A gas blowback for Russia?
The European Union’s leaders warned on Thursday that Russia faced “far-reaching consequences” if it took “further steps…to destabilise the situation in Ukraine”. But how far-reaching would those consequences be?
The question puts the spotlight on Germany – and also on Günther Oettinger, its European commissioner.
Germany is Russia’s major trading partner in Europe, as well as the EU’s biggest economy. And Oettinger is the commissioner for energy, Russia’s principal export to the EU.
Oettinger has already come out in opposition to economic sanctions on Russia, telling the German newspaper Die Welt on Monday (10 March) that “it would be wrong to question the economic ties that have been built over decades” with Russia.
He will find that position under tough scrutiny on Monday (17 March), when he will face the EU’s foreign ministers for a much- delayed discussion about the EU’s energy diplomacy.
Oettinger has already indicated that the crisis will have an impact on the Commission’s business with Russia. On Monday, Oettinger said that the European Commission would delay talks on the South Stream gas pipeline project that Russia hopes will bring Russian gas to Europe through the Black Sea, effectively bypassing Ukraine. Progress on the pipeline, which has a tentative start date of 2018, has been bogged down by legal disputes, many of them with the EU.
This, though, amounts to a formalisation of the de facto situation, much as was the case with the EU leaders’ formal suspension on Thursday (6 March) of talks on visa liberalisation with Russia.
A more challenging question for the Commission will be whether to allow Russia an exemption from EU competition so that it can send more gas to the Czech Republic via the Opal pipeline, a Russian-owned extension of the Nord Stream pipeline that brings Russian gas to Germany. At present, Gazprom, the Russian energy giant, can use 50% of Opal’s capacity. In January, Russia’s President Vladimir Putin said that “we [Russia and the EU] have reached an agreement in principle that it will be used not at 50% but at 100%”. The Commission has delayed a decision that had been expected on Monday.
Gazprom
Beyond the Opal issue lies another, far larger issue of competition in the energy sector: Gazprom. The Commission has since 2012 been investigating whether Gazprom has been abusing its dominant position on the European market to handicap rivals, to raise prices and to limit the flow of gas across the EU. The Commission has always insisted that the case is not political, but as the EU searches for measures that could have “far-reaching consequences” for Russia, that position will inevitably come under pressure.
As Europe’s financial centre, the UK too could emerge as an especially important voice in the debate about stronger measures against Russia. EU leaders did not indicate that limiting Russian access to Europe’s banking system was one of the measures they would consider. But with the US administration already exploring such measures, it may be only a matter of time before the UK, Cyprus, Luxembourg and Latvia have to consider how far they will accept EU measures.
Click Here: new zealand rugby team jerseys