EU turns blind eye to Russia’s gas bullying
VLADIMIR PUTIN’S stranglehold over European gas supplies has been laid bare by explosive EU documents, exposing deliberate violations of EU law and a pattern of political bullying over many years.
The longest investigation in EU history found that the Kremlin-controlled energy giant Gazprom has used its enormous power to pressure vulnerable states in Eastern Europe and fragment the EU’S energy market with coercive pricing policies.
The document leaves no doubt that Germany has been enjoying a sweetheart deal with Gazprom, gaining a competitive advantage in gas costs at the expense of fellow EU economies and leaving front-line states at the mercy of Moscow’s strong-arm tactics.
A leaked document from the European Commission paints an extraordinary picture of predatory behaviour, with Gazprom acting as an enforcement arm of Russian foreign policy. Bulgaria was treated almost like a colony, while Poland was forced to pay exorbitant prices for imported flows of pipeline gas from Siberia.
The stash of files slipped to MEPS imply that Brussels learnt the full truth but is nevertheless turning a blind eye as it prepares to reach an understanding with Moscow, disregarding fundamental principles of EU law.
“This is a very big deal. What the documents show is that there was systematic abuse of dominant position, and that it was clearly done for political purposes,” said Prof Alan Riley, an expert on EU energy law at the Atlantic Council, a US think tank. “Gazprom was splitting the European energy market at every point. And now the Commission is minded to do a deal that treats the East Europeans as if they were not member states at all.”
The competition commissioner, Margrethe Vestager, has pursued an aggressive campaign against US technology companies such as Google and Apple, openly vilifying the Silicon Valley leaders as a threat to European democracy. Critics say the double standards over Gazprom suggest that the Commission has succumbed to “regulatory capture” or other forms of
pressure, and has become ideologically unhinged. The key report, called a “Statement of Objectives”, is a confidential indictment by the competition directorate. It was drawn up in 2015 after four years of investigation.
It said Gazprom had infringed multiple EU laws and had engaged in “abusive behaviour”, charging “unfair prices” and leveraging its “dominant position”. The Commission called for fines of up to 30 per cent of relevant sales. “The Commission considers that the infringement has been committed intentionally. Gazprom is fully aware of the illegal nature of at least some of the various contractual and non-contractual measures,” it said.
Gazprom was charging Poland $350 per 1,000 cubic metres of gas, compared with $200 further down the Yamal pipeline in Germany. The apparent reason was to punish Poland for refusing to cede control over that section of the infrastructure to the Russians. Germany’s privileged price may help explain why it has been the chief champion of Gazprom’s interests in Brussels.
The episode risks mushrooming into a major Brussels scandal. Polish politicians say Germany has used its enormous influence to suppress the full findings of the inquiry and to push for a friendly settlement with Gazprom.
“What we’re told is that the Commission wants an amicable settlement and has already decided to do this deal. It is disloyal and Poland is one of the victims, but not the only one,” said Jacek Saryusz-wolski, a leading Polish MEP.
At the time of the inquiry Russia had a near monopoly across the old Warsaw Pact region, accounting for over two thirds of natural gas supply to several countries. Its three sets of pipelines provided 64 per cent of EU gas imports, though the advent of liquefied natural gas and the construction of LNG terminals in Poland and Lithuania has reduced this dependency slightly.
Gazprom controls the metering, the storage points and imposes clauses to stop “reverse flows” of gas from West to East, leaving the more vulnerable states at the mercy of a Kremlin squeeze. Gazprom stopped Poland obtaining emergency supplies of gas from Western wholesalers in 2009.
Bulgaria is particularly isolated with no links to neighbouring gas networks. The document said the country was the victim of “exploitative abuse”. Most of the details were blacked out but there have been allegations of intimidation and blackmail in Eastern Europe’s press.
In the Baltic states, gas prices differed from country to country, seeming to reflect shifts in policy towards Russia by respective governments.
Gazprom has modified some policies but much remains unchanged. “Despite various requests by Gazprom’s customers to remove the restrictions, also in view of their illegality under EU competition rules, Gazprom did not agree to or ignored such requests,” it said.
One of the leaked document reveals the Commission’s view on Gazprom’s offer of a settlement. It said the proposal would allow the company to “continue its pricing policy” and that it did not prevent other abuses from reoccurring. It admitted that acceptance of the offer by the EU would “be seen as failure to exercise the EU law enforcement powers”, yet this appears to be exactly what was being planned.