Conclusionsfrom the 3 Panel Discussions

In cooperation with:

• Hellenic Ministry of Foreign Affairs
• Defence Analyses Institute (IAA)
• Hellenic Foundation for European & Foreign Policy
• Center for Russia and Eurasia of the Institute for International Relations.

Conclusionsfrom the 3 panel discussions:

Panel discussion A: “Energy Security”.

Panel discussion B: “Crisis Management in the Middle East”.

Panel discussion C: “Crisis Management in the Balkans”.

Panel discussion A:

“Energy Security”

July 3rd 2007

Moderator:Dr Konstantinos Filis, Head of Center for Russia and Eurasia of the Institute for International Relations

Participation:

• Mr Michael Ivanovitch Savva, Head of Division Sectoral International Cooperation on Energy and Transport, Department of Economic Cooperation, Ministry of Foreign Affairs, Russian Federation

• Mr. Clark Price, Economic Counselor at the USEmbassy in Athens

• Mr Mikhail Myrianthis, Executive Member of the Board of Directors, Hellenic Petroleum SA

Dr. Konstantinos Filis:

I believe that we were very lucky the day before yesterday, during our panel on energy security, for having three detailed and very thorough presentations that managed to provide us with an in dept insight of Russia’s, US’s and Greece’s perspectives on energy security.

More specifically, according to Mr. Savva, who is the representative for the Russian Foreign Ministry, the supply and demand equations is as follows:For consuming countries, energy security is mainly security of supply. Whereas for producing countries, energy security is linked to security of demand. In the G8 summit in St. Petersburg last July, it was agreed that energy security can and should be a synthesis of security of supply and security of demand.

Mr. Savva went on by defining energy security as a set of measures intent to ensure an optimized balance of supply and demand on the world market with due account to the interests of both consumers and producers. Mr. Savva seems to have realized that the growing interdependence between consuming, producing and transiting countries requires strengthened partnership between all stakeholders to enhance global energy security and we all hope that his approach represents the official Russian position.

But which are among the most imperative challenges to energy security nowadays? First, high and volatile oil prices; increasingly poor geographical correlations between energy and users; the growth in demand and in the increasing import requirements of each of the main consuming regions, the United States, Japan, China and Europe that potentially could make the access to those resources an issue of strategic competition; enormous investment requirements along the whole energy chain; the need to protect the environment and to tackle climate change; the vulnerability of the critical energy infrastructure; and finally political instability, natural disasters and other threats. So, what needs to be done in confronting them from the Russian perspective? Increase the production of hydrocarbons and replace the extracted volumes by new-proved reserves, increase the export of gas and oil to the world market, enlarge the export transportation capacity, pipelines and terminals, diversify the export routes for gas and oil supply to world markets and finally facilitate transit transportation of hydrocarbons from the Caspian region to the world market.

Mr. Savva was persuasive in providing us with statistics which evince the apparent, that is that Russia is not only a crucial producing country, both in oil and gas, but also a key transit state especially for the landlocked Kazakhstan and Turkmenistan.

Mr. Clark Price from the US Embassy in Athens based his presentation on the common, as the US believes, US and EU security objectives. To the Americans, energy security, which by the way is correctly considered as a national security issue, is directly linked to prosperity and should therefore rely on safe, reliable and cheap energy supply. The position of the US government is that diversification is a key to all of the above. Based on that, Mr. Price referred to us to the US National Energy Policy, laid down by the Bush administration in 2001. Diversification fromWashington in practice means diversification of supplying countries especially with regard to the Caspian, whereas diversification for Moscow is more concerned with finding more export routes, multiplying the choices for transmitting through states that are more predictable for Russian interests.

A key component of US National Energy Policy is to develop and establish alternative forms of energy combined with diversification of existing energy routes. For that purpose more than 10 billion dollars have been allocated aiming at developing alternative sources of energy.

Overall, US objectives, as far as the Eurasian pipeline network is concerned, are based on the full utilization of the Caspian hydrocarbons via Azerbaijan, Kazakhstan, Georgia and Turkey. That, the White House hopes, will decrease prices, increase diversity and security of European energy and above all, Europe needs, according to Mr. Price, financial creativity.

Finally, Mr. Price was crystal clear in claiming that in order to achieve such objectives, the West and in particular European partners in Brussels have to reach a consensus on a clear, cohesive stance in their dealings with Moscow. As far as Gasprom and its monopoly in Europe is concerned, the US government does not oppose Gasprom as it realizes that it has been there and it owns a great part of the energy network. Nevertheless, Mr. Price argued that there have been problems and has called the European gas market as dysfunctional at times and that the US government is troubled by the increased prices Gasprom imposes. For instance, from 100 US dollars which is the production cost, Gasprom has raised the prices to 265 or even 300 dollars. And according to the American side, there is no justification for such a price.

Mr. Price also said that there is more than enough gas for the Caspian to go through the Turkish, Greek, Italian natural gas project, the so-called TGI pipeline and expressed Washington’s support for the Burgas-Alexandroupoli pipeline and Greece’s increased role as a transit country. However, he was very cautious and frugal in judging the recent announcement for the possibility of constructing the South Stream pipeline underneath the Black Sea and then in one direction from Bulgaria to Greece to Italy and the other from Bulgaria to Central Europe. To make his case more persuasive, he posed a number of questions, which apart from being based on logical considerations in a way, attempt to preoccupy the ongoing negotiations. These are: how does this project fit with US and EU plans for diversification of energy resources and transportation? How can it become more stable and price effective vis-à-vis the current networks and projects? Will it compete or supplement Nabucco pipeline? And finally how does it complement existing routes and help produce prices for EU consumers?

Mr. Myrianthis representing the key Greek energy company ELPE, involved in many projects around the country and on a regional scale, gave some sound statistics on the current and future projects, especially regarding transportation via the Greek territory and Southeastern Europe in general. He outlined the basic norms that should determine the energy relations between all involved parties. Security of supply and security of demand for producing countries which results to a long-term win-win gain, if this equation is not asymmetric. If it is asymmetric, then market distortions will be created, which is going to result in increasing prices.

Concerning the Burgas-Alexandroupoli project, Mr. Myrianthis underlined that gradually it may well be connected with the Western Balkans and to refineries in the former Yugoslav Republic of Macedonia, Albania, Serbia and Bosnia, therefore making Greece a vital transit country for other regional countries. He added that the TGI natural gas project will operate as an interconnector between the Blue Stream, Greek and then Italian pipeline network and refinery complexes. As for he South Stream project, which ELPE supports as well, it is estimated that it will double exports from alternative resources from 155 m3 annually to around 310 m3 by the year 2030.

Last, but not least-and I conclude-it should be born in mind that the state of affairs described to us by our speakers, as well as some objective realities, leave Iran as probably the most serious alternative for confronting Russia’s tightening grip on energy in the Caspian mainly with regard to supplying Western countries with natural gas from the region. In that respect, we cannot rule out a shift in the West’s stance in its negotiations with Teheran on the latter’s nuclear program, perhaps even accelerating efforts towards regime change from the current, willful, according to Western interests, Ahmadinejad to a government more amenable to Western interests.

Panel discussion B:

“Crisis Management in the Middle East”

July 4th 2007

Moderator:Dr Thanos Dokos, General Director of Hellenic Foundation for European & Foreign Policy

Participation:

• Dr Alexander Coudsi, Associate Professor on Middle East Politics, PanteionUniversity, Athens.

• Mr Georgios Ayfantis, 1st Counselor, Deputy Director of A6 Department for the Middle East in the Greek Ministry of Foreign Affairs
• Dr Ioannis Mazis, Defence Analyses Institute (IAA)
• Mr Pantias Eliades, Director of CFSP/ESDP department in the Cyprus Ministry of Foreign Affairs.

Dr. Thanos Dokos:

I was asked to summarize four sound presentations on a narrow and simple topic such as the Middle East security. And I was only given 5-10 minutes, not 5 days. So I will be very selective and by necessity a bit unfair to the presentations and the topic,and say that we heard a number of presentations, at least two of them approached the issue from a different perspective, one from an Arab perspective and the other form an Israeli and from a Western perspective and it was obvious to all of us that those two perspectives do not coincide on most of the issues.

We talked about a region with multiple crises: the traditional Israeli-Palestine problem, where no progress has been made over the last couple of years, to say the least. We have a civil war in Palestine, but also interestingly a weak government in Israel, which complicates any efforts for negotiations, for conflict resolution; we have the chaotic situation in Iraq, with repercussions well beyond the borders of that unfortunate country; we have the unfolding crisis of an Iranian nuclear program, which in my mind is potentially more dangerous than every other one in the region; the civil conflict in Lebanon; we have concerns about the emergence of a Shia crescent or axis, which will automatically lead to a Sunni counter-axis; we have the very slow pace of democratization in most Arab countries in the region partly due to the fact that democracy has been given such a bad name, because of foreign intervention to impose a democratic model; and we have political Islam becoming the main opposition force in many countries. Many of these crises have been fueling each other, there are visible or invisible connections and conflict resolution as a result becomes much more difficult and complicated.

It was pointed out that the military occupation of Iraq has changed radically the balance of power in the region, I would add especially in the gulf where we used to have a sort of triangular structure with Iraq, Iran and Saudi Arabia and the Gulf Cooperation Council states with the US playing a major military role in the region, now this structure has collapsed. As a result of all those changes a number of countries in the region are now facing challenges.

Now, let me very quickly move to some practical suggestions, because identifying mistakes and problems is perhaps the easy part, but offering policy prescriptions is much more difficult but also much more useful. In addition to the academic analysis, we also heard one operational presentation about the contribution of Cyprus in the Lebanon conflict. It is obvious that Cyprus is a strategically located outpost for both the EU and potentially NATO, which should be optimally exploited. So the faster there is a solution to the problem of Cyprus, the better it will be for both communities but also for the whole region.

Now I will come to some brief conclusions and policy prescriptions. Well, first of all, the obvious one: there is a need for division of labor between interested parties and actors.Not only the international community but also regional actors should become more active in trying to contain and manage the problems. Second point, well, very few people would disagree that the European Union, Europe, is divided and therefore, weak and unable to influence events in the region in any major way. Having said that of course, the EU is present in the region, it is physically present in Lebanon, it is interested about the region, not only because instability can spill over to Europe, but also for very practical reasons one of which is energy security.

The US, NATO and the EU should be complementary instead of competitive. And I’m going a step beyond the official statements and positions. And this complementarity element should have been there even before the failure of US policy in Iraq, not afterwards when the US became desperate and was asking for help from any of its partners or allies. There was agreement that one should address the security issues of Iran, at least those which are reasonable and justified and a new Gulf security system should be created as soon as possible. And the same need for dialogue goes for Syria as well; Damascus should be engaged as quickly as possible and it’s probably an easier task than Teheran.Democratization efforts should be supported, but the emphasis should be on those that spring from inside societies, not imposed from the outside and we should also accept any reasonable divergence from the Western model. And in this context it has been argued that the non recognition of Hamas has been a serious mistake.

The last point is on Lebanon and the strength of UNIFIL. It can be seen as a test case. Perhaps, if things go well, we will see a similar but stronger, in terms of mandate and capabilities, force being deployed in Gaza and the West Bank; but no one is predicting that for the immediate future. I drafted or at least I reported from the presentations a very pessimistic picture. No one expects a major change in the region until the new US administration takes office in one year and a half from now. And no significant changes should be expected on the European Union front as well despite the moderate success we had on the constitution matter. One hopes that there will be movement and a more strengthened presence from the European Union, but one should be cautious about that. Perhaps my last word is that the mood in Europe but also in the region is pessimistic. People talk about crisis management, containment of instability, very few people talk about conflict resolution.

Panel discussion C:

“Crisis Management in the Balkans”.

July 4th 2007

Moderator:Dr Aristotelis Tziampiris, Defence Analyses Institute (IAA)

Participation:

• Dr Athanasios Drougos, political analyst, Ministry of Defence Greece.

• Col Theodoros Panas, Commander of Hellenic Armed Forces in Kosovo.
• Col Philippe Roman-Amat, Policy and Plans Division, EUMS
• Mr Dimitrios Tsoungas, 1st Counselor, Deputy Director of A3 Department for the South Eastern Europe in the Greek Ministry of Foreign Affairs

Dr. Aristotle Tziampiris:

I will try not so much to give a summary of what was said in our panel, but focus on conclusions. Writing in 1906 the British journalist Ethel Bracefordstated that in the East-he meant the Balkans-the centuries do not follow one another. They co-exist. And the British novelist Saki (H. H. Monroe) is often quoted as having said that the Balkans have more history than they can absorb. So, it’s true the Balkans do have and do experience and have experienced a lot of history and today we are witnessing a distinct point in Balkan history and I think that our panel talked and analyzed very much in a competent fashion this distinct historical point.

Kosovo and the developments surrounding its final status was very much at the heart of the panelist discussion. So, we heard Dr, Athanasios Drougos actually concentrate on Kosovo. One conclusion, a clear one, was that what happens in Kosovo, when and how will surely have regional implications and international implications. It remains to be seen whether they will be positive or negative, but there will be implications. Another point or a series of points that were highlighted, involved the active role of Russian diplomacy and connection to Kosovo’s future; the fact that a decision will be reached at the level of UN Security Council even if the outcome involves a Russian veto; in other words, the decision might be there's no decision but the foreword is going to be reached as a UN Security Council; and another point that emerged was that the expectation is that the day after the UN there will be a central role played in Kosovo by the European Union. And that is an expectation that everyone agreed upon. There was also agreement that partition is not and should not be part of the solution to the Kosovo issue. Now, we did hear a number of plausible scenarios-I think five- five plausible scenarios: they included acceptance of the Ahtisaari plan, different modifications of the Ahtisaari plan and so on and so forth, a range of options that are possible at this point in time. Now, it is unclear which one will prevail. And we did hear from various panelists their own preferences, but the conclusion is that the next few months will be decisive. The scenario that will prevail,it will prevail in the next few months and that is the conclusion.

The international community often-actually not often-always supports stability in the Western Balkans. This is a rhetorical certainty, a rhetorical truth. We always hear: we support stability in the Balkans. But it is not just rhetoric. We had two panelists, Colonel Theodore Panas and Colonel Philip Roman Amat, who actually talked about how real security is provided on the ground in both Kosovo and Bosnia-Herzegovina. In Kosovo, as part of KFOR, some 600 Greek troops are currently serving with distinction in a situation that was described as stable but fragile. The Greek troops are based in two military camps and they implement a number of tasks on a daily basis. It was also concluded –a very interesting point- that although Kosovar Albanians view UNMIC with some suspicion or unease, KFOR is viewed in a much more positive light. Why? Because, as the Greek troops indicate, they provide or contribute to security on a daily basis.