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UNCLAS SECTION 01 OF 06 BRUSSELS 000670 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EPET EUN
SUBJECT: SPECIAL ENVOY MORNINGSTAR DISCUSSES EU ENERGY 
SECURITY 
 
Sensitive but Unclassified - not for Internet distribution. 
 
¶1.  (SBU) Summary.  On April 22-23 Special Envoy for Eurasian 
Energy Richard Morningstar met with EU and industry officials 
to discuss U.S.-EU cooperation on energy security.  In these 
meetings, Ambassador Morningstar gave his European 
counterparts an overview of the Administration's Eurasian 
energy policy, and emphasized the need for the U.S. and the 
EU to work closely to ensure Europe's energy security.  His 
visit was warmly welcomed by EU officials who also called for 
closer coordination with Washington on energy policy.  The 
discussions were wide ranging covering all aspects of 
Europe's energy security including liberalizing Europe's 
internal market for electricity and gas as well as external 
relations with producer and transit states.  A common theme 
in these meetings was the EU's desire for the U.S. to 
encourage Turkey to move forward on gas transit negotiations. 
 Joao de Vale Almeida, EU President Barroso's Chef de 
Cabinet, and Ambassador Morningstar discussed the possibility 
of establishing some form of meaningful high-level U.S.-EU 
dialog on climate and energy and agreed to talk more in the 
future to further pursue these ideas.  End Summary. 
 
¶2.  (SBU) On April 22-23 Special Envoy for Eurasian Energy 
Richard Morningstar met with EU and industry officials to 
discuss U.S.-EU cooperation on energy security.  In these 
sessions, Ambassador Morningstar told the Europeans that the 
U.S. is in the process of relooking at our policies on energy 
security.  He stressed that the new Administration believes 
the U.S. should take a balanced approach on energy security. 
He made the case that the various gas pipeline projects are 
very important parts of a jig saw puzzle -- Nabucco is part 
of the puzzle and is important, but not the Holy Grail.  He 
argued it is also important to look at interconnecting the 
EU's internal market, building new European LNG facilities, 
and promoting the use of Nuclear energy for some countries. 
Ambassador Morningstar also underlined that the U.S. sees a 
direct relationship between energy and climate change. 
 
¶3.  (SBU) On Russia, Ambassador Morningstar stressed that the 
U.S.  is not looking to have an openly confrontational 
policy.  He told EU officials that it is important to stand 
up to Russia when they use strong-arm tactics, but that we 
also need to engage with them when possible.  He argued the 
U.S. and the EU should look at the possibilities for 
"win-win" energy security projects where we can work with 
Russia as partners -- where Russia can be part of the 
solution rather than the problem. 
 
EXTERNAL RELATIONS COMMISSIONER FERRERO-WALNDER 
¶4.  (SBU) On April 22, Ambassador Morningstar met with Benita 
Ferrero-Waldner, EU Commissioner for External Relations. 
Commissioner Ferrero-Waldner began the meeting by noting that 
the Southern Corridor is a common issue of great importance 
to the U.S.  and the EU.  She said it is important for the 
U.S. and EU to work together to identify where the most 
important problems lie.  In her view Azerbaijan, 
Turkmenistan, and the EU are ready to commit to the Southern 
Corridor, but Turkey is not ready.  Ferrero-Waldner stressed 
that "We have a problem on Turkey."  She said the greatest 
help the U.S. could give to the EU on this subject would be 
getting Turkey to agree on gas transit.  She argued that 
Turkey has to see the realities and that Turkey is in danger 
of playing its cards too strongly.  She said that Turkey has 
a great opportunity at the Prague Summit to show it can be 
part of the solution by signing the Nabucco intergovernmental 
agreement (IGA).  That, she said, would open up a lot of 
things and make it easier for EU Member States to reciprocate 
on accession issues. 
 
¶5.  (SBU) Ambassador Morningstar pointed out that we've seen 
this vicious circle for some time.  Turkey doesn't believe 
the EU is serious so they do something provocative; the EU 
sees this and says "why do we bother?"  Ferrero-Waldner said 
that it will take time, but that she is optimistic Turkey 
will eventually be part of the EU.   She argued that Turkey 
will get a huge benefit out of a gas transit solution, but 
that "this is the moment when they have to show their 
commitment."  She said Turkey has to understand that there is 
a real alternative to take gas directly across the Black Sea 
and bypass Turkey.  She argued that Turkey's interests are 
 
BRUSSELS 00000670  002 OF 006 
 
 
more inline with the EU than with other regional players and 
that it is important to show Turkey that their own interests 
lie with Europe. 
 
¶6.  (SBU) Commissioner Ferrero-Waldner characterized Russia's 
recent actions in the Caspian region as very good for EU 
interests.  She argued Russia's actions in the region are 
just pushing the Caspian countries towards Europe.  She said 
the award of an offshore Turkmenistan exploration block to 
Germany's RWE is a very positive sign.  She also said that 
despite opposition from Russia, the Prague Summit is going 
forward and EU Member States have confirmed the EU is willing 
to build the trans-Caspian link so that they can buy gas at 
the Turkmenistan border.  In closing, Ferrero-Waldner thanked 
the U.S. for supporting EU efforts on energy security and 
called for greater U.S.-EU cooperation and information 
sharing going forward. 
 
HIGH REPRESENTATIVE SOLANA'S CABINET 
¶7.  (SBU) Ambassador Morningstar met on April 22 with Steven 
Everts, Energy Advisor to High Representative Javier Solana. 
Everts began the session by noting that the U.S. and the EU 
have already been working well together on energy security 
and that Solana would like to work as closely as possible 
with the U.S. on this issue.  Everts noted that energy 
security is rising to the top of the EU agenda.  He said the 
EU is doing a lot of good things on the internal market such 
as:  getting agreement on the third energy package, and 
getting agreement on using recovery funds for gas and 
electricity interconnections.  These things are very 
important for the EU's energy security.  He pointed out that 
energy security is becoming a more prominent element in the 
EU's external relations and it is becoming part of the high 
level political dialog, with Ministers discussing 
diversification.  He added that interconnecting the internal 
market is also very important because that is where the rate 
of return is greatest. 
 
¶8.  (SBU) On Ukraine, Everts said the EU has proposed to 
upgrade and modernize their gas transit system if Ukraine 
will carry out reforms in return.  He noted, however, that it 
is not easy to negotiate with Ukraine because of the 
extensive infighting in the government which he characterized 
as "very regrettable for their country."  Everts emphasized 
that the EU has no alternative, but to engage with Ukraine. 
To do so, however, the EU needs to hear the same message from 
both Prime Minister Timoshenko and President Yushenko.  On 
ways the U.S. and EU could work together on Ukraine, Everts 
cautioned "Don't make it heavy."  Everts said the U.S. and EU 
should work to informally exchange information and make sure 
we choreograph our messages to Ukraine so that they are 
similar. 
 
¶9.  (SBU) On Turkey, Everts emphasized that EU-Turkey 
relations have to be put in the broader context.  He noted 
that the EU accession issue is very complicated and the EU 
has difficulty opening certain chapters, notably the Energy 
Chapter.  He continued that inside Turkey things are also not 
so easy because of EU-NATO questions, Erodghan-Gul questions, 
and a number of other issues.  On top of this, he said, we 
have the Turkey-Armenia aspect and Azerbaijan is very upset 
over this.  Everts said the Turks have interpreted President 
Ilham Aliyev's trip to Moscow as a bluff.  Everts, however, 
believes something is really happening on the 
Russia-Azerbaijan front.  He noted that the EU strongly 
supports Turkey-Armenia rapprochement and efforts to find a 
settlement on Nagorno-Karabakh issues. 
 
¶10.  (SBU) Everts believes there is a limited window to move 
forward on opening accession chapters with Turkey before the 
end of the year, or things could get much more difficult.  At 
the same time, he argued, Turkey has to realize that it's 
difficult to be an energy hub if there is no gas to flow 
through.  He characterized the situation as "pretty serious 
but not irretrievable."  He said that it is important for the 
EU and the U.S. to convince the Turks that Azerbaijan is not 
bluffing.  Everts confided that the Commission thinks the 
Turks are serious about signing an intergovernmental 
agreement (IGA) on Nabucco by June, but that an IGA alone 
will not get the pipeline built.  There also has to be an 
agreement between Turkey and Azerbaijan on transit.  We need 
 
BRUSSELS 00000670  003 OF 006 
 
 
a constant drip of positive news to move forward.  Time is 
not neutral here, and unfortunately Turkey appears to take 
Azerbaijan for granted. 
 
¶11.  (SBU) On energy relations with Russia, Everts noted that 
engagement is good, more discussions are good, and that the 
EU should be willing to discuss their energy security ideas, 
but Russia has to realize the EU is quite attached to the 
principles in the Energy Charter Treaty.  The EU is reluctant 
to just throw that agreement out the window.  He acknowledged 
that Russia feels the existing document does not fit them. 
He said, however, the EU has to work from where it is now. 
The EU can move beyond the Energy Charter and is ready to 
talk principles, but he argued that the principles in the 
Energy Charter treaty should be used as the starting point. 
Everts emphasized that principles are good, but they must be 
monitored and implemented.  "Principles, dialogs, 
cooperation, monitoring, these are all tools to promote 
trust." When Ambassador Morningstar queried about the 
possibility of bringing the Russians in to a test project, 
not to control, but to contribute, Everts agreed and said the 
best test case would be Ukraine.  He argued the Russians have 
to be involved in Ukraine.  He said Russia has to play a role 
there, not a controlling role, but a role. 
 
PRESIDENT BAROSSO'S CABINET 
¶12.  (SBU) In a one-on-one meeting with Joao de Vale Almeida, 
Barroso's Chef de Cabinet, Ambassador Morningstar discussed 
the idea of looking for ways the U.S. and the EU can work 
together on energy.   They discussed the possibility of 
establishing some form of meaningful high-level U.S.-EU 
dialog on climate and energy and agreed to talk more in the 
future and further pursue these ideas. 
 
¶13.  (SBU) The meeting with Vale Almeida was followed by one 
with Matthew Baldwin, Barroso's energy advisor.  Also present 
were Fernando Andresen from Barroso's Cabinet, Emma Udwin 
from Commissioner Ferrero-Waldner's Cabinet, and Roland 
Kobia, from Energy Commissioner Piebalgs' Cabinet.  Baldwin 
began by acknowledging that when it comes to energy security 
the interest of the EU and the U.S. are not identical.  He 
said that this is not a bad thing, just something we have to 
recognize.  Energy security means different things to the 
U.S. and the EU.  For the EU it is "Keep the bloody gas 
flowing!"  He noted that there is no clear cut competence for 
the EU on external energy policy, but during the 
Russia-Ukraine crisis none of the Member States objected to 
the Commission playing an active role to resolve the crisis, 
and even the Germans agreed to stick to the EU line:  "You 
are both at fault, reconnect the gas!"  The U.S., Baldwin 
said, views energy security on a much wider basis. 
 
¶14.  (SBU) Baldwin said that the U.S. and the EU need to keep 
each other closely informed.  He noted that there is a lot 
more scope for cooperation at the government to government 
and company to company levels.  He emphasized that it is very 
useful for the EU to hear what other countries tell the U.S. 
about EU relations.  He cited as very useful and very 
important the message the U.S. passed to the EU that 
Azerbaijan really wanted to hear from the EU and that they 
did not feel like they were getting the attention they 
deserved.  He added that the U.S. and the EU also have to 
look at our policies on climate change and how they support 
each other. 
 
¶15.  (SBU) On Ukraine, Emma Udwin pointed out that "when we 
talk about Ukraine there are broader issues," noting that the 
Eastern Partnership has a strong energy component.  She 
argued that energy relations with Ukraine cannot be seen in 
isolation.  She said that the EU and the U.S. need to deliver 
the same messages on Ukraine's quality of governance and lack 
of transparency. 
 
¶16.  (SBU) Baldwin noted that the May 8 Prague Summit could 
be very significant.  He said that unlike most declarations 
that start out strong and get watered down, the Prague 
declaration draft start out relatively weak and got stronger. 
 If it is signed in its current form, Baldwin believes it 
would be very significant.  Baldwin said that the EU is 
concerned over the way Turkey has interpreted President 
Obama's visit.  He said the Turks read the President's 
 
BRUSSELS 00000670  004 OF 006 
 
 
message as "we are much stronger now with the U.S. and at the 
end of the day the U.S. will fix our EU accession problems." 
Baldwin said it would be helpful if the U.S. disabused Turkey 
of this notion.  Baldwin said he really thinks "this is the 
moment" for Turkey.  He cautioned that he sees increasing 
concerns from producer countries that are getting extremely 
impatient with Turkey. 
 
¶17.  (SBU) Roland Kobia characterized Turkey's position as 
"unclear and moving."  For example, he noted that at one 
moment Turkey's 15 percent off-take demand will be off the 
table and then in the next moment it is back on the table. 
Fernando Andresen added that Turkey sees transit negotiations 
as intricately linked with EU accession.  He argued that the 
EU and U.S. need to convince Turkey that this is not the 
case.  He noted "We have an accession process underway. 
Let's not kill the process."  Emma Udwin opined that the U.S. 
and the EU have a sense of urgency on the Southern Corridor, 
but Turkey does not.  She noted Turkey does not believe the 
EU has other options.  She said what Turkey needs to 
understand is that the EU is serious about the Black Sea 
option to bypass Turkey for gas transit.   They also need to 
understand that Azerbaijan is not bluffing about selling gas 
to Russia or just leaving it in the ground.  Ambassador 
Morningstar pointed out that we need Turkey to see Turkey's 
own interests.  Turkey has an important self interest in 
seeing gas from Azerbaijan, Turkmenistan, and Iraq flowing 
west through Turkey.  Ambassador Morningstar noted that the 
important question for Turkey is:  "Does Turkey really want 
to make itself more dependent on Russia?" 
 
¶18.  (SBU) Moving to the question of relations with Russia, 
Baldwin cautioned that it is a great mistake to see Russia as 
monolithic.  Baldwin characterized Putin's actions during the 
gas crisis as "unspeakable."  At the same time, he 
acknowledged that Gazprom's desire to deliver gas as close to 
the customer as possible (Nord Stream) is a sound commercial 
approach.  He said it makes sense for Gazprom to want to 
avoid Ukraine.  Baldwin said that the task for the EU and the 
U.S. is to identify who in Russia is trying to do business 
and who are the bad guys. 
 
DG-ENLARGEMENT 
¶19.  (SBU) In an April 22 meeting with Michael Leigh, 
Director General DG-Enlargement, Ambassador Morningstar noted 
that in terms of enlargement ramifications one issue that 
keeps coming up in discussions on energy is Turkey.  Leigh 
noted that his DG is not directly involved in pipeline issues 
but is interested and actively involved with Turkey.  On 
opening the Energy Chapter Leigh said the formal vie is 
there is no link between the Energy Chapter and getting a 
deal on gas transit.  As such, Leigh said the EU is in an 
embarrassing position.  The EU should be ready to open the 
Energy Chapter based on Turkey's actions, impact assessments, 
etc.; there is no reason not to.  But, Leigh said, "we have a 
problem with a certain Member State (Cyprus)."  Leigh said 
the EU is actively looking for a way out of this impasse, and 
the message they consistently deliver to the Turks is that 
the EU does not accept the linkage between accession and gas 
transit.  He said the EU is looking for a formula that meets 
Cyprus's concerns. 
 
¶20.  (SBU) Leigh acknowledged that Turkey has valid reasons 
to be concerned about opening the Energy Chapter, but 
believes their concerns are totally out of proportion.  While 
doubtful the EU will succeed, he said the EU is making every 
effort to get a solution by June.  Leigh characterized the 
situation as highly politicized.  He said the Cypriots have 
outraged the Turks over boundary issues.  The Turks see this 
as a border dispute and consider themselves wronged.  Turkey 
takes this very seriously.  Leigh said it would be helpful if 
the U.S. would urge Turkey to be as flexible as possible.  He 
said he is hoping for an accession conference in June at 
which the Energy Chapter could be on the agenda. 
 
¶21.  (SBU) Leigh noted that Turkey believes the EU is not 
really engaged, and the Turks portray themselves as playing 
an "alternative role", providing an alternative vision, which 
plays well internally.   Leigh cautioned that the areas for 
negotiation have narrowed.  "There is a real risk we could 
get to the next accession conference and have no chapters to 
 
BRUSSELS 00000670  005 OF 006 
 
 
move forward on."  On the energy chapter, Leigh admitted the 
EU is at fault, but on the other two chapters under 
discussion he said the fault lies with Turkey.  He noted that 
Turkey has not fully carried out its obligations, especially 
regarding Cyprus. 
 
ENERGY ROUNDTABLE 
¶22.  (SBU) On the morning of April 23, Charge Murray hosted 
an Energy Roundtable with representatives from Brussels-based 
think tanks and EU Commission officials.  The debated 
centered on an exchange of views on energy security and 
European needs/policy, especially regarding Central Asia, the 
Middle East, Russia, and Iran.  Once again, a large part of 
the discussion focused on Turkey's role and the associated 
problems with European integration.   Participants called for 
the U.S. help to persuade Turkey to be more flexible on gas 
transit. 
 
EDISON CEO QUADRINO 
¶23.  (SBU) On April 23 Ambassador Morningstar met with 
Umberto Quadrino, CEO of Italian Edison.  Quadrino noted that 
despite the current economic slump, Europe does not have 
enough gas supply.  Europe cannot reduce its dependence on 
Russia with current alternate suppliers such as North Africa. 
 As such Europe needs the Southern Corridor along with more 
LNG import facilities. 
 
¶24.  (SBU) Quadrino characterized gas from Iran as a huge 
question mark.  He said that getting gas from Iran would 
require huge infrastructure investments, noting that you 
would need a very high gas price to justify building a 3000 
kilometer pipeline.  He noted there is a lot of gas available 
on the other side of the Caspian, but you first have to solve 
the issues of Caspian delimitation and even then gas wouldn't 
be available until the 2015 to 2020 timeframe.  Quadrino 
argued that only TGI (sponsored by Edison) and first phase 
Nabucco would work in the short term.  He noted that with 
TGI, Bulgaria could be linked-in easily through Greece.  The 
Greece-Italy and Greece-Bulgaria connections could be built 
first.  Later you could connect Romania and Bulgaria.  Once 
the gas is in Italy, you could also swap with other countries 
in Europe.  Quadrino argued that TGI would add to overall 
European supply. 
 
¶25.  (SBU) Quadrino said that the problem with Turkey is that 
they want an above normal benefit from gas transit.  He said 
Azerbaijan views the current gas price deal with Turkey as an 
insult.  Azerbaijan will not negotiate with Edison on the 
pipeline until the transit fee for gas is fixed.  Turkey 
wants transit first, price later and will not budge. 
Quadrino argued that Turkey is trying to get too much and 
trying to play the same game as Ukraine.  Turkey can't decide 
whether it wants to be in or out of Europe. 
 
DG-TREN 
¶26.  (SBU) In a April 23 meeting Matthias Ruete, Director 
General for DG-TREN, told Ambassador Morningstar that 
European energy policy and integration still has a long way 
to go.  Europe still does not speak with one voice on 
external energy policy.  Ruete noted that this changed 
somewhat with the Russia-Ukraine gas crisis when EU gas 
companies came to Commissioner Piebalgs and Ruete for 
solutions, not to their national governments.  Internally, 
Ruete noted that the EU is still working on developing a 
common market for gas and electricity, but is getting there. 
 
¶27.  (SBU) Ruete noted that the way Russia treats different 
Member States creates different attitudes toward Russia 
within EU.  He said the challenge is how to develop a decent, 
meaningful relationship with Russia, particularly on energy. 
With Russia, Ruete noted that everything hinges on energy. 
The EU is extremely dependent on Russia for energy:  oil, 
gas, and electricity.  Many new Member States also depend on 
Russian for nuclear fuel supplies.  Ruete opined that if 
Europe could turn elsewhere Russia would go under, but Europe 
is too dependent to be able to turn away. 
 
¶28.  (SBU) On the Southern Corridor Ruete said that the 
question of gas transit through Turkey needs to be sorted 
out.  He said there are a lot of issues to be worked out with 
Turkey and noted "Turkey plays a good game."  Ruete argued 
 
BRUSSELS 00000670  006 OF 006 
 
 
that Turkey has to decide whether it wants to tie itself to 
Europe or to Russia and/or Iran.  Turkish relations with 
Azerbaijan will also play a central role. 
 
¶29.  (SBU) On the question of how to intensify transatlantic 
cooperation on the energy and climate change nexus, Ruete 
said he would like to see a more serious element in 
discussions with concrete results.  Ruete said that there are 
so many levels and fora for cooperation (IEA, nuclear, 
biofuels strategy, etc.) with a huge agenda that makes our 
discussions thin rather than deep. 
 
¶30.  (SBU) Ambassador Morningstar cleared this cable. 
 
Murray 
.