Finland Withholds Pipeline Backing

President Dmitry Medvedev didn't win firm backing for the Nord Stream gas pipeline from his Finnish counterpart Tarja Halonen in Monday talks, a signal that bargaining will continue in the next few months. Halonen said Finland was still studying the project in terms of its environmental safety and suggested that a decision might be coming in July, when the countries' prime ministers are scheduled to meet. "As Finns have said earlier, the gas pipeline is an ecological question," Halonen said, speaking at a joint news conference with Medvedev. "If it can be built in an ecologically safe way, then we think it's a good solution." Medvedev said simply that Russia would continue to promote the pipeline. In exchange for permission to lay the undersea pipeline off its coast, Finland may ask Russia for further changes in timber export policy and discounts for gas and electricity imports, said Dmitry Abzalov, an expert at the Center of Current Politics, a think tank. Russia is a major exporter of timber for Finland's sprawling forestry industry. "I think Helsinki is trying to bargain," Abzalov said. "They are first and foremost interested in timber." Gazprom, Germany's E.On and BASF and Holland's Gasunie expect all permits from Finland and four other littoral states for the pipeline's construction across the Baltic Sea by the end of the year. Gas shipments are scheduled to start in 2011. Prime Minister Vladimir Putin delayed the introduction of prohibitively high export duties for timber from last January by nine to 12 months after a meeting with his Finnish counterpart Matti Vanhanen in November. After those talks, an irritated Putin said the environmental impact study on Nord Stream was so extensive as to cover "stones, fur-seals, birds, shipping, cables laid on the bottom and ammunition left from World War II." As a return favor for the export-duty gesture, the Kremlin expected unconditional support for Nord Stream from Finland, a Kremlin source said ahead of Medvedev's visit. "We are hoping for Finland's active participation on the issue of the Nord Stream pipeline," the source said, Interfax reported. "We hope this participation will be as active as when Finland turns to us on timber supply-related issues." Nord Stream AG, the company set up to build the pipeline, in March presented Finland with a formal request to allow construction through two separate permits -- one in accordance with the Exclusive Economic Zone Act and the other under the Water Act. The company also needs permission from Russia and Germany, the countries that stand to gain from the pipeline, as well as Sweden and Denmark. Medvedev also said he would present new proposals for energy cooperation in an effort to offer an alternative to the European Energy Charter, which Moscow has refused to ratify. The alternative proposals, which will cover coal, nuclear fuel, oil and gas, aim to balance the interests of producers, buyers and transit states, Medvedev said.