KOSOVSKA MITROVICA, Kosovo—A fight over license plates in the Balkans has gotten the North Atlantic Treaty Organization (NATO) involved.
Posters and graffiti can be seen throughout the Serbian-dominated part of the town of Kosovska Mitrovica in northern Kosovo that say, “No surrender—Serbian license plates and ID remain.”
Despite the European Union moderating bilateral talks, ethnically Albanian-dominated authorities in Pristina, Kosovo’s capital, plan on September 1 to re-register vehicles featuring Serbian plates. However, recent protests jammed up border crossings between Kosovo and Serbia. Plus, a poll shows the majority of Kosovo-based Serbs plan to continue using Serbian-issued license plates.
“They will certainly provide resistance if Pristina attempts to ‘nationalize’ thousands of cars if their owners refuse to replace Serbian-issued license plates with Kosovan ones,” said Milica Andric Rakic. The project manager of Kosovska Mitrovica-based non-governmental organization New Social Initiative told Toward Freedom that Serbs may bow to a certain degree to pressure from Belgrade, but will not accept ultimatums from Pristina.
This dispute comes amid Serbia’s resistance to the European Union’s and the United States’ pressure to recognize the 2008 secession of Kosovo. But, as Serbian President Aleksandar Vucic recently pointed out, both entities refuse to acknowledge breakaway republics in Ukraine’s Donbass region.
Serbia-Kosovo Relations
Following the 1999 NATO bombing of Serbia, the Serbian police and army were forced to withdraw from the country’s southern province, Kosovo. Then NATO troops entered Kosovo in June 1999, having remained since. Nine years later, Pristina declared independence, a move recognized by most Western countries. In southern Kosovo, ethnic Albanians make up over 90 percent of the population.
Serbia’s defeat, however, did not mark the end of the presence of Serbian institutions in Kosovo. In the north, as well as in certain places in the south, Serbs make up the majority of the population. Despite the secession, Serbia has continued issuing license plates and identification cards (IDs) to Serbs living in northern Kosovo.
“For Kosovo’s Prime Minister Albin Kurti, those car plates are illegal,” Rakic said. “But for the local Serbs, they are the only ones they have.”
She said Serbs do not want to integrate into Kosovo’s legal and political system, despite occasional pressure that comes from Belgrade. For them, Kosovo is part of Serbia. That is Belgrade’s official position, too.
However, amid Western pressure over the years, Serbia has had to make concessions to Kosovo. For example, in 2011, Serbia agreed to create de facto border crossings with Kosovo, while Serbian police officers were integrated into the Kosovo police force. In 2013, Belgrade called on Serbs living in northern Kosovo to take part in Pristina-run local elections. Two years later, Serbia’s judicial authorities in northern Kosovo were integrated into the Kosovo legal framework.
“The Serbs in northern Kosovo never supported such actions. That is why Belgrade was always either ‘bribing’ them or pressuring them to integrate into Kosovo’s institutions,” Rakic said, referring to various deals Belgrade has offered Serbs over the years to de-escalate the situation.
‘New Generation Will Not Put Up with Terror’
Serbian President Aleksandar Vucic expressed solidarity with ordinary Serbians at an August 17 joint press conference with NATO Secretary General Jens Stoltenberg.
“A new generation of young men in northern Kosovo will not put up with the terror that comes from Pristina,” Vucic said.
But, Sinisa Radovic, who owns a small souvenir shop in Kosovska Mitrovica, said he has no choice but to re-register his vehicle.
“Otherwise, they will confiscate it. Right now, if I drive a car with Serbian-issued plates south of Kosovska Mitrovica, the police can fine me and I would have to pay 250 euros,” Radovic explained.
In northern Kosovo, drivers have used stickers to cover Serbian state symbols on license plates. It is a temporary solution to the dispute.
On August 18 in Brussels, Vucic and Kurti failed to reach a deal, although EU High Representative for Foreign Policy and Security Josep Borrell claimed they have until September 1 to resolve the burning issue.
Kosovo Prime Minister Albin Kurti has stated Serbian license plates are considered illegal. Rakic said it’s possible Kosovo’s authorities will force Serbs into Kosovo’s legal system without an agreement with Serbia.
“Such an attempt will undoubtedly lead to an escalation,” she pointed out.
‘Pristina Will Have a Big Problem’
Moreover, Pristina now requires Serbs living in northern Kosovo to replace their Serbian-issued identification cards with Kosovo documents.
Some challenges Serbians in Kosovo face are that Pristina neither recognizes Serbian-issued driver’s licenses nor Serbian-issued IDs.
Some Serbians hold Kosovo’s IDs, while others cannot get them for technical reasons. In order to apply for a Kosovo ID, one would have to attach a birth certificate. Serbians living in Kosovo would want a Kosovo-issued ID to be able to get Kosovo-issued driver’s licenses and plates to be allowed to drive south of the Serbian-dominated areas. Plus, to get paid by a Kosovo-based employer, they would need a Kosovo ID to be able to open bank accounts to receive direct paycheck deposits.
“But Pristina does not recognize birth certificates issued by Serbia’s authorities after June 1999, which means that someone who was born in Kosovska Mitrovica in 2000 does not legally exist for Pristina and cannot even apply for an ID,” Rakic explained.
Yet, some holdouts remain. One of them is local pensioner Mirko Trajkovic.
“This is Serbia. Why should I have any documents issued by illegal institutions in Pristina?” Trajkovic said, adding Belgrade will not betray Serbs in northern Kosovo.
This reporter found it difficult to find many Serbs who would comment. Many fear both the Serbian and Kosovo governments would retaliate.
Neither Belgrade nor Pristina effectively control northern Kosovo. The territory is a “gray zone,” where NATO’s Kosovo Force (KFOR) mission is expected to intervene in case of potential clashes between Serbs and the Albanian-dominated Kosovo Security Forces.
Meanwhile, panic has spread on social media and in Western media. Plus, the Kosovo prime minister speculated about an escalation leading to a new war in the Balkans.
Rakic thinks that’s unlikely, though. But she did suggest one possibility: Because Kosovo has rejected all Serbian proposals for a resolution, what could happen if no deal is reached by September 1 is Belgrade may call on the Serbian community in the north to boycott Kosovo-issued documents and license plates.
“Then Pristina will have a big problem, since it is logistically very difficult to confiscate thousands of vehicles.”
Nikola Mikovic is a Serbia-based contributor to CGTN, Global Comment, Byline Times, Informed Comment, and World Geostrategic Insights, among other publications. He is a geopolitical analyst for KJ Reports and Enquire.
Editor’s Note: Light editing helped conform this article that originally appeared in Peoples Dispatch to TF’s style.
Protests against secessionist rule are spreading across the Sool region of Somaliland, the breakaway region of northern Somalia. Unionist protesters are calling for reunification with Somalia and Somali activists and observers opine that the protests might soon spread across Somaliland, questioning the legitimacy of its unrecognized claim to sovereignty, which the United States and the United Kingdom have been seeking to strengthen with recent overtures.
On Sunday, January 15, protests were reported from the Taleex city, where Somaliland’s tricolor flags were removed and replaced with the blue flags of Somalia. Taleex is about 160 kilometers northeast of the epicenter of the protests, Las Anod, Sool region’s capital city. Las Anod was captured by Somaliland from Somalia’s autonomous region of Puntland in 2007.
The protests began in the city on December 28. In an attempt to put them down, security forces killed at least 20 civilians over the following five days, before reportedly retreating to the city’s outskirts on January 5.
Somaliland’s commander of Armed Forces, Brigadier General Mahad Ambashe, has, however, indicated his intention to take back the city, saying that his troops “shall continue staying in Las Anod and Sool region to ensure law and order has been followed by residents.”
Defiant, the clan leaders of the region held a meeting in Las Anod on January 12, calling on Somaliland’s forces to withdraw from Sool, Sanaag, and Cayn (SSC), where a majority of the people have been historically opposed to secession from Somalia.
Pro-unionist troops under the command of the head of the Dhulbanate clan have taken over the city and sworn to defend it from Somaliland. “Everybody is waiting for the tribesmen in Las Anod to fully announce a war against Somaliland. And you will hear this very soon as they have formed a committee of 33 heads to come up with a roadmap to remove Somaliland from SSC,” Elham Garaad, a UK-based Somali activist whose unionist parents migrated out of Somaliland, told Peoples Dispatch.
The protests had spread to the city of Kalabaydh, 70 kilometers (43 miles) to the southwest of Las Anod, by January 12. Two days later, unionist demonstrations broke out in Xudun, 100 kilometers (62 miles) to the north of Las Anod, and in Boocame, 80 kilometers (49 miles) to its east. Protesters also took to the streets of Boocame’s neighboring Tukarak on January 15, and blocked a minister from visiting the city.
Badhaan, a city in Sanaag region, and Buuhoodle city in Cayn region, have also witnessed protests. The three regions together had formed the Sool, Sanaag, and Cayn (SSC) state of Somalia, before being forced into Somaliland by the secessionist Somali National Movement (SNM).
Waving the blue flag of Somalia, the protesters have been demanding the “right to self-determination” on the question of reuniting with Somalia, which was fractured after the civil war that ended with the collapse of its federal government in 1991.
‘Most Regions in Somaliland Oppose Secession’
“Until 1991, there was no such thing as Somaliland, except when the area was a British Protectorate,” Mohamed Olad, a Somali activist studying law in the United States, told Peoples Dispatch. “The idea of forming a country on the basis of this border of the British protectorate,” separating itself from the part of Somalia under Italian occupation, was opposed by two of the three original states of Somalia that came to be part of the self-declared Republic of Somaliland after 1991, he said.
Support for secession was largely limited to the North West state, a stronghold of the SNM, which fought in the war against Somalia’s federal government led by Mohamed Siad Barre. SSC and Awdal “have historically opposed” the notion of Somaliland, Olad explained, adding that Awdal was captured by the SNM with the help of Ethiopia during the civil war.
The SSC leaders, on the other hand, were tricked into signing an agreement on the guarantee that Somaliland would form itself into a single state within Somalia. “That agreement never included secession,” he said, adding that discontent against Somaliland’s rule has since been intensifying, and protests might also soon spread to Awdal.
Three of the four major clans—namely the Dhulbahante, Warsangeli and Gadabursi—along with the smaller Issa clan, had opposed the secession from Somalia, added Elham Garaad. Only the Isak clan, which dominated the SNM and had a strong presence in the North West state, supported the secession and formation of Somaliland. Other clans have since felt marginalized by the Isak, which wields disproportionate power in the government of Somaliland.
But currently, the “Isak themselves are divided,” Garaad said. “Gaarhajis, one of the largest tribes (under the Isak clan), has been vocal about the atrocities in the SSC region.” Defending the right of the people in SSC to be unionist, they have called on the Somaliland government to stop the killings. Garaad maintains that the current spate of protests may soon reach even Somaliland’s capital city Hargeisa, which has been a historic stronghold of the SNM’s secessionist politics, dominated by the Isak.
“SNM was led by the elite and petty bourgeoisie of the Isak clan. They have neither dealt with the class contradictions within the clan, nor succeeded in integrating other clans into the secessionist movement,” historian Mohamed Hassan told Peoples Dispatch. “While the Isak is supposed to be the ruling clan, in effect, what you have in Somaliland is a one-man rule by former army Colonel Musa Bihi Abdi, whose term had already expired in October 2022. [An] increasing number of people within the Isak clan are also supporting unionist politics.”
Somalia is among the most homogeneous countries in Africa, in terms of language and religion, explained Hassan, who is also an advisor to the head of Ethiopia’s Somali state. The clan system from feudal times, preserved under colonial administration as an essential tool for divide-and-rule, remains the key fissure exploited by imperialism to ensure Somalia remains a fractured nation, he argued.
Rising Tide of Somali Nationalism
“But hundreds of thousands from Somaliland are working and staying in Somalia,” he added. Youngsters from Somaliland make up a significant portion of Somalia’s national army. The large Somali diaspora is getting increasingly politicized and organized by international exposure. All this has contributed to a surge in Somali nationalism, he said, adding that even businessmen in Somaliland, who want a larger and integrated market, seek a unified Somalia.
The tensions between clans—whose leaders choose the MPs in most of Somalia, including in Somaliland—is only a surface manifestation of the tide of Somali nationalism churning from underneath, Hassan argued. In the face of this nationalist sentiment, Somaliland’s existence as an independent entity is facing a “crisis of legitimacy” internally, he maintains.
This crisis is accentuated by the fact that Musa Bihi Abdi’s presidential term expired last October, despite which he has continued to rule without having conducted elections yet. In September, the Somaliland Electoral Commission announced that elections cannot be held for at least nine more months due to financial and technical problems.
Opposition parties, which have 52 of the 82 seats in Somaliland’s parliament, had led protests in August demanding timely elections. At least seven people were killed and several more wounded in the crackdown on these protests. It was the assassination of a popular opposition politician, in the backdrop of a spate of killings of prominent people in the SSC region over the last decade, that triggered the protests on December 28 in Las Anod, which have snowballed into a unionist movement.
While Somaliland is thus unraveling, with internal rifts between ruling and opposition parties, mounting tensions between the clans, and sa urging unionist sentiment contesting its legitimacy, the United States and the United Kingdom have been increasingly legitimizing the secessionist state.
U.S. Military Base in Somaliland?
The then-commander of United States Africa Command (AFRICOM) General Stephen Townsend met with President Abdi in Somaliland in May, becoming the highest ranking official to visit the breakaway state, whose claims to sovereignty have no international recognition.
While not recognizing Somaliland as a sovereign state, and officially adhering to ‘One Somalia policy,’ the United States has lately made several gestures seen as a dilution of this policy. Prior to Townsend’s visit, in March 2022, the Somaliland Partnership Act was introduced in the U.S. Senate by Republicans Jim Risch and Mike Rounds, and Democrat Chris Van Hollen.
The “Biden Administration has limited itself to the confines of a ‘single Somalia’ policy at the detriment of other democratic actors in the country. In this complex time in global affairs and for the Horn of Africa, the United States should explore all possible mutually-beneficial relationships with stable and democratic partners, like Somaliland, and not limit ourselves with outdated policy approaches and diplomatic frameworks that don’t meet today’s challenges,” Jim Risch had said.
The act was signed into law by U.S. President Joe Biden on December 23, under the Fiscal 2023 National Defense Authorization Act, which was the first time a separate reference to Somaliland was made in U.S. law.
The Act commissions a feasibility study by the “Secretary of State, in consultation with the Secretary of Defense,” to determine “whether opportunities exist for greater collaboration in the pursuit of United States national security interests… with… Somaliland.”
It further seeks to identify “the practicability and advisability of improving the professionalization and capacity of security sector actors within the Federal Member States (FMS) and Somaliland.” While adding that “Nothing in this Act… may be construed to convey United States recognition of Somalia’s FMS or Somaliland as an independent entity,” it stops just short of doing that.
Somaliland’s port city of Berbera will also be one of the sites for the U.S.-led multinational 10-day military exercise scheduled to take place in February. On January 13, personnel from AFRICOM’s Combined Joint Task Force – Horn of Africa [CJTF-HOA] visited Somaliland and surveyed the Berbera port.
“Berbera is now an American military base without settling the secession issue,” former Somali Special Envoy to the United States, Abukar Arman, wrote in the Eurasia review. “Stakes have never been higher for all actors. Against that backdrop, President Muse Bihi was given the nod and wink to march on ahead to secure total control over his claimed territory by any means necessary. He was also granted the reassurance that neither the central government of Somalia nor Puntland will interfere militarily or otherwise.”
‘Oil Companies Want a Weak and Divided Somalia’
In the meantime, Genel Energy, listed in London Stock Exchange, claimed the right to explore and exploit the oil fields in Somaliland last month. The oil ministry of the federal government of Somalia has said it “categorically rejects Genel Energy plc’s claim to own petroleum rights in Somalia’s northern regions and calls upon Genel Energy plc to cease its illegal claim to own petroleum rights.”
Insisting that it is the only body authorized to grant such rights, it warned: “Any authorization granted in violation of Somalia’s laws and regulations is unlawful and would be considered null and void.”
Refuting Somalia’s Federal government, Somaliland’s secessionist government has claimed “the authority to engage foreign investors in order to explore and exploit the Republic of Somaliland’s potential hydrocarbons and mineral resources. No one other than the Somaliland government has the authority to claim or award an exploration license within Somaliland,” a statement issued on December 29 said, amid the crackdown on the protests in Las Anod.
Las Anod is also claimed by Somaliland’s neighboring Puntland, which has been an autonomous region within Somalia in dispute with Somaliland over the SSC region. On January 9, Puntland declared that it will be independent of Somalia until the Federal Constitution is finalized.
Disputes over the rights to enter into partnerships with foreign companies over oil and other natural resources are reported to be among the key reasons behind tensions between the Federal government of Somalia and Puntland.
“Oil and gas has been found across Somalia, including in Somaliland and Puntland. British capital is heavily invested. These oil companies want a weak and divided Somalia, because a strong and united country will be more difficult to exploit,” Hassan said.
Puntland’s state government maintains that the provisional federal constitution and the constitution of Puntland state allows it to act as an independent entity until the federal constitution is finalized, and all the states’ constitutions are harmonized with it.
Pointing out that Puntland has a constitutional right to be independent until the finalization of the federal constitution, Olad said it is Somaliland that has been blocking the finalization of the constitution. The federal government of Somalia, he said, should ensure that Somaliland will no longer hold the process of finalizing the constitution hostage.
However, a lack of confidence in the federal government led by President Hassan Sheikh Mohamud, who is seen as inept and pliable by western powers, is perceptible, despite the surging unionist politics and nationalist sentiment.
The federal government can truly reflect the widespread sentiment of Somali nationalism only when it is elected on the basis of one-person-one-vote, argues Olad. Former President Mohamed Abdullahi Mohamed, aka Farmajo, who had become a popular representative of Somali nationalism, had promised to break the stranglehold of the clans by implementing universal adult suffrage, but failed to do so. He lost the clan-controlled election last year, and the current government of Hassan Sheikh Mohamud has failed to materialize the aspirations of Somali nationalism.
Mohamed Hassan sums the situation up by citing [Italian communist] Antonio Gramsci: “The old is dying and the new is struggling to be born,” he says, adding that “the winds of change are most definitely blowing over all of Somalia.”
While Russia continues conducting its “special military operation” in Ukraine, Moscow’s ally, Armenia, has been seeking to normalize relations with its arch enemy, Azerbaijan. Although the South Caucasus region has traditionally been in the Kremlin’s geopolitical orbit, it is the European Union that seems to be playing the major role in peace talks, border delimitation and the reopening of transportation links.
During the past six months, Armenian Prime Minister Nikol Pashinyan and Azerbaijan’s President Ilham Aliyev met three times through the mediation of European Council President Charles Michel.
In the past, Russia had mediated conflict between the two Caucasus countries over the Nagorno-Karabakh region. Although it is an internationally recognized part of Azerbaijan, it has been under Armenian control for more than two decades. In November 2020, Pashinyan and Aliyev traveled to Moscow to sign a ceasefire deal that effectively ended the 44-day war that Yerevan and Baku fought over the mountainous region.
As a result of the conflict, Azerbaijan restored its sovereignty over most parts of Nagorno-Karabakh, as well as surrounding areas. More importantly, Russia deployed about 2,000 peacekeeping troops, which strengthened its positions in the South Caucasus.
‘Karabakh Has Turned Into South Ossetia’
Russian forces are stationed mostly in parts of Nagorno-Karabakh that are still under Armenian control.
According to Tom Mutch, a New Zealand-born journalist who covered the 44-day war, such a position allows Moscow to turn the region into its de facto military state.
“Let’s be honest, Karabakh has turned into South Ossetia now,” Mutch told Toward Freedom, referring to Georgia’s breakaway region that Russia recognized as an independent state in 2008, following the brief war Moscow fought against its small neighbor. “Russia holds all of the political and military power in the region. But the problem is that the Kremlin is so distracted by what is going on in Ukraine that it doesn’t really have any ability to focus on Karabakh.”
Despite its preoccupation with the war in Ukraine, Russia hosted Azerbaijani and Armenian delegations on June 3 in Moscow, where they held the 10th meeting of the trilateral working group on the opening of regional transport communications. According to reports, representatives of the three countries discussed and coordinated on borders, customs, and other kinds of control, as well as safe transit of people, cars, and goods by roads and railways through the territories of Azerbaijan and Armenia.
Following the Brussels meeting in May between Pashinyan and Aliyev, Baku and Yerevan announced the creation of commissions for border delimitation. In other words, they would look into increasing movement between the two states.
Dr. Gulshan Pashayeva, a board member of Azerbaijan’s Center of Analysis of International Relations, claims that is one of the tangible results of the peace talks held under the EU auspices. Still, she does not think the EU can replace Russia as the major mediator in the South Caucasus.
“EU and Russia are quite different geopolitical actors with incompatible resources and influence,” she told Toward Freedom. “Therefore, they cannot replace each other.”
Both Azerbaijan and Armenia are members of the EU’s political and economic Eastern Partnership initiative. Russia, on the other hand, sees both countries as its allies—Armenia, through the military alliance, the Collective Security Treaty Organization, and Azerbaijan, in the form of the allied cooperation agreement signed in February.
No Agreement Without Moscow
According to Russian political analyst Sergey Markedonov, Russia and the West have always cooperated regarding the Karabakh issue. But the problem is Western powers no longer want to work with Moscow amid the Ukraine conflict.
Meanwhile, Mutch said Nagorno-Karabakh could be a place Russia and the EU can cooperate, despite their strained relations regarding Ukraine.
“But I don’t see any agreement that can be signed without Moscow’s final say,” he stressed.
In his view, the real reason why peace talks seem like they are making progress is the military defeat of Armenia in 2020.
“The speech that Pashinyan made in April was widely seen as signaling that he was prepared to give up Armenia’s aspirations for a de jure independent status of Karabakh,” Mutch said. “That was the sticking point of negotiations for the past 25 years.”
In that speech on April 13, the Armenian prime minister said, “The international community is telling Yerevan to lower the bar on the status of Nagorno-Karabakh.” He pointed out Armenia “cannot rely on international partners, not because they do not want to help the landlocked nation, but because they cannot help.”
Pashinyan also recently emphasized that the most important and most urgent issue between Armenia and Azerbaijan is the Nagorno-Karabakh issue. For Baku, however, the status of the mountainous region has already been resolved.
The most important and most urgent issue between Armenia and Azerbaijan and for the peace in our region is the Nagorno-Karabakh issue. pic.twitter.com/oT1eCluiOE
“I strongly believe that Armenia will come to understand that there will be no special status for ethnic Armenians living in the Karabakh region of Azerbaijan,” Samir Mammadov told Toward Freedom. He heads the international affairs department at “Back to Karabakh” Public Union – a political organization that aims to return ethnic Azeris to Nagorno-Karabakh.
“Armenian government officials often claim that they want the rights of Armenians living in Azerbaijan to be respected. Azerbaijan can and will ensure that without allowing the creation of an artificial autonomy within its borders,” Mammadov said, pointing out that if Yerevan continues insisting on the status of Karabakh, Baku will “probably raise the issue of the rights of Azerbaijanis ethnically cleansed from Armenia.”
In other words, Baku expects Yerevan to recognize Azerbaijan’s territorial integrity, while Armenia fears full implementation of the ceasefire deal the two sides signed in 2020 in Moscow would jeopardize the landlocked nation’s sovereignty. According to the Moscow agreement, “Armenia shall guarantee the security of transport connections between the western regions of the Republic of Azerbaijan and the Nakhchivan Autonomous Republic in order to arrange unobstructed movement of persons, vehicles and cargo in both directions.”
The Fate of a Corridor
Russian Foreign Minister Sergey Lavrov recently assured Armenian officials the future railway and highway that will connect Azerbaijani mainland with its Nakhchivan exclave through southern Armenian will be “based on the recognition of the sovereignty of Armenian territory.”
For Azerbaijan, the future transportation route should be part of the Nakhichevan Corridor, also known as the Zangezur Corridor.
“The narrative of the wording of a so-called corridor is unacceptable for Yerevan,” Pashinyan said in a June 13 interview. “We have one corridor in our region, and this is the Lachin corridor connecting Nagorno-Karabakh with Armenia.”
That corridor is a mountain road that is de jure in the Lachin District of Azerbaijan, but is under the control of a Russian peacekeeping force as a result of the 2020 ceasefire deal.
Thus, the future of transportation links in the South Caucasus will almost certainly be on the agenda of future meetings between Pashinyan and Aliyev, be it in Brussels or in Moscow.
“The EU is ready to step up its support,” Michel said in a May 23 statement. “We agreed to remain in close contact and will meet again in the same format by July/August.”
Meanwhile, Lavrov is planning to meet today in Azerbaijan, which can be viewed as Russia’s attempt to keep both Armenia and Azerbaijan in its geopolitical orbit, despite the EU’s recent new role as a major mediator.
Nikola Mikovic is a Serbia-based contributor to CGTN, Global Comment, Byline Times, Informed Comment, and World Geostrategic Insights, among other publications. He is a geopolitical analyst for KJ Reports and Enquire.
Editor’s Note: The following represents the writer’s analysis and was produced in partnership by Newsclick and Globetrotter.
The current crisis of spiraling gas prices in Europe, coupled with a cold snap in the region, highlights the fact that the transition to green energy in any part of the world is not going to be easy. The high gas prices in Europe also bring to the forefront the complexity involved in transitioning to clean energy sources: that energy is not simply about choosing the right technology, and that transitioning to green energy has economic and geopolitical dimensions that need to be taken into consideration as well.
Gas wars in Europe are very much a part of the larger geostrategic battle being waged by the United States using the North Atlantic Treaty Organization (NATO) and Ukraine. The problem the United States and the EU have is that shifting the EU’s energy dependence on Russia will have huge costs for the EU, which is being missed in the current standoff between Russia and NATO. A break with Russia at this point over Ukraine will have huge consequences for the EU’s attempt to transition to cleaner energy sources.
The European Union has made its problem of a green transition worse by choosing a completely market-based approach toward gas pricing. The blackouts witnessed by people in Texas in February 2021 as a result of freezing temperatures made it apparent that such market-driven policies fail during vagaries of weather, pushing gas prices to levels where the poor may have to simply turn off their heating. In winter, gas prices tend to skyrocket in the European Union, as they did in 2020 and again in 2021.
For India and its electricity grid, one lesson from this European experience is clear. Markets do not solve the problem of energy pricing, as they require planning, long-term investments and stability in pricing. The electricity sector will face disastrous consequences if it is handed over to private electricity companies, as is being proposed in India. This is what the move to separate wires from the electricity they carry aims to achieve through Indian Prime Minister Narendra Modi’s government’s proposed amendment to the existing Electricity Act of 2003.
In order to understand the issues related to transitioning toward green energy, it is important to take a closer look at the current gas supply-related issues being faced by the European Union. The EU has chosen gas as its choice of fuel for electricity production, as it goes off coal and nuclear while also investing heavily in wind and solar. The argument advanced in favor of this choice is that gas would provide the EU with a transitional fuel for its low carbon emission path, as gas tends to produce less emissions than coal. It is another matter that gas is at best a short-term solution, as it still emits half as much greenhouse gas as coal.
As I have written earlier, the problem with green energy is that it requires a much larger capacity addition to handle seasonal and daily fluctuations that planners have not accounted for while advocating for switching over to clean energy sources. During winter, days are shorter in higher latitudes, and the world therefore gets fewer hours of sunlight. This seasonal problem with solar energy has been compounded in Europe with low winds in 2021 reducing the electricity output of windmills.
The European Union has banked heavily on gas to meet its short- and medium-term goals of cutting down greenhouse emissions. Gas can be stored to meet short-term and seasonal needs, and gas production can even be increased easily from gas fields with requisite pumping capacity. All this, however, requires advance planning and investment in surplus capacity building to meet the requirements of daily or seasonal fluctuations.
Unfortunately, the EU is a strong believer that markets magically solve all problems. It has moved away from long-term price contracts for gas and toward spot and short-term contracts—unlike China, India and Japan, which all have long-term contracts indexed to their oil prices.
Why does the gas price affect the price of electricity in the EU? After all, natural gas accounts only for about 20 percent of the EU’s electricity generation. Unfortunately for the people in the EU region, not only the gas market but also the electricity market has been “liberalized” under the market reforms in the EU. The energy mix in the grid is determined by energy market auctions, in which private electricity producers bid their prices and the quantity they will supply to the electricity grid. These bids are accepted, in order from lowest to highest, until the next day’s predicted demand is fully met. The last bidder’s price then becomes the price for all producers. In the language of Milton Friedman’s followers—who were known as the Chicago Boys—this price offered by the last bidder is its “marginal price” discovered through the market auction of electricity and, therefore, is the “natural” price of electricity. For readers who might have followed the recently concluded elections in Chile, Augusto Pinochet—who was a military dictator in Chile from 1973 to 1990—introduced the Constitution of 1980 in Chile and had incorporated the above principle in a constitutional guarantee to the neoliberal reforms in the electricity sector in the country. Hopefully, the victory of the left in the presidential elections in Chile and the earlier referendum on rewriting the Chilean constitution will also address this issue. Interestingly, it was not the former UK Prime Minister Margaret Thatcher—as is commonly thought—who started the electricity “reforms” but Pinochet’s bloody regime in Chile.
At present in the EU, natural gas is the marginal producer, and that is why the price of gas also determines the price of electricity in Europe. This explains the almost 200 percent rise in electricity price in Europe in 2020. In 2021, according to an October 2021 report by the European Commission, “Gas prices are increasing globally, but more significantly in net importer regional markets like Asia and the EU. So far in 2021, prices tripled in [the] EU and more than doubled in Asia while only doubling in the U.S.” [emphasis added].
The coupling of the gas and the electricity markets by using the marginal price as the price of all producers means that if gas spot prices triple as has been seen recently, so will the electricity prices. No prizes for guessing who gets hit the hardest with such increases. Though there has been criticism from various quarters regarding the use of marginal price as the price of electricity for all suppliers irrespective of their respective costs, the neoliberal belief in the gods of the market has ruled supreme in Europe.
Russia has long-term contracts as well as short-term contracts to supply gas to EU countries. Putin has mocked the EU’s fascination with spot prices and gas prices and said that Russia is willing to supply more gas via long-term contracts to the region. Meanwhile, in October 2021, European Commission President Ursula von der Leyen said that Russia was not doing its part in helping Europe tide over the gas crisis, according to an article in the Economist. The article stated, however, that according to analysts, Russia’s “big continental customers have recently confirmed that it is meeting its contractual obligations,” adding that “[t]here is little hard evidence that Russia is a big factor in Europe’s current gas crisis.”
The question here is that the EU either believes in the efficiency of the markets or it doesn’t. The EU cannot argue markets are best when spot prices are low in summer, and lose that belief in winter, asking Russia to supply more in order to “control” the market price. And if markets indeed are best, why not help the market by expediting the regulatory clearances for the Nord Stream 2 pipeline, which will ship Russian gas to Germany?
This brings us to the knotty question of the EU and Russia. The current Ukraine crisis that is roiling the relationship between the EU and Russia is closely linked to gas as well. Pipelines from Russia through Ukraine and Poland, along with the undersea Nord Stream 1, currently supply the bulk of Russian gas to the EU. Russia also has additional capacity via the newly commissioned Nord Stream 2 to supply more gas to Europe if it receives the financial regulatory clearance.
There is little doubt that Nord Stream 2 is caught not simply in regulatory issues but also in the geopolitics of gas in Europe. The United States pressured Germany not to allow Nord Stream 2 to be commissioned, and also threatened to impose sanctions on companies involved with the pipeline project. Before stepping down as the chancellor of Germany in September 2021, Angela Merkel, however, resisted pressure from Washington to halt the work on the pipeline and forced the United States to concede to a “compromise deal.” The Ukraine crisis has created further pressure on Germany to postpone Nord Stream 2 even if it means worsening its twin crises of gas and electricity prices.
The net gainer in all of this is the United States, which will get the EU as a buyer for its more expensive fracking gas. Russia currently supplies about 40 percent of the EU’s gas. If this stalls, the United States, which supplies about 5 percent of the EU’s gas demand (according to 2020 figures), could be a big gainer. The United States’ interest in sanctioning Russian gas supply and not allowing the commissioning of Nord Stream 2 has as much to do with its support to Ukraine as seeing that Russia does not become too important to the EU.
Nord Stream 2 could help form a common pan-European market and a larger Eurasian consolidation. Just as it did in East and Southeast Asia, the United States has a vested interest in stopping trade following geography instead of politics. Interestingly, gas pipelines from the Soviet Union to Western Europe were built during the Cold War as geography and trade got priority over Cold War politics.
The United States wants to focus on NATO and the Indo-Pacific region, as its focus is on the oceans. In geographical terms, the oceans are not separate but a continuous body covering more than 70 percent of the world’s surface with three major islands: Eurasia, Africa and the Americas. (Although in the formulation of British geographer Halford Mackinder, the originator of the world island idea, Africa was seen as a part of Eurasia.) Eurasia alone is by far the bigger island, with 70 percent of the world’s population. That is why the United States does not want such a consolidation.
The world is passing through perhaps the greatest transition that human civilization has known in meeting the current challenges posed by climate change. To address these challenges, an energy transition is required that cannot be achieved through markets that prioritize immediate profits over long-term societal gains. If gas is indeed the transitional fuel, at least for Europe, it needs long-term policies of integrating its gas grid with gas fields, which have adequate storage. And Europe needs to stop playing games with its energy and the world’s climate future for the benefit of the United States.
For India, the lessons are clear. Markets do not work for infrastructure. Long-term planning with state leadership is what India needs to ensure supply of electricity to all Indians and ensure the country’s green transition—instead of dependence on electricity markets created artificially by a few regulators framing rules to favor the private monopoly of electricity companies.
Prabir Purkayastha is the founding editor of Newsclick.in, a digital media platform. He is an activist for science and the free software movement.