The Gazpromization of EU energy security

The term “energy security” in Europe has been hijacked to empower suppliers and weaken importers, implying a drastic reduction in competition, rising political vulnerability, and the erosion of the rule of law. The fact that Russian President Vladimir Putin’s likely successor, Dmitry Medvedev, is chairman of Gazprom leaves little doubt about the Kremlin’s determination to maintain an iron grip on the energy sector. But the asymmetry in European Union-Russian energy relations must end.

Concerns in the EU over energy security, fueled by increasing dependence on Russia, have never been greater. Together with the Russian authorities’ expropriation of the oil company Yukos, foreigners have been squeezed out of Russia’s energy extraction sector. Inevitably, many in Europe are questioning the value of the Kremlin’s word.
Rather than turning away, the EU should seek deeper engagement and reciprocity. It should facilitate further incorporation of Gazprom into the EU market through market liberalization and downstream integration. Yet it must also press for Gazprom’s ultimate restructuring and real market entry into Russia for European companies, because Russia’s unwillingness to do so guarantees energy insecurity for Europe.

Indeed, the Putin administration established a track record of bending rules and bullying foreign investors, with the support of prosecutors, tax authorities, regulatory agencies, and courts. At the same time, Gazprom has evolved into the dominant market-maker in gas for Europe, and its actions have made a mockery of EU efforts at greater collaboration with Russia.

Gazprom strategy deploys three tactics: cooptation – cultivating partnerships with certain countries, political leaders, and corporations, as levers of its interests; preemption – using upstream power and Russian diplomacy to manipulate downstream conditions and scoop up assets; and disaggregation – dividing the EU through bilateral deals.

Daily Star