West Germans set on Soviet gas
The Reagan administration will find little -- if any -- support in Bonn for an alternative energy package aimed at wooing West Germany from a proposed $9.5 billion gas pipeline deal with the Soviet Union.
IF West Germany signs a contract for the construction, the controversial partnership would represent the biggest business deal ever between the capitalist and communist world.
The United States is concerned that such a deal would make Western Europe -- particularly West Germany -- too dependent on the Soviet Union for energy supplies.
Financial experts predict that the expected counter-proposal from the United States would offer a combination of coal and enriched uranium. But both energy sources are loaded with political implications in West Germany and not likely to upset the rhythm of West German-Soviet negotiations, which are reportedly moving at a steady pace.
West Germany vocal antinuclear lobby would quickly lash out against any consideration of atomic power for energy, and coal would be similarly judged as environmentally harmful. Faced with widespread criticism of the United States' neutron bomb decision, Chancellor Helmut Schmidt's government isn't looking for another votatile issue. "We have enough anti-Americanism as it is," said one international businessman specializing in energy.
For West Germany, agreement on the pipeline goes well beyond relief for its energy problems. Faced with a sluggish economy and rising unemployment, Bonn welcomes the possibility of new contracts for its ailing industries. Well before West German consumers would use gas to heat their homes, German manufacturers may stoke their shrinking coffers with contract money for pipes, compressors, and other equipment.
The giant project, in the works since 1978, would mean that natural gas would be pumped from the frozen wastes of Siberia more than 3,000 miles to the Bavarian frontier, where it would tie into a European energy grid. At first, the pipeline would meet only 5 percent of West Germany's energy needs, but by the end of the decade, the nation would be dependent on the Soviet Union for more than 40 percent of its supply. With an estimated annual import of 24 billion cubic meters of gas from the Soviet Union, it would become the largest gas-importing country in the world.
Washington has argued that the deal would give the Soviets the Western technology they desperately need, and free capital for building up defense. A counterargument, voiced by several international traders in Bonn, is that the deal provides Western leverage against actions such as an invasion of Poland.
US Assistant Secretary of State Robert D. Hormats is due in the West German capital the first week of October, and senior White House officials have expressed hope he will have with him a workable alternative to the Soviet pipeline, which would transport about 40 billion cubic meters a year to Western Europe. Besides West Germany, the nations of Austria, Belgium, France, Italy, the Netherlands, Sweden, and Switzerland have all shown interest in receiving the natural gas.
But the West Germans are making their own plans. Count Otto Lambsdorff, the West German minister for economic affairs, will head a delegation due to arrive in Moscow Sept. 24, East-West banking sources say. And it is likely that the pipeline will be at the top of his agenda.
Preliminary approval of the project early this year was spurred by soaring interest rates on the continent and Moscow's insistence on lower-than-market-level financing. But by the end of July, the West German consortium of 14 banks had established another "preliminary" agreement which the banks called "a necessary precondition for concluding contracts" for West German equipment. Banking sources in Bonn said that the high interest rates may be buried in the price of the equipment of resolve the financing logjam.
But the price of the gas itself is yet another stumbling block, and the West German gas importing firm, Ruhrgas, has refused to accept a Soviet proposal that the price be in parity with oil.
Though the supplying of pipes is no longer being discussed in the main credit negotiations, several West German companies stand at the front of the line for contracts. The pipeline manufacturer Mannesmann, in deep financial trouble, has already extended a credit of about 5 billion deutsche marks (about $2.1 billion) to the Soviets, and signed an agreement in April to supply the Soviet Union with 550,000 tons of pipe.
The official Soviet news agency Tass announced the formal exchange of papers on the deal Aug. 25, stating a "major new contract" had been closed. But a Mennesmann spokesman in Dusseldorf said that the order for steel pipes was part of the April contract, with no direct link to the pepeline deal.
But Moscow's trumpeting of last spring's contract showed that the Russians are anxious to keep the issue in the spotlight.