European Commission’s Anti-Trust Probe of Gazprom and Ukraine’s Old Wounds

Director’s note: As I mentioned in Mark’s posting, this is a large enough issue that with two pieces submitted by two scholars independently, I’ve broken our internal rule against hitting the same story twice in the same week. Mark Impomeni’s piece is a focus on the larger issues in play; in keeping with his focus, Matt Lina’s is directed more toward the implications for Ukraine.

The news today that the European Commission is investigating Russian natural gas giant Gazprom for numerous sins against free markets and human decency is welcome news for everyone in Eastern Europe — in the European Union or outside — caught under Russia’s last weapon of hegemony.

According to Bloomberg-Businessweek, “the European Commission is investigating whether Gazprom imposed unfair prices by linking natural gas and oil prices, prevented gas from being traded between countries and hindered the diversification of supply.” This has special relevance for Ukraine, which not only suffers from an inflated price for natural gas from Gazprom, but is also the conduit through which so much natural gas travels from Russia.

Gazprom’s response has ranged from curt (“Let them investigate”) to nonsensical. Again according to Bloomberg, “Gazprom expects that the EU will take into account that it is ‘registered outside the jurisdiction of the EU, is a business entity empowered, according to the legislation of the Russian Federation with special social functions and the status of a strategic organization, administered by the government.'”

Inevitably when one hears of the issues of Gazprom, natural gas, and Ukrainians dying in the winter because of Russia’s particular approach to foreign policy, Yulia Tymoshenko comes up. Tymoshenko’s history with Gazprom — first as adversarial partners off of whom she and her company UES did well to the tune of billions of dollars, and later as participants in the now-infamous price-setting deal with which Ukraine is still saddled — makes this inevitable. Despite her favorable press treatment in the West, her tangled history with Gazprom must be seen of a piece, culminating in her illegal ratification of the gas price contract without Cabinet approval.

With the Tymoshenko deal locked in, Russia is now offering the carrot of relief if Kyiv will simply once again become Moscow’s satellite, a trick it used to great effect with Belarus. Despite the pain Ukraine suffers every winter and the recent move to adopt Russian as an official language, President Viktor Yanukovych as yet shows no signs of taking this poison pill.

At a certain level, the anti-trust probe is nothing more than the European Union attempting to buy its members some space for negotiations with Russia — Poland and Lithuania in particular have been on the receiving end of Russian wrath for attempting to inject free-market principles into negotiations with the Russian gas giant. Germany’s and other nations’ foreign policy is if not dictated certainly influenced by Russia’s stranglehold on natural gas, especially after Germany’s bizarre decision to abandon its nuclear energy program — an influence that is best seen in the regular attacks on Ukraine over issues of every kind. With any luck, there may be some small delinking of natural gas from foreign policy.

It is likely too much to hope that the European Commission will note the extent to which Russia’s use of Gazprom as a weapon against the EU’s Eastern states is an echo of what it has done to Ukraine for decades, but it is reasonable to expect a brighter light on the practices by which Gazprom has bullied Russia’s former satellites. The very things for which Gazprom is now under investigation are the tools Russia used against Ukraine through the 1990s and the last decade, and many of its other satellites at times as well.

Perhaps now, with EU member states under more or less direct assault from Russia, with the extent and nature of the weapons it uses through its Gazprom subsidiary coming to light, policy-makers in Brussels and the rest of Europe will begin to understand the gravity of the situation in which Ukraine has found itself since independence. Perhaps they will understand why Tymoshenko’s approval rating cratered in the wake of the gas deal.

And, if this probe is not merely a prelude to cheaper gas for Poles and Lithuanians and a return to the status quo ante thereafter, perhaps Brussels will finally understand exactly what every Ukrainian suffers to keep the hope of European membership alive.

Image Copyright Shutterstock.com/Pecold