Cancellation of the South Stream Gas Pipeline – Win for Turkey, Suicide for Europe

| December 6, 2014 | 0 Comments

south stream gas pipelineBe careful of what you are wishing for because it might come true. Europeans will learn it the hard way.
The top economic and geopolitical story of the last week is the cancellation of the South Stream gas pipeline project that had to directly connect Southeastern and Central Europe with Russia through the Black sea.
Apparently the project was closed by the Russian side after years of negotiations and preparation because they couldn’t come to an agreement with all of the participants from the European side. Instead Russia will build a gas pipeline to Turkey, signed and announced.

Who wins and who loses after South Stream is no longer in play?

There are 2 big winners – the United States state department and Turkey.

For the US this is a geopolitical win. They don’t want close economic relations between Europe and Russia to exist. Putting it simple, they don’t care about the European interests. They want to weaken Russia and Europe. They can’t allow any form of strong strategic alliance between those sides. The cancellation of the project prevents such thing. Europe is a vassal.

For Turkey it’s a geopolitical win and economic win at the same time. They were at the right place at the right time, sort of speak. Tightening their partnership with Russia gives them huge economic benefits and it will help them to establish themselves as a very strong regional player that is not completely dependent on anyone. Cheaper energy, tighter economic and trade relations and geopolitical agreements with Russia are welcome for Erdogan, Davutoglu who have their own big plans.

The big losers – the European Union, the southeastern and the central parts of Europe in particular

Talking about economic suicides the Europeans reached new heights. Lets make it clear. Europe needs gas, preferably at a good price via a secure route. South Stream would have provided exactly that. There would have been no Ukraine transits to deal with each winter, at least not at the same extent. Countries like Italy, Hungary, Austria, Slovenia, Croatia, Greece, Serbia (which is not part of the EU) and Bulgaria would have benefited from that and some of these countries would have benefited a lot from the transit fees too. No sane person in those countries opposed the project, except in Bulgaria.

Putin directly said that Bulgaria better seeks a compensation from the European commission for lost profits. Bulgaria was the weak link in the whole thing. Even though that’s the poorest EU country which buys 100% of its’ gas from Russia via Ukraine for higher prices than Germany, the Bulgarian political elite essentially sabotaged the project. Giving up potential cheaper gas, secured supplies and hundreds of millions of euro in transit fees per year just to prove themselves as loyal Euro-Atlantic puppets to the masters in Washington. People in Bulgaria must love their politicians.

What about Russia? Are they winners or losers?

For Russia the South Stream pipeline was a geopolitical project in the first place. It was a very expensive project that had to secure those close relations between Europe and Russia. So in that regards this is a big loss. It’s not such an economic loss because the project would have cost a lot. They can still sell their gas. It’s not like there is no one to buy it. Europe will still buy gas from Russia, they have no other sound choice. Turkey getting actively involved seems like a good thing for Russia too, because it makes them less of an enemy. Have in mind, Turkey has the second largest army in NATO and for years has been an enemy of Russia. Now things change a bit.
So while we can’t say that they are winning, certainly they are not losing as much as the Europeans.

south stream project map

South Stream project map

Is it really over with the project?

Some people and some experts say that the South Stream project is not over. There are people in the European Union who will push for the project to happen anyway. Things might change, who knows, right? But even if the project restarts in the future the price to be paid by the EU is going to be higher.

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