Brussels officially charged Gazprom with violating EU anti-trust legislation today. The accusation is four years in the making and comes at a time when tensions between Europe and Russia are at a post-Cold War high.
The EU’s complaints are straightforward. In the words of EU Competition Commissioner Margrethe Vestager, Gazprom, which supplies roughly 30 percent of the continent’s gas needs, has abused its dominant position in the market. The FT has a good bullet-point list of the main allegations:
- Gazprom carved up the market to its own advantage and hindered the free flow of gas. This boils down to terms in Gazprom’s “take-or-pay” contracts that stop countries from reselling gas that they are obliged to buy but may not need.
- Gazprom maintained a stranglehold on the market by muscling out potential competitors and preventing the emergence of alternative gas supplies. This relates to Gazprom linking its own pipeline projects to supply deals and prices, making it more costly to diversify.
- Gazprom unfairly overcharges customers in some EU countries by dictating abusive terms in long-term gas contracts, which link the price of gas to oil. The commission probe found prices in Lithuania, for instance, to have been at times more than a third higher than Germany’s more developed energy market.
Though some may applaud this move as evidence that the EU has finally stiffened its spine somewhat, a nagging question remains: was this in fact a strategic political move, or merely the end result of a long and drawn-out bureaucratic process?
It’s important to remember that the Europeans blundered into the mess in Ukraine precisely by following a plodding bureaucratic process to its conclusion—namely, the finalization of the Association Agreement with Kyiv. The Eurocrats never seemed to take into account just how much this step would enrage Moscow, and were thus left flat-footed when the Russians began making good on all the threats they had made in response to Ukraine’s westward drift. None of this in any way excuses Russia’s subsequent rapacious behavior in Ukraine, but it certainly shouldn’t absolve the Europeans from pretty much sleepwalking into a crisis.
The Gazprom case hits Vladimir Putin exactly where it hurts. Does the EU understand that Putin’s first impulse won’t be to respond to these charges with a legal brief? Europe should be striving to make good policy, and consolidating its energy markets into some kind of union is a sensible step in that direction. It shouldn’t, however, be crafting these policies while on bureaucratic autopilot. We certainly hope that there is a concerted strategy at play, and that the EU’s Competition Commissioner isn’t merely working through the backlog of alphabetized cases left to her by her predecessor. (“Let’s see: Google, check, Gazprom, check”).