Rome BURNS: Berlusconi, Putin and a Natural Gas Pipeline

Robert Rand, BURN Editor

In Sochi, Russia, on a warm summer evening in August, 2005, Vladimir Putin, the Kremlin leader, stood on a pier overlooking the Black Sea with his friend, Silvio Berlusconi, the Italian Prime Minister. Their wives were with them, and the group had just enjoyed a sunset walk along the beach. The previous day, according to The Moscow Times newspaper, Putin had shown Berlusconi his new pony, which the Italian, casually dressed in rolled up sleeves and a sweater tossed over his shoulders, leaned over and petted as a smiling Putin stood nearby.

The two men liked each other, and their relationship reflected a longstanding bond between Italy and Russia. In the 15th century, Moscow claimed the title “Third Rome” after the fall of Constantinople. Peter the Great built St. Petersburg with the help of Italian architects. Myriad Russian writers found inspiration on the banks of the rivers Tiber and Arno. During a visit to Rome in 2000, Putin dedicated a monument to Alexander Pushkin, the great Russian poet.  “The level of our relations, including personal ones, is such that interstate problems just don’t exist,” Putin told Berlusconi, the Moscow Times reports.

south stream pipeline

The South Stream pipeline on its way through Bulgaria. (Photo: Gazprom)

Putin invited his friend to Sochi to talk about energy, in particular natural gas. The Russian presided over a resource rich country and wanted to increase his reach into European markets. The Italian wanted a reliable source of gas and contracts for energy companies back home. Negotiations ensued. Four years later, in 2009, Berlusconi returned to Sochi. Putin, seated behind the wheel of a black limo, picked Berlusconi up at the airport. Russia’s Channel One says Putin whisked him to a meeting where Italy joined a consortium of countries building a pipeline to the West that now runs more than 300 miles under the Black Sea.

Dubbed the “South Stream”, the pipeline, which is slated to start up next year, will bring Russian natural gas directly to Italy and elsewhere in southern and central Europe. It bypasses Ukraine, the transit state for a different Russian pipeline that currently provides the EU with much of its natural gas. Pricing disputes between Moscow and Kiev in 2006 and 2009 led Gazprom, the Russian state energy giant, to shut down that line, causing serious energy shortfalls in Europe.

If Putin was in the driver’s seat in Sochi in 2009, his control over EU gas exports looms even larger now in the wake of the crisis in Ukraine. The concern is that Moscow might manipulate EU and Ukrainian access to Russian gas if the West punishes Putin for his move into Crimea. The New York Times reported today that to offset Putin the U.S. wants to reduce Russia’s energy grip by exporting American shale gas to Europe, which would decrease EU dependence on Russian supplies. However, the New York Times says implementation is several years down the road since U.S. export terminals are still under construction.

The Russians charge EU countries a lot of money for natural gas. European gas prices are three times higher than in America, where, in contrast to Europe, there is a natural gas bounty thanks to fracking.  Fracking, or hydraulic fracturing, is the technology that injects a highly pressurized cocktail of fluids and substances into the ground to extract gas from shale formations.

Poland is set to become the first European country to start commercial shale gas production, according to Bloomberg. Britain, Romania and Ukraine are also interested, as is Italy. But environmental concerns have slowed the move towards fracking in Europe. Opponents, and there are many, say fracking’s mix of water and chemicals is toxic. France and Bulgaria have banned the technology, and Germany has a moratorium in place.

The Ukraine problem has made the debate over shale gas extraction more urgent. Europe must either “embrace shale gas or embrace Russia,” warned Paolo Scaroni, CEO of Eni, the Italian energy conglomerate that has partnered with Gazprom in the South Stream pipeline project.

Eni is collaborating with a Ukrainian company to explore and develop natural gas formations in Ukraine, which is thought to have some of Europe’s most promising shale deposits. Ousted Ukrainian President Viktor Yanukovych supported fracking, but some politicians in the movement that deposed him think differently, citing environmental concerns and corruption.

A few months before Yanukovych’s fall from power Berlusconi suffered his own high stakes drama. Last November, he was forced off the central stage of Italian politics when the Italian senate expelled him following a conviction for tax fraud.

Nicknamed Il Cavaliere (“The Knight”), Berlusconi left public service with a reputation for sexual indiscretion, corruption and wily political governance. Berlusconi’s sleight of hand allegedly involved the Kremlin. In December, 2010, Wikileaks published a cable from the U.S. embassy in Rome citing allegations by Italian politicians that “Berlusconi and his cronies are profiting personally and handsomely from many of the energy deals between Italy and Russia.”

Berlusconi denied these allegations, stating the U.S. clearly knows “that I have absolutely no interest in any other country; that there are absolutely no personal interests, and that I only look after the interests of the Italians and my country.”

In the weeks following Berlusconi’s ouster, The Times of London said Italian media reported that Putin thought about making his old friend the Russian Ambassador to the Vatican, a move that would have allowed Berlusconi to keep a diplomatic passport.

Interestingly, the crisis in Ukraine has boosted Berlusconi’s profile in Italy. In a move that generated publicity, the leader of Berlusconi’s political party, as well as the party’s newspaper, said that the current Italian government should dispatch Berlusconi to negotiate with Putin to defuse the Ukraine crisis. And Italian press reports said the U.S. Ambassador to Italy, John Phillips, lunched with Berlusconi earlier this week.

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Rome BURNS: Fuel booty on the Autostrada

Gas strike 1Robert Rand, BURN Editor

Two years ago, not long after my family moved to Rome, I purchased a new car at a local dealership. It’s an Asian import – a nice little vehicle that gets pretty good gas mileage and fits into small parking spaces.

But the battery has always been a bit off, so  I recently brought the car to the dealership for a check up.

I hadn’t seen Giovanni, the dealership owner, for many months.

“How are you doing?” I asked.

He shrugged. “Well, we are still in business,” he said. “Asian imports are popular. But many car dealers have had to close their doors.”

Thousands, in fact. The number of Italian car dealerships has fallen 31 percent since 2007, from 2,950 to 2,011, including a 7 percent drop last year. Car sales are at their lowest level since 1966.

The global recession is to blame, which has deprived people of jobs and disposable income. Also at fault is Italy’s chronically tempestuous political system, which undermines already shaky consumer confidence.

But if you ask Italian drivers what’s wrong with the automobile industry, you’re likely to hear them talk about the price of gasoline. It averages $8.92 a gallon, making Italy the most expensive European Union country  in which to purchase gasoline at the pump.

Fuel prices rose rapidly two years ago, after former Prime Minister Mario Monti took office and made pain at the pump public policy. He imposed a draconian 25 percent tax increase on gasoline in an effort to reduce Italy’s public debt. By the middle of last year, Bloomberg news reported that “Italians were spending more each week to fill their tanks than they do to feed their families.”

High gasoline prices and the concurrent fall off in car sales are two elements of a broader phenomenon: a deep drop in overall energy consumption in Italy. Guido Bortoni, chairman of Italy’s energy authority, reported last month that the global recession has caused energy demand here to drop to 1998 levels, “and shows no sign of recovery.”

In an effort to force down the price of gas, Italy’s service station industry – which has suffered a loss of business because of the high fuel costs – has announced that freeway gas stations will seal their pumps for three days this month, July 16 – 19.  In a statement, the industry said service station “managers are being fired and consumers are paying for the most expensive gasoline in Europe.” The pump lock down aims to draw public attention to what the industry calls Il “Bottino” del carburanti in autostrada – “Fuel booty on the motorway.”





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Rome BURNS: Was that a fracking quake?

Robert Rand, BURN Editor

I was sitting in my dentist’s office here in Rome a few weeks ago, watching an overhead television set while Dr. Pasquale drilled into a molar. The screen showed some sort of public gathering, with various orators and a guy playing the guitar. Behind them was a sign that said, “Per non dimenticare.” Do not forget.

I had forgotten. At the end of May, 2012, two earthquakes hit Emilia Romagna, a region in northern Italy that includes Bologna. The first quake measured 6.0. The second had a magnitude of 5.8. Twenty four people died, several hundred were injured, and 15,000 people were forced from their homes.

Emilia quakeThe event on my dentist’s television screen commemorated the first anniversary of the Emilia earthquake. Newspaper coverage of the anniversary included something that caught my eye: there was speculation that fracking may have caused the quake.

Fracking, or hydraulic fracturing, is the technology that injects a highly pressurized cocktail of fluids and substances into the ground to extract natural gas from shale formations. It is a controversial issue in the U.S. and elsewhere (here in Europe, fracking has been banned in France and in Bulgaria).  Proponents say fracking is a safe and effective way to collect shale gas, which America has in abundance.

Opponents – and there are many – say fracking’s mix of water and chemicals is toxic and harms the environment. Fracking was an issue in the 2012 presidential campaign, the subject of a recent movie starring Matt Damon, and the focus of one of Alex’s stories here on BURN.

Fracking has also been implicated as a trigger for earthquakes, and that gets us back to what happened in Emilia Romagna one year ago. In the weeks following the Emilia tremors, the Italian press reported that local residents had blamed fracking for what happened. Emilia Romagna has natural gas reserves which had been conventionally tapped in years past, but not with fracking. People were suspicious nonetheless.

“The most popular term in Italy today is ‘fracking’ and in recent days there has been a lot of speculation about fracking and the earthquake in Emilia Romagna.” That was the immediate post-earthquake pronouncement of Beppe Grillo, a popular anti-establishment-comedian-turned-politician who scored big in recent parliamentary elections. When Grillo speaks, people listen. Last month, on the anniversary date, Grillo reiterated his concerns regarding fracking. “The Emilia earthquake? I think the holes they drill while searching for gas are partially to blame.”

The Italian Ministry of Development says fracking has never been used in Emilia.

And it’s not even clear whether fracking is used much at all in Italy. Maria Rita D’Orsogna, a California State University-Northridge physicist and activist who opposes fracking, told me she has found only two documented incidents of fracking in Italy, and neither was in Emilia Romagna. “I do not know if anybody has any real proof,” she said regarding Grillo’s assertions.

D’Orsogna says there is the lack of transparency in Italy about natural gas development and fracking, and that’s what especially bothers her. In a contribution to Grillo’s blog, she wrote: “Given that people are talking about it all over the world and given that people want answers, do the people currently governing us…want to say something about how Italy is positioned in relation to the possibility of carrying out fracking in our land?”

At the request of the president of the Emila Romagna region, an international commission has been set up to investigate any possible links between fracking and the 2012 earthquakes.


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Rome BURNS: Lord of the Wind

Robert Rand, BURN Editor

Here’s a story about some odd bedfellows: wind mills, solar panels, and the Mafia.

First, some background. Renewable energy is a pretty big deal in Italy. The country ranks third among the G20 – the world’s top industrialized nations — with respect to percentage of electricity deriving from green resources. In 2011, 6.2% of Italy’s overall energy use came from solar, wind, geothermal, tidal and wave. The U.S. ranked seventh, at 2.7 percent.

According to Invitalia, the Italian government’s agency for investments and economic development, a favorable climate is responsible for boosting renewables. Italy is blessed with ample sunshine and abundant breezes.

Invitalia has mapped out Italy’s solar and wind hot spots.

Solar irridationWind speed

Ground zero is the island off the toe of Italy’s boot. That’s Sicily, and it has more sun and wind than any other region of the country. According to ENEL, Italy’s largest utility, the world’s first solar plant was built in Sicily in 1981. Sicily now houses more than 8000 solar facilities. And it is home to thirty wind farms.

sicily windmills“When it rains it pours,” goes the cliché. But in Italy, there’s another meteorological maxim, reserved for renewables: Where the sun really shines and the wind really blows, billions of dollars of government funding will follow. That has made solar and wind lucrative businesses, a magnet for the Sicilian mob.

Teresa Maria Principato, a prosecutor with Sicily’s anti-mafia squad, summed up the problem for The Washington Post earlier this year:

The Cosa Nostra is adapting, acquiring more advanced knowledge in new areas like renewable energy that have become more profitable because of government subsidies. It is casting a shadow over our renewables industry.

Here’s how the Mafia manipulates the renewables industry. A solar company trying to tap into those generous government subsidies will invariably bump up against Italy’s most bountiful natural resource — a mountain of bureaucratic red tape.

The mafia provides “facilitators” to speed up the process, and delivers the goods in a way that only the Mafia can. The fees it demands are in the hundreds of thousands of dollars per job. (One researcher put it at $520,000 per megawatt.) The mob also forces companies to hire Cosa Nostra contractors and to launder Cosa Nostra cash.

“Sicily is dotted with these giant windmills and solar panels, all doing nothing but laundering mob money,” said Giacomo Di Girolamo, a journalist who writes on organized crime, in The Mirror Online.

A few weeks ago, in early April, the Italian police struck back, seizing more than 1.3 billion Euro (about $1.7 billion) in assets from Vito Nicastri, a Sicilian green energy business magnate believed to be a mafia frontman. Nicastri controls one of the largest wind and solar conglomerates in Italy. His nickname is “Il Signore del Vento” – Lord of the Wind.


The confiscated assets include 43 wind and solar energy companies, plus numerous bank accounts, properties, investment funds, credit cards, cars and boats. It is the biggest ever seizure of mafia holdings, and testament to the breadth of Mafia involvement in renewables.

Nicastri is now under surveillance and has been told to stay put his Sicilian home town. If Nicastri is ever arrested, his fingerprints presumably will be taken with green ink.

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Rome BURNS: Italy’s power grid, taken by storni

Robert Rand, BURN Editor 

Not long ago, as Rome passed through the final weeks of winter, a swirling black cloud flew in from the hills outside the city just before sunset. It whorled in the skies over my neighborhood, elegantly dancing to and fro and inside out. I’d never seen anything like it. My daughter thought it was a tornado. I was mesmerized. The whole thing seemed extraterrestrial.

The show took place every day in the late afternoon for more than a week. The performers were flocks of European starlings — gli storni – come to roost in Rome and elsewhere in Italy by the many, many thousands.

Despite the beauty of their aerobatics, the starlings are not particularly welcomed here.

There are some obvious reasons.


A more subtle and serious effect is the occasional blackout caused by way too many birds perching on electric power lines all at the same time. In the town of Brindisi, in the heel of southern Italy, outages once resulted when an army of starlings simultaneously took flight from their power line roost, triggering oscillations that interrupted the flow of electricity.

In Fasano, about a hundred miles north of Brindisi, the combined weight of the starlings caused high tension wires – in the words of a local newspaper – to be “sent into a tailspin.” In the Tuscan town of Montecarlo, a newspaper reported frequent blackouts and called the starlings “a scourge.” The city urged hunters to take up arms.

I checked with Terna, the Italian transmission grid operator, and was told that Rome did not experience any starling-induced blackouts this year. The city has used loudspeakers and light projectors to repel the birds with some success. A Terna spokesperson did point out that the company works with environmental groups to study the interaction between high-voltage lines and birds. One objective is to minimize avian collisions.

More than 9,000 special noise-making “dissuaders” – like this one – have been installed on the Italian grid to make power lines easier to see by birds in flight.

Bird grid dissuader


Here is Terna’s 2011 “Sustainability Report.”

By the way, “murmuration” is the word used to describe an airborne starling ballet. Daniel Butler, a writer for the Telegraph, described the science behind it this way:

Each bird strives to fly as close to its neighbours as possible, instantly copying any changes in speed or direction. As a result, tiny deviations by one bird are magnified and distorted by those surrounding it, creating rippling, swirling patterns. In other words, this is a classic case of mathematical chaos (larger shapes composed of infinitely varied smaller patterns). Whatever the science, however, it is difficult for the observer to think of it as anything other than some vast living entity.

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