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26th Apr 2019

Putin says will not build South Stream gas pipeline

Russian leader Vladimir Putin has said he will no longer build the South Stream gas pipeline due to EU opposition.

He made the announcement in Ankara on Monday (1 December) at a press briefing with Turkish leader Recep Tayyip Erdogan.

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  • Putin (l) and Erdogan in Ankara on Monday: a new axis of 'dear friends'? (Photo: kremlin.ru)

“We believe that in the current conditions Russia cannot continue with the realisation of this project [South Stream],” Putin said.

“Bearing in mind that you need to construct the pipeline under the Black Sea, we cannot begin construction so long as we do not have permission from Bulgaria. To begin construction in the sea, get to the Bulgarian beach, then stop - it would be ridiculous”, he added.

“The position of the European Commission was not constructive … If Europe does not want to realise it, well, then, it won’t be realised”.

South Stream was to bring Russian gas to Austria and Italy via the Black Sea, Bulgaria, Serbia, and Hungary from 2016.

In strategic terms, it was to increase EU dependence on Russian energy and boost Russian influence in participating states.

It would also have harmed Ukraine by bypassing its gas transit system.

But the European Commission threatened to launch legal action on grounds that South Stream violates EU anti-monopoly laws, with Bulgaria halting construction in August.

Putin said his decision will cost the EU.

He noted that the South Stream consortium - which includes French, German, and Italian firms - has already spent “hundreds of millions of dollars” on the project.

He added that Germany, which agreed to build the Nord Stream pipeline under the Baltic Sea, now benefits from some of the lowest gas prices in Europe.

He also urged Bulgaria to seek compensation for lost revenues.

“If Bulgaria is prevented from behaving as a sovereign state, then at least let them ask for money from the European Commission for lost income - the direct budget revenues that Bulgaria would have had from [gas] transit were at least €400 million a year”.

The death of South Stream should make it easier for the EU to construct a competing project - the so-called Tanap gas pipeline from Azerbaijan via Turkey to south-east Europe.

But Putin on Monday also announced a new energy partnership with Turkey, amid EU concern over Erdogan’s future loyalties.

New Putin-Erdogan axis?

The Russian leader said he will add an extra branch to his existing Blue Stream gas pipeline to Turkey and build a new storage and trading “hub” on the Turkish-Greek border.

The two leaders also noted that plans for Russian firm Rosatom to build a $20 billion nuclear power plant in Turkey are proceeding full speed ahead.

For his part, Erdogan urged Putin to give better treatment to Crimean Tatars, a Turkic ethnic minority.

Russia annexed Crimea in March and launched a crackdown on the Tatars, who oppose Russian rule.

But the Turkish leader took a soft line on Russia’s war on Ukraine. Referring to Putin as his “dear friend”, he said only that the conflict must be "resolved within the framework of international law”.

Erdogan also complained that Europe is not doing enough to help with Syrian refugees.

He noted that Turkey has spent $5 billion on the 1.6 million Syrians who fled across the Turkish border.

“So, what support has come to us from around the world? I tell you: $200 million. How many asylum seekers has all of Europe taken in? Dear friends: 130,000”, he said.

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