Toggle navigation menu.
Helsinki Default Banner

Beyond Pipelines: Breaking Russia’s Grip on Post-Soviet Energy Security

By Paul Massaro, Policy Advisor,
and Andras Olah, Intern

In 2007, the Helsinki Commission held a hearing titled “Pipeline Politics: Achieving Energy Security in the OSCE Region,” which focused on energy security in Post-Soviet Eastern Europe. The hearing took place in the wake of the first major Ukrainian-Russian gas dispute in 2006 that demonstrated not only the Kremlin’s willingness to use its energy resources as a weapon to meddle in its immediate neighbors’ domestic affairs, but also the extreme dependency of much of  Europe on Russia’s energy supplies. At the time, experts and policymakers focused primarily on the enhancement of security of supply through the construction of new energy infrastructure, including pipelines, which would allow the diversification of energy imports of countries in the OSCE region.

Ten years later, the energy landscape of the world fundamentally has changed. As Peter Doran, the Executive Vice President of the Center for European Policy Analysis (CEPA), stressed at a July 2017 Helsinki Commission briefing titled “Energy (In)security in Russia’s Periphery,” new energy infrastructure been built and the regulatory environment of the EU’s energy sector has significantly improved. At the same time, the shale gas revolution in the United States and the simultaneous development of a global liquid natural gas (LNG) market offers European gas consumers more alternative options to Russian gas imports than ever before.

Most countries in Central and Eastern Europe have improved their energy security by the implementation of crucial reforms in their energy sectors. For example, in Ukraine, where for a long time “energy oligarchs” profiting from dodgy gas deals with Gazprom torpedoed any meaningful reform initiatives, a recent landmark decision has eliminated energy subsidies that have been a lucrative source of corruption for decades.

However, Moscow has resisted surrendering its monopolistic market position and is fighting back through politically motivated energy projects designed to exploit the fault lines between European countries’ differing energy policies. The most important Kremlin-sponsored projects to date have been the planned Nord Stream 2 and TurkStream pipelines, which will carry gas to EU countries by circumventing Russia’s immediate post-Soviet neighbors.

According to Doran, the Kremlin aims to end the role that neighbors like Ukraine, and to a lesser extent Moldova, currently play in the transit of gas to the EU through the Brotherhood and the Trans-Balkan pipelines. The success of Nord Stream 2 potentially could result in the loss of billions of dollars in transit revenues for Ukraine and Moldova, as well as diminishing their geopolitical importance for Europe, while subsequently enabling Russia to reassert its old influence over them by exploiting their diminished energy security.

As a result of massive infrastructure projects promoted by the EU to develop reverse flow capacities on existing pipelines and create new interconnections, Ukraine is now capable of purchasing gas from a Western direction and, for the first time, since November 2015 has ceased buying gas contractually from Russia altogether. New pipeline infrastructure projects, namely the planned expansion of the Iaşi-Ungheni pipeline, as Lyndon Allin, Associate at Baker Mackenzie, pointed out at the same briefing, might enable Moldova in the medium-run as well to reduce its dependence on Russian gas that currently constitutes almost a 100% of its total gas consumption.

Nevertheless, the effectiveness and profitability of these regional gas transit systems could be severely endangered once the transit of gas is diverted to other pipelines, potentially hampering the prospects of further gas infrastructure modernization, which is necessary for both countries to ensure their energy security. Moreover, as both ‘Stream projects’ would circumvent the region, Russian gas could become the only one that can be bought from the east as well as the west direction, strengthening Gazprom’s monopolistic market position in the region.

While political leaders on both sides of the Atlantic have been pushing recently for the introduction of U.S. LNG to the region to serve as a new ‘external solution’ to the above mentioned challenges, as Edward Chow, Senior Fellow at the Center for Strategic and International Studies (CSIS), noted at the briefing, the main challenge for post-Soviet Eastern European countries remains an internal one. While the level of energy infrastructure might already be close to sufficient, the biggest problem for post-Soviet countries remains the underdeveloped nature of their energy sectors that lack harmonized and stable regulations, consistently-applied property rights, and transparency.

Additionally, as Dr. Mamuka Tsereteli, Senior Fellow of the Central Asia – Caucasus Institute pointed out, energy security could not be achieved without high-levels of cross-border market integration, even if physical infrastructures are in place. The underdeveloped nature of post-Soviet Eastern European countries’ energy sectors has been having a severe impact on the energy security of those states, in particular of Ukraine, which could be easily self-sufficient—even without the import of U.S. LNG—in natural gas if private investment was not being discouraged by the opaque, uncompetitive, and corrupt nature of its energy sector.

Once the right regulatory environment is established, Ukraine, for instance, could possess an immense gas transmission and storage infrastructure that, if properly upgraded, as well as connected to the energy networks of Central European countries, could lead to the establishment of a highly liquid East Central European gas trading hub with a spot-based gas trade. This could create increased energy security in the entire region by improving both the level of competition and the diversification of supplies.

While the West could offer the countries of post-Soviet Eastern Europe, Ukraine and Moldova in particular, alternative energy sources (e.g. U.S. LNG), these should and could not serve as a substitute for structural reforms and capacity-building, which are ultimately necessary to achieve true energy security in the region.

Category
Country
Issue
Date
Filter Topics Open Close
Press Releases

Helsinki Commission House Leadership Marks Fourth An...

Jun 06, 2024

WASHINGTON—Today, Chairman Rep. Joe Wilson (SC-02) and Ranking Member Rep. Steve Cohen (TN-09) marked the fourth annual Counter-Kleptocracy Month. The U.S. Helsinki Commission has marked Counter-Kleptocracy month since June 2021 when the Commission helped to launch the Congressional Caucus against Foreign Corruption and Kleptocracy (Counter-Kleptocracy Caucus). The Caucus is also chaired by Reps. Wilson and […]

screen-reader-text
Hearings

Russia’s Alpine Assets: Money Laundering and S...

Jul 18, 2023

Switzerland has for years been a primary destination for Russian money laundering and, since the Russian invasion of Ukraine, a weak link in Western sanctions enforcement. This Helsinki Commission hearing examined Switzerland’s poor track record of rooting out dirty Russian money and examined potential paths forward for U.S. policymakers in persuading Switzerland to uphold its […]

screen-reader-text
Press Releases

Hearing: Supporting a Democratic and Secure Moldova

Jul 06, 2023

Wednesday, July 12, 2023 2:00 pm Cannon House Office Building, Room 210 Live stream: https://www.youtube.com/watch?v=jm-R6rfQbCo In recent years, Moldova has enacted numerous reforms under current Moldovan President Maia Sandu to strengthen its democratic institutions, combat corruption and kleptocracy, and integrate with the European Union. In 2022, the European Union granted Moldova “Candidate” status in its […]

screen-reader-text
Press Releases

Chairman Wilson and RM Cohen Mark Third Annual Count...

Jun 16, 2023

WASHINGTON—Today, Helsinki Commission Chairman Joe Wilson and Ranking Member Steve Cohen, Co-Chairmen of the Counter-Kleptocracy Caucus, marked the third annual Counter-Kleptocracy Month. “Foreign corruption and kleptocracy is the main reason that we face a full-scale Russian invasion of Ukraine today. It is the way that the Islamic Republic of Iran sustains itself. It is the […]

screen-reader-text
Press Releases

Helsinki Commissioners Announce Re-introduction of C...

Jan 25, 2023

On Tuesday, Helsinki Commissioners Rep. Steve Cohen, Rep. Joe Wilson, and Senator Ben Cardin re-introduced the Combatting Global Corruption Act in both the House and Senate, along with Rep. Bill Keating, Rep. Maria Elvira Salazar and Senator Todd Young. This bipartisan, bicameral legislation formally designates combatting global corruption as a key U.S. national security concern. It would require […]

screen-reader-text
Press Releases

Helsinki Commission Announces Briefing on US-Europe ...

Dec 12, 2022

WASHINGTON—At a virtual kickoff event on December 13, Co-Chairman Cohen and Ranking Member Wilson launched the US-Europe Coalition on Russia Sanctions. NO SAFE HAVEN Launching the US-Europe Coalition on Russia Sanctions Tuesday, December 13, 2022 8:30 a.m. EST Since February 24, 2022, Western countries have imposed sanctions against Russian officials, businessmen, and public figures who […]

screen-reader-text
Press Releases

Co-Chairman Cohen Calls for the Release of Political...

Aug 09, 2022

Washington – On the second anniversary of the sham presidential election in Belarus, the Helsinki Commission Co-Chairman and OSCE PA Special Representative on Political Prisoners Rep. Steve Cohen (TN-09) issued the following statement: “Two years ago today, Belarus’s autocrat Aleksander Lukashenko put up a show of an election that he had hoped would legitimize his […]

screen-reader-text
Digests

Helsinki Commission Digital Digest July 2022

Jul 29, 2022

screen-reader-text
Digests

HELSINKI COMMISSION DIGITAL DIGEST JUNE 2022

Jun 30, 2022

screen-reader-text
Hearings

European Energy Security Post-Russia

Jun 07, 2022

Russia is weaponizing energy to prolong its unlawful invasion of Ukraine. Unfortunately, the sanctions that Europe and the United States have put in place have not been enough to curb Russian aggression thus far and the European Union pays Russia almost a billion euros a day for energy resources—mostly gas— that fund the Russian war […]

screen-reader-text
Press Releases

European Energy Security Focus of Upcoming Helsinki ...

Jun 02, 2022

WASHINGTON—The Commission on Security and Cooperation in Europe, also known as the Helsinki Commission, today announced the following hearing: EUROPEAN ENERGY SECURITY POST-RUSSIA Tuesday, June 7, 2022 2:30 p.m. Watch live: www.youtube.com/HelsinkiCommission The United States and European allies have largely cut Russia out of the global economy following its full-scale invasion of Ukraine. However, given […]

screen-reader-text
Digests

Helsinki Commission Digital Digest May 2022

Jun 01, 2022

screen-reader-text