No Gas Deal at the E.U.-Russia Summit

No Gas Deal at the E.U.-Russia Summit

The location may have been the first hint. The 23rd European
Union-Russia summit on Friday was held in the Russian Far East city of
Khabarovsk, a former Tsarist army outpost just a few dozen miles from
the Chinese border and 5,000 miles east of Western Europe. The
location seemed more aimed at inducing jet lag and awe at Russia’s
size than at forging agreement on energy, an issue that has
consistently soured relations between the two powers over the past
months — and which the summit failed to resolve.

While the site implied that Russia was not ready to budge on
any of the issues on the table, Russian President Dmitri Medvedev made
the point exceedingly clear. “The Russian Federation has not given any
assurances and will not give any,” he said after requests from the
European side that the January gas crisis — when Russia cut off
supplies to Ukraine for over a payment dispute — not be
repeated. Although smiles abounded and the talks were held at the
Musical Comedy Theatre, just off Khabarovsk’s main Karl Marx Prospekt,
the tone was one of disagreement.

The major sticking point was Ukraine’s place in the gas supply chain
between Russia and Europe, and the country’s role in the January gas
war. In the coming months, Ukraine will have to spend $4 billion to
buy the 19.5 billion cubic meters of gas it requires to fill its
storage reservoirs before the cold comes again. But how it will afford
the purchase from Russia remains unclear. “We have doubts about the
solvency of Ukraine,” Medvedev said, according to Russian news agency
Interfax. “We are ready to help Ukraine, but we would like to see much
of this work taken up by the European Union, that is, by those who are
interested in the reliability and security of energy cooperation.”

In response, head
of the European Commission, José Manuel Barroso said that the two
parties involved in the dispute should be the ones to settle it: “We
have asked Russia and Ukraine to do everything they can to avoid such
crises. It would not be good for the overall climate of relations if
such a crisis happened again.” Barroso was part of a delegation that
included E.U. foreign policy chief Javier Solana and Czech President
Vaclav Klaus, whose country holds the E.U. presidency.

Medvedev said Russia could help with some of the cost, but not all.
“When it comes to credit, let us help syndicate the corresponding
money for Ukraine, but this should not be only Russia doing this,” he
“At the end of the day, it is not us who have problems paying.”
Yet, observers see Medvedev’s comment as more of a barb than as a
viable suggestion. “I would be surprised if the E.U. felt that
[helping Ukraine purchase gas from Russia] was an appropriate use of
their funds,” says Niall Trimble,
director of The Energy Contract Company, a consulting company based in England. “In order to rebuild relations, Russia needs a
period of uninterrupted supply for a significant time. Action always
speaks louder than words and the Russians do have a little bit of work
to do.”

But Trimble acknowledges that, even amid the quarreling, the summit
showed some hope: “Russia has a good track record. They were always
seen as a very reliable supplier. There is no reason to believe the
problems can’t be resolved. I think the chances are pretty good that
gas will continue to run.”

The E.U. also lost its bid to convince Russia that a consortium to
manage Ukraine’s pipeline system should be exclusively controlled by
the E.U. Another sticking point was the Energy Charter Treaty, adopted
in 1991, that integrated the
energy sectors of the former East Bloc into Europe. Russia has sought
to “ensure that the Energy Charter ceases to be the basis for the
energy dialogue between the E.U. and Russia in the future, and to
emphasize the need for new ad hoc arrangements in the format proposed
by Russia,” says Dmitry Orlov, head of the Agency for Political and
Economic Communications, a Moscow-based think tank. During the talks,
Medvedev reiterated that Russia would not participate in the current
version of the document. Because of Medvedev’s steadfastness, Orlov
believes the E.U. is “now ready to consider new positions on energy

Words were also traded between the two sides concerning the place of Georgia in current defense architecture. Russia remains suspicious about security frameworks expanding into its Soviet-era sphere of influence.

Though no major breakthroughs were made during the summit, there were
also no major collisions. “Expectations that the summit would only
cause troubles and fruitless discussions were wrong,” says Nikolai
Petrov, an analyst at independent think tank The Carnegie Moscow
Center. “It looks like it wasn’t extremely successful, but it wasn’t a
failure.” Referring to past E.U. conferences that have been held in
remote Russian cities, he adds: “If anything, this was a continuation
of E.U. field trips into Russia’s deep countryside.”

For those who experienced the bite of the cold during Russia and
Ukraine’s gas row last winter, they can only hope an agreement between
the two sides is not as far off as Khabarovsk is from Brussels.

Read: “Russia-Europe Gas Spat Ends — For Now”

See pictures of the Russians in Ossetia.