Tuesday

21st Aug 2018

Analysis

Good day for Russia in Europe

  • Gazprom in Russia: Putin's friends won NS 2 construction contracts (Photo: gazprom.com)

Russian firm Gazprom is a reformed character, the European Commission has said, improving the climate for new pipelines to Europe.

"Cher Vladimir [Putin]", the Russian leader, is also a European "partner", France said the same day, amid extravagant diplomacy in St Petersburg.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Putin (l) and Macron ate caviar in St Petersburg (Photo: Kremlin.ru)

When commission sleuths raided Gazprom offices in 10 EU capitals seven years ago on Lithuania's tip-off, few doubted what they would find - evidence that it had screwed clients in eastern Europe with excessive prices and blocked them from sharing gas.

Find it they did, as the commission later spelled out in a statement of objections.

But on Thursday (24 May), anti-trust commissioner Margrethe Vestager said there was no fine to pay because the Russian firm had agreed to play ball.

Gazprom had "agreed to play by European rules" and was now locked into "a structured process", she told press in Brussels.

She spoke of "obligations that bind and that will bite". "We can impose a fine if the obligations are broken," she said, referring to multi-billion euro penalties.

Those obligations included letting EU clients resell Russian gas and take delivery of it where they like. They also included linking Russian gas prices to market prices in Germany.

Russian aggression in Europe has raised tension to levels reminiscent of the Cold War.

Dutch investigators underlined that when they concluded, also on Wednesday, that Russian forces supplied the missile which shot down flight MH17 over Ukraine in 2014.

But the commission was guided purely by thoughts of EU consumers when it declined to fine the Kremlin gas firm, Vestager said.

"This is about what rules to play by no matter your flag, no matter your ownership," she said.

"I know some [EU states] would have liked to see us fine Gazprom no matter what the solution on the table. A fine would not have achieved our competition objectives," she added, alluding to Lithuania and Poland, who say Putin uses gas as a foreign policy weapon.

NS 2 climate

The settlement mends Gazprom's image, with its chiefs, Alexei Miller, who is on a US blacklist, and Alexander Medvedev, welcoming the "reasonable" EU decision.

It comes amid the firm's plan to build a controversial pipeline from Russia to Germany this year.

The Nord Stream 2 (NS2) pipeline would make it easier for Putin to cut-off Western allies, including Ukraine, for strategic reasons, and to gouge prices, Poland and Nordic states have said.

It would also help Putin to line the pockets of his friends, such as Gennady Timchenko and Arkady Rotenberg, whose firms build pipelines for Gazprom, hardening the Russian leader's grip on power.

Vestager's decision removed an obstacle from NS2's path, according to Anders Aslund, a Russia expert at the Atlantic Council, a Washington think tank.

"That the EU competition case against Gazprom had not been concluded was a strong argument against NS2, which now has disappeared," he told EUobserver.

The decision would "heat up" the NS2 debate, according to Stefan Meister, from the German Council on Foreign Relations, a think tank in Berlin.

"It will make the countries who are against NS2 even more aggressive and angry with the commission," he said.

But those countries have no power to stop the pipeline from being built.

They also have little power to stop Russia from reverting to abusive behaviour after NS 2 is laid in steel.

"This decision … will not do away with the alleged political agendas coming with Gazprom," Andreas Goldthau, a Russia expert at Royal Holloway University in London said.

"I have my doubts," Meister said, "if that [Vestager's 'obligations'] will change Gazprom's policy. It'll take time to decide on penalties and that'll give opportunities for the Russian side to influence the process."

Bouquet diplomacy

Russia has about 140 diplomats and at least €14m a year worth of lobbyists who seek influence in the EU capital.

The French and German leaders are also prepared to make Putin look good for the sake of grand diplomacy and for national energy interests.

France's Emmanuel Macron met the Russian president in St Petersburg the same day the commission ruled on Gazprom.

They met in a palace and ate caviar. Macron addressed Putin as "cher Vladimir" and quoted Russian writers, while Putin gave his wife flowers in what Russian media called "bouquet diplomacy".

France and Russia disagreed on various things, Macron said, but called for "strong multilateralism" on Iran nuclear non-proliferation.

"I hope Russia understands France is a credible and trustworthy European partner," he said.

The visit focused on Iran and was not linked to the Gazprom decision, but Macron brought a business delegation, including French energy firm Total, who invested $2.5bn in Russian gas projects.

French firm Engie is among EU backers of NS 2, along with Anglo-Dutch company Shell, Austria's OMV, and German firms Uniper and Wintershall, who also sent top men to meet Gazprom in St Petersburg on Wednesday.

The St Petersburg crush came one week after German chancellor Angela Merkel met Putin and agreed to build NS2 .

With Gazprom preparing to extend its power in Europe, Meister, from the Berlin think tank, said Vestager's settlement might help despite its clunky mechanisms.

"It's a step forward, because it gives the EU the opportunity to punish Gazprom for misbehaviour," he said.

Gazprom's nature

Vestager made a "smart choice" even if the deal did not change Gazprom's nature, the London university's Goldthau said.

"Whatever the Kremlin thinks Gazprom is, the EU will treat it as a dominant market player … and it has a track record in forcing big corporations to adhere to the EU market regime," he said, referring to aggressive EU fines on US corporations.

"The task will be to … make Gazprom live up to its commitments," he added.

Europeans ought to be building their own energy security instead of relying on Russia's word, Berlin's Meister also said.

"Only a truly competitive market, with alternative suppliers, LNG [liquid gas] terminals and interconnectors will protect member states" from Russian machinations, he said.

News in Brief

  1. EU Commission: efforts 'ongoing' over Italian migrant ship
  2. Italy allows boat with migrants to dock
  3. France's Total pulls out of Iran due to US sanctions
  4. Trump accuses EU and China of currency manipulation
  5. Swedish conservatives regret unsuccessful integration policies
  6. Record high measles cases hit Europe
  7. Swedish politician declares war on media
  8. Italy threatens to return migrants to Libya

Opinion

Has the time finally come for 'European champions'?

Since Emmanuel Macron took the French presidency in 2017, the concept of consolidating European industries to create continental 'champions', capable of competing on a global scale, has been revived.

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. UK sanctions appeal risks highlighting EU divisions
  2. Wind delays launch of European wind-mapping satellite
  3. Greece 'normal' again after end of crisis, EU says
  4. Putin strikes blow against Russia's isolation by Europe
  5. EU-China cooperation on CO2 storage lost in limbo
  6. Greece exits bailouts, but difficult path ahead
  7. EU gets record response on 'summertime' consultation
  8. 'Nativism' and the upcoming Swedish and Bavarian elections

Stakeholders' Highlights

  1. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  2. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  3. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  4. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  5. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  6. FIFAGreen Stadiums at the 2018 Fifa World Cup
  7. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  8. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  9. FIFARecycling at the FIFA World Cup in Russia
  10. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  11. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  12. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up

Stakeholders' Highlights

  1. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  2. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  3. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  4. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments
  5. International Partnership for Human RightsAnnual Report celebrates organization’s tenth anniversary
  6. Nordic Council of MinistersNordic Cooperation Needed on Green Exports and Funding
  7. Mission of China to the EUPremier Li Confirms China Will Continue to Open Up
  8. European Jewish CongressCalls on Brussels University to Revoke Decision to Honour Ken Loach
  9. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  10. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  11. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  12. Mission of China to the EUProgress on China-EU Cooperation

Join EUobserver

Support quality EU news

Join us