projects stretching from
Azerbaijan to Italy, via Greece.
“It is an excellent project for Greece as it will create a significant amount of jobs,” Mr. Hochstein said.
Mr.
Hochstein met on Friday with the Greek energy minister, Panagiotis
Lafazanis, and said afterward that there had been a “very essential and
honest exchange of views.”

“We
want a multilevel and independent energy policy that will be formed
exclusively on the basis of our national interest, the interest of the
Greek people and, of course, the cooperation and energy security in our
region and in Europe,” Mr. Lafazanis said.
Greece’s
commitment to the Southern Corridor project could help it attract
further investment to develop its offshore gas resources, Mr. Hochstein
said, at a time when other Mediterranean nations like Israel and Cyprus
have made significant discoveries of natural gas.
The
European Commission in Brussels, the executive arm of the European
Union, has long accused Moscow of using gas pipelines, including ones
not yet built, to exercise control over European energy systems and to
partition supplies and keep prices high — especially in Baltic countries
like Lithuania with few alternatives for suppliers.
Last month, after years of European Union threats of taking such an action, Margrethe Vestager, the European antitrust chief, charged Gazprom with abusing its dominance in natural gas markets — a move amounting to a direct challenge to the authorities in Moscow.
Ms.
Vestager, in making those formal charges, also said that Gazprom might
have been leveraging its powerful market position in Bulgaria and Poland
by making supplies of gas conditional on those countries’ agreeing to
participate in pipeline projects like South Stream to carry Russian gas
into Europe.
Gazprom
could eventually face a fine exceeding €10 billion. But the larger
worry for Gazprom in that case is the prospect of being forced to allow
more competition in markets it has long controlled.
Mr.
Hochstein said on Friday that Gazprom’s proposed Turkish Stream would
be bad for Europe because it would extend Europe’s dependence on Russian
gas.

Running a Southern Corridor pipeline through Greece would benefit
Europe and would enhance Greece’s longer term goals of diversification
and of developing its own energy resources, he said.

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