Serbia Plays Key Role In Russian Gas Pipeline Plans Belgrade is part of a fierce struggle between Russia and the West over the future of energy supplies to Europe. Russia has taken control of Serbia's state oil and gas industry, while the Serbian capital hopes to be a hub for a major Russian gas pipeline.
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Serbia Plays Key Role In Russian Gas Pipeline Plans

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Serbia Plays Key Role In Russian Gas Pipeline Plans

Serbia Plays Key Role In Russian Gas Pipeline Plans

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This week on Morning Edition, we've been exploring the power you gain when you're the guy who heats everybody's home. We've seen a demonstration in recent days after Russia shut off the supply of natural gas to one of its neighbors. Now, a number of European countries say they are running short of Russian gas. So it's fitting that we've spent the last few days exploring Russia's giant state gas company, Gazprom.

Its business extends Russia's influence to a number of U.S. allies. And Gazprom is also busy in a region where the United States took part in multiple wars. NPR's Greg Feifer traveled to the Balkans in southern Europe. That's where Gazprom plans to purchase a controlling interest in Serbia's state energy industry.

GREGORY FEIFER: Russian President Dmitry Medvedev had reason to look pleased when he met Serbian President Boris Tadic in Moscow on Christmas Eve. The two leaders finalized an agreement for Gazprom to buy 51 percent of Serbia's state oil and gas companies and a plan for Russia to construct a gas pipeline through Serbia.

Serbian leaders said the promised pipeline would end their country's crippling energy shortages. But many Serbians welcome sacrificing control over their energy industry for political reasons as much as economic ones. Both Russia and Serbia are Slavic countries that consider each other traditional allies. Moscow supported Belgrade during its bombing by NATO in 1999, memories of which are still raw here.

This street of bustling shops and outdoor cafes, with its sparkling fountain, is a stark contrast to the rest of Belgrade. After years of economic sanctions under Slobodan Milosevic, the soot-stained, crumbling buildings give Belgrade the lingering look of a Soviet bloc city. Student Vlada Vasic is among many who believe Serbia's plans to join the European Union are the only way forward. But he says they won't be affected by Russian control over the energy industry.

Mr. VLADA VASIC (Student): (Through Translator) Russia supplies a lot of countries in Europe, and the Russians are our brothers. I don't think we have anything to fear from them.

FEIFER: Others aren't so sure. The Gazprom deal came at a critical time, just as the Serbian province of Kosovo was preparing to declare independence, which Belgrade and Moscow opposed. Many believe pro-Western President Tadic, who was running for re-election, couldn't afford to displease the Kremlin.

In a cafe in Belgrade's down-at-heel Moskva Hotel, parliament member Slobodan Maras, of the opposition Liberal Democratic Party, criticized Tadic for buying Russian political support.

Mr. SLOBODAN MARAS (Serbian Member of Parliament, Liberal Democratic Party): (Through Translator) Signing away our energy industry was a huge price to pay for what we got. Now the Russians can direct our energy policy.

FEIFER: There's much more at stake than simply the Serbian energy market. Belgrade is part of a fierce struggle between Russia and the West over the future of energy supplies to Europe. A number of European companies had hoped to buy into Serbia's energy industry but withdrew because of the cost.

But despite the global financial crisis, Gazprom found the money because it wants to make Serbia the European hub of its planned, new South Stream pipeline from Russia. The project is meant to compete with a planned European Union pipeline from the Caspian Sea that would cut out Russia. The Nabucco pipeline is championed by the United States, but the view from well-heated Washington sharply differs from how ordinary people see things in Serbia, a country that's been on the brink of economic collapse for years.

In the high-ceilinged kitchen of an old central Belgrade apartment, Ivana Gevic lights her stove to make tea.

Ms. IVANA GEVIC: (Russian spoken)

FEIFER: She says the Gazprom deal is the only way to make sure gas supplies don't run out, but she's worried Serbia is enmeshed in a murky, high-stakes deal. In October, a shady intermediary company suddenly raised the price Serbia will pay for Russian gas by 60 percent. Critics say the intermediary is one of the obscure structures the Kremlin is using to secretly control the company's profits.

Final negotiations between Gazprom and Serbia Gas were further complicated by Gazprom's insistence on paying only half the estimated value for Serbia's state oil company. The deal could still fall apart, but energy analyst Sasha Djogovic says Serbia, hit hard by the global financial crisis, has no real alternative but to agree to Gazprom's terms. And that's something Russia is exploiting.

Mr. SASHA DJOGOVIC (Energy Analyst): This decision is not only a decision because of the economy aspect. This is a decision because of political aspects. Energy sector is the hand for the strengthening of political power of Russia in the world.

FEIFER: Such has been the success of Gazprom's strategy, Moscow is even setting up an organization of gas-exporting countries that some are calling a natural-gas version of OPEC. Analyst Djogovic warns that unless the West develops a common response, it risks losing the competition over European energy supplies. In the energy market, he says, Russia is a shark.

INSKEEP: That's NPR's Gregory Feifer reporting on the Russian company Gazprom. And Greg, stay with us a moment, because if this analyst is right and Russia is a shark, I want to ask if it's biting right now. You know the news - we mentioned it - that Russia's cut off gas to Ukraine. Other European countries that get their gas through Ukraine are reporting shortages. How bad is it?

FEIFER: It's bad. I guess you could call this a new form of the Cold War. Russian gas deliveries have completely stopped to a dozen countries, including Serbia, Italy and Germany. But it's really the former Soviet bloc countries that depend on Russia for up to 90 percent of their gas that have been hit hardest.

Just as a freezing cold spell is hitting northern Europe, thousands of people in Bulgaria were left without heat overnight. And Slovakia now has declared a state of emergency. Now, European energy companies are digging into stockpiled gas reserves, and they're really scrambling to find alternate supplies.

INSKEEP: Knowing that a lot of people's comfort or even their lives might be at stake here, I'd like to know, is this really just a dispute over prices between Russia and Ukraine, which is how it started, or is this another projection of what you've been talking about the last three days, Gregory Feifer, the increasing power of Russia and a way that Russia's flexing its power.

FEIFER: I think you're absolutely right. There is certainly another major aspect to the standoff. Russia says this is a purely business dispute, but it was the prime minister, Vladimir Putin, who was seen on television giving the order to reduce supplies to Europe by the amount Gazprom says Ukraine is stealing.

Putin blamed the crisis on what he called the irresponsibility of the Ukrainian leadership, and it's really been part of a stream of very angry vitriol that's been directed at the pro-Western Ukrainian leadership. I think that whatever Russia says, this is very much a political dispute, and it's getting very nasty.

INSKEEP: NPR's Moscow correspondent Gregory Feifer, thanks for your reports all week.

FEIFER: You're welcome.

INSKEEP: And you can see just how much Russian gas goes to European countries, and also hear the rest of our series, at

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