My take is that the EU will not be able to free itself much from the tightening energy grip of Russia until it finds alternative energy sources. It's simple, really: you can fool around with Microsoft, but it's not so simple to do to your most important energy provider who can cut off supply at a moment's notice as it has already done to numerous former Soviet satellites. "Don't bite the hand that feeds the energy supplies." From the International Herald Tribune:
After years of Russia's using energy as a political weapon, the European Union sought to turn the tables Wednesday with a proposal to prevent the state-owned Russian monopoly Gazprom from taking over power networks in Europe.
Under plans submitted by the European Commission, non-EU companies would be barred from owning a majority stake in gas pipelines or electricity power grids unless their home country signs a reciprocal agreement with the EU. Such an agreement would have to give European companies access to the home market as well.
The proposal was contained in a package of measures designed to liberalize the European energy market, underlining European concern that Russia's state-owned, monopoly gas exporter would buy up energy assets across the continent. It also marks a new phase in the EU's efforts to apply pressure on Russia to open its pipeline infrastructure to European importers.
"We must not be naïve," said José Manuel Barroso, the European Commission president, denying that the EU was being protectionist.
"Fair competition is different from protectionism," he said. "We need to protect the internal market from noncompetitive behavior coming from elsewhere."
Several EU countries, however, want to water down the package because it would also force European energy giants involved in the power supply to hive off their transmission networks into separate companies. By contrast, the measures directed against companies like Gazprom are likely to be less contentious.
Barroso argued that if the EU liberalized its own internal market, it would be vital that non-European nations played by the same rules.
He won some backing from Fulvio Conti, the chief executive of the giant Italian utility Enel.
"When it comes to gas, I think it's appropriate that Europe takes some symmetrical approach and asks for reciprocity as a measure of deterrence," Conti said in London during an energy conference.
"We are speaking about a few large organizations that can supply gas to us, while we are here in Europe an umpteen number of operators trying to get this gas," Conti said. "You have to balance that to some extent.
"Europe can instruct us to unbundle things, but they will have to put some more political pressure on having a common voice when it comes to relationships with oil and gas producing countries," he said.
In a statement, Gazprom said it wanted to consult with the EU before giving its evaluation of the effect on "security of supply, the competitiveness of European energy markets and, finally, the energy prices in Europe."
"Gazprom is a reliable gas supplier to the European Union and a major investor in the infrastructure which brings gas to Europe," said Sergei Kupriyanov, spokesman for Gazprom. "We share the EU's core goal of ensuring long-term security of energy supply to the EU."
However some experts believe that the proposals need not have a large impact on Gazprom because it could buy into European utilities without taking a controlling stake.
"Classically Gazprom has acted in joint venture operations," said Simon Blakey, senior director for European research for Cambridge Energy Research Associates, or CERA. "When it comes to storage or transmission pipes this has been its usual modus operandi."
The impact of the proposals on the EU's tense relationship with Russia was also unclear.
"There is a huge amount at stake for both Russia and the EU in terms of the gas relationship and they are going different directions," said Daniel Yergin, chairman of CERA and author of an acclaimed history of the oil industry. "For 40 years this has been a stable relationship. The question is whether a crisis of confidence need lead to a crisis of supply."
Barroso said that Europe's 50 percent dependence on energy imports was set to rise to 65 percent by 2030. Gazprom supplies around one quarter of the gas used by Europe today.
The accession of former Soviet bloc countries to the EU has increased pressure for a tough line with Moscow, particularly following price disputes between Moscow and Ukraine, as well as with Belarus, which ended up disrupting supplies to European countries.
Jacek Saryusz-Wolski, a Polish center-right member of the European Parliament and chairman of its Foreign Affairs Committee, called on the EU to be "as consistent with Gazprom as we are with Microsoft."
There was, he added, "a double standard."
The European Commission has been fighting Microsoft for years since finding in 2004 that the U.S. software giant had abused its dominant position in desktop operating systems.
The proposals for "unbundling" power generation and transmission follow a study last year into the European energy market, which said the market blocked new entrants and provided insufficient competition.
Neelie Kroes, the EU competition commissioner, said that liberalization would reduce prices and that the continent's energy giants needed to remember that the "consumer is king."
Under the European Commission's proposals, large utilities involved in power generation and supply would be able to retain the ownership of transmission networks providing these are leased to a separate company under different management. Such arrangements would be policed by a new and tougher regulatory regime.
But this concession was insufficient for the continent's big power groups.
"Separating networks doesn't increase competition, doesn't lead to higher investment in networks and doesn't lead to lower prices," Christian Drepper, a spokesman for E.ON, said in a statement.
The proposals will go to the European Parliament and to the EU member states, where they face a tough slog.
Finance Minister Christine Lagarde of France said that Paris "will do everything we can with other opponents to oppose any unbundling." The package received a skeptical reception in Berlin as well.
