Serbian victory for Putin and Russia Inc
By Quentin Peel Published: January 25 2008 02:11 | Last updated: January 25 2008 02:11 Russia will reap its first big reward on Friday for supporting Serbia in trying to stop Kosovo from declaring unilateral independence. Next week the European Union may suffer a serious reverse for doing <http://www.ft.com/cms/s/a74d7bca-caa8-11dc-a960-000077b07658.html> the opposite, if Serbia elects a hardline nationalist president. The price of Kosovo’s freedom is high. Gazprom <http://markets.ft.com/tearsheets/performance.asp?s=ru:GAZP> , the Russian state-controlled gas monopoly, is to acquire a majority shareholding in NIS, the Serbian state oil monopoly, and in return incorporate the former Yugoslav republic into its proposed South Stream gas pipeline that will run under the Black Sea via Bulgaria to Greece and Italy. The deal has already been approved by the Belgrade government, although the price to be paid for NIS has not been finalised. Whatever happens, Gazprom will get a bargain, as well as a customer for South Stream rather than the rival Nabucco pipeline project, intended to reduce EU dependence on Russian gas, without having to submit to any competitive bidding process. What has Russia done to deserve such favourable treatment? It has blocked a resolution in the United Nations Security Council to endorse Kosovo’s independence. That will not stop the process, but it makes it much more difficult for other countries to grant the future state formal recognition. Although the US and most EU states will recognise it de facto, Kosovo will be left in a sort of legal limbo. That suits President Vladimir Putin in three ways. First, he is profoundly opposed to any process of national self-determination that allows a country such as Kosovo to declare independence unilaterally, rather than by agreement with the country from which it is separating. Today’s Russia, after the collapse of the Soviet Union, is determined not to allow any other of its constituent parts to break away. That is why Moscow fought two bloody wars in Chechnya. Although Mr Putin hints that breakaway regions such as Abkhazia – part of Georgia, not Russia – might follow Kosovo, all the evidence suggests he wants nothing of the kind. Second, he can exploit differences between EU members and the US. He knows that countries such as Spain, Greece and Cyprus hate the idea of self-determination, fearing it might be copied by Basque separatists or Turkish Cypriots. They are very unhappy about the precedent to be set by Kosovo. Best of all for the Kremlin, however, is the third benefit: the sweetheart deal for Gazprom. Its strongest supporter in Belgrade is Vojislav Kostunica, the prime minister, because he thinks Russia deserves a reward. Serbia also needs the gas. Mr Kostunica got his way in cabinet this week because the pro-EU party in the government, the Democratic party of President Boris Tadic, desperately needs his backing to help Mr Tadic win the second round of the ongoing presidential election. In the first round last Sunday he trailed behind Tomislav Nikolic, nationalist leader of the anti-EU Radical party. Mr Kostunica is notorious for not showing his hand. Mr Nikolic may very well end up winning the run-off on February 3. That would be a disaster for EU relations with the most important country in the western Balkans. Analysts in Moscow say Mr Putin might prefer Mr Tadic to win. He does not want to do business with an isolated Serbia. They dismiss suggestions that Russia’s opposition to Kosovar independence reflects some sort of Orthodox Christian, Slavic solidarity with the Serbs. It is far more likely to be related to the Gazprom deal. This is classic behaviour by Russia Inc, a Russian state driven by money, not ideology. There is also a strategic motive, although it is probably secondary. Every energy customer won by Gazprom further justifies construction of the South Stream gas pipeline rather than the alternative Nabucco pipeline to link central Asian suppliers via Turkey to Europe. Nabucco already has problems getting enough gas supplies to justify its construction. It will never get them without customers. Mr Putin must be laughing all the way to the bank. Copyright <http://www.ft.com/servicestools/help/copyright> The Financial Times Limited 2008 http://www.ft.com/cms/s/0/a78fc2a4-cadb-11dc-a960-000077b07658.html
