International
Poland Balances U.S. Missile Defense Plans and Energy from Iran
By Adrian Erlinger, World Politics Review 11/7/08
Jul 12, 2008 - 9:00:17 AM

After months of shuttle diplomacy and intense negotiations, U.S. Secretary of State Condoleeza Rice inked a deal with the Czechs on July 8 but failed to convince her Polish counterparts to host the project.

For months, it appeared that Poland would easily accept U.S. plans. Undoubtedly, Poland is a strong U.S. ally and a vital contributor to transatlantic security, contributing a sizable contingency in Afghanistan and a vocal lobby for future eastward expansion of NATO. However, seeking millions of dollars in military aid, Polish Prime Minister Donald Tusk rebuffed the latest U.S. offer on July 4.

To make matters more complicated, Polish Petroleum and Gas Mining (PGNiG), 85 percent of which is owned by the Polish state, is looking to Tehran as a source of energy. On June 30, the Polish daily Rzeczpospolita reported that PGNiG was "close" to securing a contract to extract liquefied natural gas (LNG) from Iran's Lavan gas field.

The deal is part of ongoing negotiations between PGNiG and the Iranian Offshore Oil Company after a framework agreement was signed in February. While a PGNiG spokesman denied that his company was ready to commit to a specific level of investment, Iranian media reported that the Polish side was "ready to invest $1 billion" to secure gas deposits estimated at 140 billion meters and purchase up to 7.3 billion cubic meters of sweet dry gas or LNG annually.

In the meantime, PGNiG is grasping to find supply contracts for its proposed €450 million LNG terminal at Swinoujscie on the Baltic Sea. The terminal is central to PGNiG's plans to deliver up to 5 billion cubic meters annually to satisfy Poland's future gas demand, reduce Russia's energy monopoly and decrease Poland's dependence on its aging carbon-belching coal plants. PGNiG needs to secure an LNG contract in order to make the planned regasification terminal economically feasible.

However, negotiations to secure LNG supplies from other sources have moved slowly. Earlier this year, PGNiG signed an exploration and production agreement with Libya's National Oil Corporation, but supplies are not finalized. Ongoing talks between PGNiG and Algeria's Sonatrach have reached an impasse. Qatar, the world's largest exporter of LNG, has expressed interest in shipping gas to Poland but no contracts have been settled.

Divergent Security Strategies

On July 9, Iran test launched Shahab-3 medium-range missiles, again defying international pressure to cease its nuclear development activities. Speaking to detractors, U.S. Secretary of State Condoleezza Rice pointed to the tests as "evidence that the missile threat is not an imaginary one."

While the United States fears a nuclear-armed Iran, Poland is weighing this risk against its own national security agenda -- to reduce its overwhelming dependence on Russian energy imports. Considering that total Polish demand for gas is expected to double to 24.4 billion cubic meters by mid-decade, the Polish government is reluctant to increase volumes of Russian gas. After a Russian-Ukrainian price dispute in January 2006 reduced Polish gas imports by 9 percent for several days, diversifying away from Russian gas sources looks more prudent.

In the wake of Iran's most recent test launch, Washington has repeated its mantra that business deals with Iranian energy companies are both inconsistent with U.N. Security Council resolutions and send a conflicting message to fellow European allies. U.S. officials reiterate that energy deals between European and Iranian energy companies run flagrantly against nonproliferation efforts.

Despite the risks, however, European energy companies are still looking to Iran for energy. In March, Switzerland's foreign minister flew to Tehran to sign a multibillion dollar deal between Swiss electricity firm EGL and the state-owned National Iranian Gas Export Company. In October, Turkey announced it would invest in a $3.5 billion natural gas pipeline to pump Iranian gas to world markets.

At this stage, it is unclear whether PGNiG will be importing Iranian gas any time in the near future. Although it is a majority state-owned company, PGNiG's decision was made independently and does not reflect Polish foreign policy. In the long run, the Polish government may prefer to stay dependent on Russian gas than risk a political minefield.

Since the initial agreement was signed in February, the Polish government has shied away from the prospect of investing in Iran's Lavan field. In March, Polish Deputy Prime Minister Waldemar Pawlak admitted that the preliminary deal was "a little risky," adding that Poland should look for gas "a little closer to home." Neither Tusk's Civic Platform party, nor the opposition Law and Justice, have praised the prospective investment.

While U.S.-Polish discussions continue on the missile defense shield, PGNiG's foray into Iran's energy sector may prove to be a bellwether of a coming transatlantic rift between two divergent but interconnected policy goals -- energy security and non-proliferation.

Warsaw's increasingly tough negotiation style with the United States signals that the current Polish government is no longer satisfied with a quid pro quo relationship with its number one ally. In January, Prime Minister Tusk said he was "responsible for the safety of Poles, and not the safety of the United States."

While Washington frowns on European companies investing in Iran, Warsaw remains unconvinced that an anti-missile installation on Polish territory would improve its own security interests. The new American president may be pressed to reassess previous support for Europe's energy diversification plans in favor of pushing a tougher Iran policy.


Source: Ocnus.net 2008