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Putin Pushes South Stream In Belgrade, Milan

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Russian President Vladimir Putin’s visits to Belgrade and Milan allowed the Kremlin leader to push the planned South Stream gas pipeline that would allow Gazprom to transport its gas to Europe across the Black Sea, avoiding Ukraine.

But the meetings produced no breakthrough. It’s more about laying the groundwork for future cooperation. “I don’t think that visiting Belgrade or Milan will significantly push South Stream. Europe will be very, very, reluctant to move on,” Slava Smolyaninov, chief strategist at UralSib Financial Corp in Moscow, told New Europe on October 16. He reminded that South Stream will cross many EU member states and that even Serbia, which is not part of the EU, does not want to appear as breaking the existing rules.

Smolyaninov said that he believes that South Stream will be postponed or shelved for the time being. “It will be extremely difficult to move on given the perception of Russian role in Ukraine,” he said. “It’s not the best time to be discussing those kinds of things.”

Smolyaninov predicted that Western sanctions against Russia would remain unless Moscow takes action to defuse the crisis peacefully in Ukraine and Eastern Europe.

Regarding Putin’s two-day trip to a Europe-Asia summit in Milan on October 16-17, Smolyaninov said Russia wants cooperation and going back to business as usual with the EU. “It’s a matter of whether the EU wants that at this point and it doesn’t look like anybody, including leaders such as [German] Chancellor [Angela] Merkel are yet ready to try and do business as usual with Russia,” he said.

During his brief visit to Belgrade on October 16, Putin stressed that Russian gas transit risks to Europe would be reduced by building South Stream, bypassing Ukraine. His visit came at a time when Moscow-ally Belgrade is under EU pressure to distance itself from Russia over the Ukraine crisis.

Putin said construction of South Stream is linked with political issues. “The South Stream cannot be realised one-sidedly. It is like love, it can be a happy one only if both sides wish to develop relations. We cannot build alone a pipeline worth several billion euros, if our partners are not sure they need it or not,” Putin said.

He said similar dilemmas existed during the construction of the North Stream gas pipeline across Baltic countries, but that clients in those countries are now satisfied with the project. 

South Stream’s future is uncertain because the European Commission has said it runs counter to EU law. In August, Bulgaria suspended operations, saying that they did not meet EU requirements.

Russia insists the South Stream project should be exempt from the effect of the Third Energy Package.

South Stream’s route is expected to come ashore in Bulgaria and continue to Serbia, where it divides, with the first branch going through Hungary to Austria and the second through Hungary and Slovenia to Italy. Under the plan, pipeline sections are also to be constructed in Croatia and the Bosnian Serb Republic.

Itar-Tass quoted EU Energy Commissioner Günther Oettinger as saying on October 16 in Brussels that South Stream is acceptable for the bloc but is not of priority importance for it at the moment. “South Stream is fully acceptable but is not a priority at the moment,” he said.

follow on twitter @energyinsider

Previously on Energy Insider:

Gazprom Neft Well-Prepared For US-EU Sanctions

US, EU Sanctions Push Iran Toward Russia, China

EU’s Cold War With Russia Worries German Business

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