EUROPE WILL HAVE TO WAIT

The Czech Republic, which holds the presidency of the EU, has decided to convene an informal summit of countries on 8 May, upon which the implementation of the Nabucco gas pipeline project depends. Invitations to participate in the summit have been sent out to the heads of state and government of Azerbaijan, Kazakhstan, Turk-menistan, Georgia and Turkey. Represen-tatives of Iraq, Egypt and Uzbekistan have been invited as observers. It is possible that Russian representatives will also attend.

Europe hopes that the Prague summit will make it possible to clarify many issues linked to the future of the Nabucco project and will help diversify sources of energy supplies to Europe. At the same time, experts think that it is difficult to talk about planning large investments in the short term, in the context of the world economic crisis. Albert Bressand, a doctor of economics, professor and director of the Centre for Energy, Marine Transportation and Public Policy at Columbia University, USA, holds the same view. In an interview with R+, he commented on the current situation on the world's energy market, the influence of the financial crisis and many other issues.

- Dr Bressand, what effect is the world economic crisis having on the energy market?

- There are probably very different effects - over the short-term and the long-term. Over the short-term, the economic crisis obviously reduces the demand for energy and, therefore, reduces prices, in spite of OPEC's efforts to limit production. Prices have fallen massively. This is welcomed by consuming countries in the short-term, because it facilitates economic recovery. However, over the long-term the decline in price may have some negative implications. The negative implications may lower all prices and, also, volatility of prices makes it more difficult to plan large investments. It (volatility of prices) also makes it more difficult to plan for a transition to a low carbon economy. As you know, within the framework of the UN convention on climate change, countries are trying to move to sources of energy with lower carbon content. But these energy sources are still very expensive. So if all prices fall drastically, it is possible that the transition to new sources of energy will be much less rapid.

- It is no secret that a lot depends on US policy in overcoming the current crisis. What can you say about the Obama administration's energy policy? What are your expectations?

- The Obama administration's energy policy has not been fully articulated yet. Some important indications were given during his campaign and following the election. And also, some major initial steps have been taken, in spite of the recovery package (the package of anti-crisis measures - R+). But everyone understands that the administration will need more time to articulate its policy completely. First, and very importantly, President Obama has made clear that energy would be of central importance to his overall policy. And you know that in America it is not always the case that they treat energy as a major issue. Second, in the context of the recovery package President Obama is trying to use energy policy to also create jobs, so-called "green jobs", and to help with the transition to a low carbon emission energy mix. In the recovery package, the Obama administration has already taken a significant step towards developing green energy. On the way it also supports job creation in the US. Eighty billion dollars have been allocated to clean energy projects, public transportation and green infrastructures. This is the largest investment of this type in US economic history. Thus these various measures are quite impressive. Now, the administration still has to make a number of more complex decisions, one of them, for example, is about nuclear energy. President Obama does not really oppose it and, in principle, he is in favour of nuclear energy. But he has decided to cancel the waste depository project. This will make it much more difficult for nuclear power plants to be licensed, because being able to dispose of waste for the long-term is an important requirement. Similarly, Salazar, Interior Secretary and in charge of environmental policy, has taken major steps against deep sea drilling and against a number of projects that were seen to have a negative environmental impact. So this US administration will have to balance its support for green energy with the need to develop sufficient energy resources, and it is too early to know how President Obama will manage this.

- In recent years, Azerbaijan's role in world energy supply has grown considerably. How do you see this role and can Azerbaijan give sufficient support to Europe on the issue of energy security?

- I think Azerbaijan makes a very significant contribution, not only to the energy security of Europe, but also to energy security in general. Azerbaijan provides important energy resources and it does so using several transit routes, which bring a very useful degree of diversity in energy transit. And this is a very welcome addition to other resources and energy routes. So yes, very definitely, Azerbaijan plays, I would say, a very important role and, to show how important this role is, you should understand that there are only three countries standing between European consumers and the energy resources of Central Asia, and these three counties are Russia, Azerbaijan and Iran. So to speak, Azerbaijan is as important as these other two countries, and it has acted in a manner which is of great importance to security.

- What are the prospects for the Nabucco project?

- I think at this stage the Nabucco project is not yet a fully fledged project, not yet a fully developed project, because a real project, a complete project, must include an upstream as well as a midstream dimension. Midstream is about the pipeline which everybody is talking about, but upstream is about the arrangements to provide gas for the pipeline. So I think it is too early to pass judgment on the Nabucco project, because some very important parameters of that project have not yet been articulated. When these parameters are articulated, then it will be possible to see whether they make commercial and political sense, and to pass judgment.

- Does Europe only need Azerbaijan for its energy?

- Europe needs Azerbaijan for more than energy. Energy is only one aspect of international relations and Azerbaijan is needed in many other ways. First, in the economic sphere itself, Azerbaijan is needed as a rapidly developing economy which can also provide quality agricultural and manufacturing products and quality services. When people visit the city of Baku, they see how lively, how cosmopolitan, international it is. And beyond the economy, the contribution of Azerbaijan is also as a member of a community of people and nations in which we all benefit and we all learn from one another. And in that sense, Azerbaijan brings unique experience, from its history of providing a bridge between different cultures, different nations, and I think Azerbaijan is needed in that sense as a contributor, an important contributor to the architecture - the political as well as economic architecture - of Eurasia, and not simply as a source of energy.

- Your centre also researches issues of sea transportation. How do you appraise Azerbaijan's prospects in sea transport?

- This is an interesting question. Because, of course, it means that Azerbaijan must be seen not just in the context of the Caspian Sea, where it is a very important, resurgent state, but also in that of the Black Sea, where it is the owner of the Kulevi terminal in Georgia. If one bears in mind that the Caspian and the Black Sea actually form an integrated system, combining transportation by pipeline and transportation by sea, then the importance of Azerbaijan is much stronger than if one were to think purely in geographic terms. Actually, we are now in the process of developing a project for sustainable shipping in the Black Sea region and we consider the Caspian to be fully connected to the Black Sea in that sense.

- The Azerbaijani-Armenian conflict and other internecine wars impede many integration plans…

- Unfortunately, it has been the nature of some international conflicts to last for decades or, sometimes, for centuries, and we can see that in the Middle East and in Europe we have had the experience of countries being in conflict with one another over long periods. When I visit Baku, I take a more optimistic view on the subject because it is the European experience that, by developing rapidly, one makes territorial and political conflicts less important and one provides more avenues for people to come together. And I think that by having embarked on economic development, Azerbaijan provides one of the critical keys to unlocking this conflict. Conflict is unlocked when people move from zero sub-gain, whereby what I gain is what you lose, and vice-versa, to positive sub-gain, when both gain together. And it was the experience of France and Germany that the way for us to go beyond zero sub-gain was to build Europe together. So I think that by being an important architect in the search for a Euro-Asian structure, Azerbaijan is also, in a sense, taking steps towards putting this bilateral conflict into a broader prospective, from which it will be more easily resolved.