Soviets try to get gas-for-pipe deal back on track
Amid US concern, the Soviet Union is apparently moving to break a long negotiating deadlock over a mammoth gas pipeline link with Western Europe. Soviet officials call it the East-West "deal of the century," and with an estimated price tag of $10 billion to $12 billion, that's hard to dispute.
Washington fears the scheme could dangerously increase West European energy dependence on the Soviet Union. President Reagan reportedly told the West German and French leaders at the current Ottawa summit that the United States was prepared to discuss alternatives to the proposed pipeline in meeting European energy needs.
But one Ottawa dispatch from the British news agency Reuter said: "West German Chancellor Helmut Schmidt resisted US demands . . . to drop or scale down plans" for the pipeline.
So far the issue has been largely academic. Early this year, agreement on the project was reported near. But problems, principally over the terms for Western financing of the deal, deadlocked the talks.
Now, business sources here say privately, the Soviets seem to be softening their position on the issue.
The sources caution that it is still too early to pronounce the deal "as good as complete" -- an assessment delivered, then promptly retracted, by a West German spokesman July 13. Much is expected to depend on talks schedules to start this week between Soviet and West German representatives.
But in recent talks here with French representives, the sources say, the Soviets indicated acceptance of a proposed 7.8 percent interest rate rejected earlier.
The Soviets also reportedly dropped an earlier demand that the financing cover all of an estimated $3.5 billion in French input for the pipeline -- in effect agreeing to hand over 15 percent of the amount, with French financiers covering the balance.
The French are to be major participants in the gas project. Buw West Germany , earmarked to get the largest share of the gas and provide the largest share of the financing and equipment, is seen as key to the deal.
The proposed French interest rate remains below that so far sought by the West Germans.
"The talks with the Germans," said one Western expert here, "will probably be crucial in determining just how close an agreement is, or is not."
The Soviets already export natural gas to Western Europe.
But should the pipeline deal go through, greatly increased amounts would flow Westward: to the Germans, French, and presumably others, like the Dutch and Italians.
By 1990 West Germany could be getting some 30 percent of its gas from the Soviet Union, of 5 to 6 percent of its primary energy.
The deal would mean some 40-45 billion cubic feet of Siberian natural gas yearly for the energy-hungry West Europeans.
And West European companies -- and conceivably Japanese or, depending on an official OK, even some US concerns -- would stand to win enormously lucrative supply contracts for construction of the pipeline.
The current thinking is that the West European banks that finance the deal would, in effect, get repaid in gas deliveries.
The Soviets would get a new, large-diameter pipe link to Western Europe, over 3,000 miles long. But what ultimately will count for a superpower faced with a decrease in easily accessible oil is what lies at the other end: reliable, hard-currency customers for plentiful Soviet natural gas.
Soviet officials brusquely reject US concern that Moscow could at some point use gas deliveries -- or the lack of them -- as a means of political pressure on Western Europe.
One senior economic expert, in a recent interview with the Monitor, dismissed the idea as "ridiculous."
"We get so many products . . . for various factories, from the West, spare parts and the like."
He suggested that if the Soviet decided to use the gas for pressure on the West, the West could answer in kind.