Trouble In The Pipeline

Oil disputes, like oil spills, have a tendency to spread. So German Chancellor Angela Merkel is determined to ensure that what began as a regional spat between Russia and Belarus over oil prices doesn't build into a Europe-wide energy crisis. For weeks, Russian President Vladimir Putin and Belarusan President Alexander Lukashenko have been locked in a public and vitriolic clash over Russian plans to increase its price for energy to Belarus.

But Putin upped the ante dramatically when, on Jan. 8, he cut off shipments through the Druzhba pipeline, which carries 1.2 million bbl. of Russian oil through Belarus to customers across Europe. Suddenly, countries like Germany and Poland were drawn into the fray. Germany gets about one-third of its oil imports from Russia, most of it through Druzhba. Poland relies on the pipeline for 96% of its oil imports, while Europe as a whole depends on Russia for over 30% of its oil needs.

At a gathering of E.U. commissioners in Berlin to mark the beginning of Germany's E.U. presidency, Merkel and E.U. Commission President José Manuel Barroso called Russia's move "unacceptable."

Merkel chided Moscow for failing to consult with its "partners" before taking action. "That always destroys trust," she said. "No trusting cooperation can be built on this." As Minsk and Moscow continued to bicker, Poland and Germany said they have enough oil in reserve to tide them over until a solution is reached, but the episode has highlighted just how dangerously dependent many European countries have become on Russian energy.

While many governments are seeking to diversify their fuel sources, Merkel in particular has put energy policy at the top of her agenda. She has used this crisis to reintroduce one of her pet ideas: reviving Germany's nuclear energy program. The country's strong environmental movement has long demonized nuclear power, and Merkel's suggestion raised howls of outrage from many quarters. But feeling like pawns in Putin's brinkmanship has led some to entertain new possibilities. "In the long run," said one commentator on Radio Berlin, "the fear of blackmail will be bigger than the fear of nuclear power."

Merkel, meanwhile, heads to Moscow on Jan. 21. Her likely message for Putin: Germany and the E.U. want energy — and reliability.