Margrethe and the bear

Margrethe and the bear

The European Union’s trustbuster turns her fire on Gazprom—marking a big change in European policy and the gas business

GAZPROM revelled in its untouchability. It was the main supplier of imported gas to the European Union, benefiting both from close Kremlin patronage (the Russian state is its largest shareholder) and from a web of business and political relationships in countries it sold gas to, notably Germany. Alternatives to Russian gas were scant, as was customers’ willingness to resist Gazprom’s dominance.   

Now the EU is taking on the Russian gas beast. The first blow fell on April 22nd when the EU’s competition commissioner, Margrethe Vestager, sent the company a long-expected “statement of objections” (Euro-parlance for a charge-sheet) alleging market abuses. The unpublished document runs to hundreds of pages. They detail the murky world of Russian gas exports, featuring lucrative intermediary companies with unknown beneficial ownership, deals struck by politicians not businessmen, and a hefty dose of geopolitical favouritism.

EU charges Russia's Gazprom, alleging price gouging

(Reuters) - The European Union launched a legal attack on Gazprom on Wednesday, stoking tension with Moscow as it accused the Russian gas giant of overcharging buyers in Eastern Europe and hindering competition.

The Kremlin appeared to take a conciliatory tone, saying it hoped for compromise and an impartial stance from EU regulators.

The EU's new antitrust chief, Margrethe Vestager, who a week ago announced a similar market abuse prosecution against U.S. tech giant Google, said state-controlled Gazprom was using its continued dominance in Moscow's old Soviet client states to hike prices by as much as 40 percent over the norm.

It could do so, she said, by insisting on contracts that bar customers selling on gas to others, notably across borders, which she described as a hindrance of free markets that broke EU law. It has also been an obstacle to EU efforts to supply Ukraine.

Another set of charges related to pressure put on Poland and Bulgaria to invest in pipelines according to priorities dictated by Gazprom.

Russia's biggest company, which saw an offer of a negotiated settlement rejected by Vestager's predecessor, dismissed all the accusations as "unfounded" and said it expected a resolution at a political level - though Vestager insisted the case was "not political", and in any case relations between President Vladimir Putin and the West are in deep freeze over the Ukraine conflict.

"The era of Kremlin-backed political and economic blackmail draws to a close," Lithuanian President Dalia Grybauskaite told Reuters in welcoming charges which EU officials said were based on evidence going back to when the eight countries affected joined the bloc, most of them in 2004.

Russian Foreign Minister Sergei Lavrov branded the move an "absolutely unacceptable" bid to apply EU rules retroactively to contracts signed long ago by Gazprom, which supplies about 30 percent of the gas used in the 28-nation bloc. 

Putin's spokesman said he hoped for compromise: "We are looking forward to an absolutely impartial attitude towards the Gazprom company," he told reporters. "Of course, Gazprom will defend its interests and the state, as a major shareholder in the company, will also defend the interests of Gazprom."

A formal inquiry was launched in September 2012 though, as in the Google case which had been meandering in Brussels for twice as long, Vestager has dramatically moved to a prosecution phase less than six months after taking over her job. 

From beyond the EU's borders, Ukraine's state-owned gas firm Naftogaz also hailed the move to free cross-border flows from Gazprom restrictions. Like others in Moscow's former empire, Kiev accuses Putin of using Russian energy, and the Soviet-era infrastructure that carries it, to crimp its independence.

FINE OR SETTLEMENT

Gazprom has 12 weeks to respond to the charges and Vestager stressed that a negotiated settlement, under which it would amend its practices, was still possible. Without a deal, she has the power to fine companies up to 10 percent of their annual sales - a potential penalty in Gazprom's case of $10 billion.

"Gazprom is dominant in all these markets," Vestager, a Danish former economy minister, told a news conference. "Our preliminary view alleges that Gazprom is abusing this position."

"Gazprom has been able to charge higher prices in some countries without fearing that ... gas would flow in from where prices were lower," she said of contracts with the three ex-Soviet Baltic states, Poland and Bulgaria. 

The broader charges on hindering cross-border sales also affect Hungary, Slovakia and the Czech Republic.

Migrant influx strains Greece as economy suffers

(Reuters) - Shortly after taking power in January, Greece’s new government opened the gates of one of the main detention centers where thousands of undocumented migrants had been held against their will after arriving on the country’s Mediterranean shores.
Many of the inmates, including refugees and children, were driven to Athens and released, in what Prime Minister Alexis Tsipras's leftist government hailed as the beginning of the end of inhumane migrant policies of the past.
Now the move has created other problems. With the influx of migrants from Africa and the Middle East rising this year, hundreds have ended up like 40-year-old Syrian Dia Qasem and her three sons: stuck in the Greek capital’s public squares with nowhere to sleep and little eat.
"The only help is from God,” sobbed Qasem, a neat hazel-eyed woman with chipped red nail varnish, one afternoon this week. Qasem and her sons fled Damascus last year and, after a dangerous voyage from Turkey, they landed on the island of Kos.

They have enough money to stay in a hotel on occasion. But most nights Qasem settles down to sleep with her sons, other Syrians and migrants from other nationalities, under a tree in a central Athens' square.

EU summit to offer resettlement to only 5,000 refugees

EU summit to offer resettlement to only 5,000 refugees

Exclusive: Confidential draft from summit reveals that only 5,000 migrants will be allowed to resettle in Europe with large numbers likely to be repatriated
Alan Travis
Thursday 23 April 2015 10.43 EDT
Only 5,000 resettlement places across Europe are to be offered to refugees under the emergency summit crisis package to be agreed by EU leaders in Brussels on Thursday.
A confidential draft summit statement seen by the Guardian indicates that the vast majority of those who survive the journey and make it to Italy – 150,000 did so last year – will be sent back as irregular migrants under a new rapid-return programme co-ordinated by the EU’s border agency, Frontex. More than 36,000 boat survivors have reached Italy, Malta and Greece so far this year.
The draft summit conclusions also reveal that hopes of a major expansion of search-and-rescue operations across the Mediterranean in response to the humanitarian crisis are likely to be dashed, despite widespread and growing pressure.
The summit statement merely confirms the decision by EU foreign and interior ministers on Monday to double funding in 2015 and 2016 and “reinforce the assets” of the existing Operation Triton and Operation Poseidon border-surveillance operations, which only patrol within 30 miles of the Italian coast.

Ruble Hits New 2015 Highs in World's Best Currency Rebound

Ruble Hits New 2015 Highs in World's Best Currency Rebound

The Russian currency strengthened sharply Wednesday, bolstering a recent rally driven by greater confidence in the ruble, easing international tensions over Ukraine and oil price stability.

The ruble jumped over 3 percent in morning trading to 53.4 against the U.S. dollar before paring gains through the day. In the early evening in Moscow the Russian currency was up 2.6 percent at 53.66 against the dollar and 2.2 percent at 58 against the euro.

The ruble has clawed back some of the losses it sustained during a currency collapse in December, driven by lower oil prices and Western sanctions on Russia over Ukraine, and is now trading at record highs for this year.

“The market has reconciled itself to the growth of the ruble and it's risky to stand against it,” ING's chief economist in Russia, Dmitry Polevoy, wrote in a note to investors Wednesday.

Bruised by wild ruble volatility over the last six months, which has seen the currency swing from the world's worst performing to its best performing, experts are reluctant to predict future values, but some analysts warned Wednesday that the ruble rebound could soon fizzle out.

The Russian currency has climbed 34 percent against the greenback since mid-January and 7.6 percent this month alone.

Unlike in December and January, the market is no longer pricing in “catastrophic scenarios” including possible capital controls, according to Oleg Kouzmin, chief economist at Renaissance Capital in Moscow.

A Ukraine cease-fire, which has drastically reduced the levels of violence in eastern Ukraine, and stabilizing oil prices have also given the currency a boost. The price of international benchmark Brent oil has recovered from lows of about $50 recorded in January and is now trading at about $57 after dipping slightly on new data from the United States on Wednesday.

Local purchases of rubles appear to be driving much of the gains. “Companies and, probably, the population as a whole continue to sell,” Polevoy said.

Much of the ruble's weakness in late 2014 and earlier this year was due to large debt payments due to foreign creditors by Russian companies unable to roll over loans after U.S. and European Union debt markets were closed to many Russian firms in the wake of Western sanctions.

Repayment peaks in December and March have passed and payments for the rest of this year are evenly spaced, according to Kouzmin.

But the rally is put into context by last year's huge ruble devaluation: the currency shed 41 percent of its value against the dollar through 2014 and in December crashed to 80.1 against the dollar, its lowest level since the late 1990s.

Even amid its current run of strength, the ruble is down 39 percent over the last six months.

While Central Bank officials have said that the period of extreme volatility for the currency is over, analysts and experts appear split over the ruble's future prospects.

The Russian currency could keep rising against the dollar if the Central Bank takes no action to halt its surge, according to Vladimir Bragin, the head of financial markets and macroeconomic analysis at Alfa Capital, in a note published by the RBC news website Tuesday.

Former Finance Minister Alexei Kudrin said last month that given a steady oil price and no new Western sanctions, the ruble would stabilize. The Russian currency was likely to trade between 58 rubles to the dollar and 64 rubles to the dollar for the rest of the year, he predicted.

Some experts caution, however, that the rally might not last. The current trend is driven by the temporary phenomenon of "foreign investors closing long positions on the ruble,” according to Maxim Korovin, a currency analyst at VTB Capital in Moscow.

Others warned that the Central Bank could step in to halt a lengthy rally that could reduce the value of tax revenues being collected by the government. “The Central Bank may start direct dollar buying at a 50ish level to prevent the budget deficit widening,” said Aram Kazrayan, a senior FX and Derivatives trader at MDM Bank in Moscow, in written comments.

Analysts at Sberbank CIB warned that the ruble could overshoot.

“We see more room for advancement but are wary of a potentially sudden reversal, as we see fundamental support as lacking,” they wrote in a note to investors Wednesday.

Now Greece may turn to Russia for a bailout: Kremlin set to offer discounts on natural gas supplies in exchange for some of Athens' assets

• Alexis Tsipras, Greece’s prime minister, will meet Vladimir Putin in Moscow
• The meeting comes amid reports Russia is considering bailing out Greece 
• Reports Kremlin may offer loans and discounts on supplies of natural gas

By Daniel Martin, Chief Political Correspondent For The Daily Mail

Published: 17:23 EST, 7 April 2015 | Updated: 12:26 EST, 8 April 2015

Russia is considering bailing out Greece in exchange for the country’s ‘assets’, it was reported last night.

Alexis Tsipras, Greece’s prime minister, will meet Vladimir Putin in Moscow today, amid reports that the Kremlin will offer controversial loans and discounts on supplies of natural gas in a bid to lessen its dependence on the West

The visit will raise fears the radical left government is looking east in search of alternative sources of finance as it bids to avoid bankruptcy.

Scroll down for video 

• Alexis Tsipras, Greece’s prime minister, will meet Vladimir Putin (pictured earlier this week) in Moscow today, amid reports that the Kremlin will offer controversial loans and discounts on supplies of natural gas

Ahead of his visit, Mr Tsipras condemned the West’s economic sanctions on Moscow as ‘a road to nowhere’.

But Martin Schulz, the president of the European Parliament, has already warned it would be ‘unacceptable’ if Mr Tsipras ‘jeopardised Europe’s common policy on Russia’ in return for Kremlin aid.

Kommersant newspaper quoted an anonymous Russian government source last night saying that lines of credit were being offered.

‘We’re ready to consider the question of providing Greece discounts on gas: the price for it is tied to the cost of oil which has significantly fallen in recent months,’ the source said.

‘We are also ready to discuss the possibility of granting Greece new loans. But here we, in turn, are interested in reciprocal moves – in particular, in Russia receiving particular assets in Greece.’

Yesterday Greece demanded more than £200billion in compensation from Germany for Nazi atrocities during the Second World War.

The government unveiled its final calculation for the war reparations stemming from occupation by the Third Reich.

The radical left Syriza party says Germany owes Greece nearly 279billion euros, or £204billion to compensate it for looting and war crimes.

The German government says the issue was resolved legally years ago.

Greece’s defence minister said it had obtained ‘stunning evidence’ to support its massive claims for reparations.

Panos Kammenos said the country had obtained records held by the US military that review the extent of damage to private and public property during the Nazi occupation.

• Ahead of his meeting with Putin, Mr Tsipras (pictured) condemned the West’s economic sanctions on Moscow as ‘a road to nowhere’. Greece is obliged to pay 450million euros of its debt in a matter of days

Greek PM pledges to keep to his promises in inaugural speech

The demand comes just days before Greece is obliged to pay 450million euros of its debt to the International Monetary Fund.

Yanis Varoufakis, the Greek finance minister, has said the country ‘intends to meet all obligations to all its creditors, ad infinitum’.

Greece suffered a brutal occupation at the hands Adolf Hitler’s forces in 1941. More than 40,000 people are believed to have starved to death in Athens alone.

Yesterday a parliamentary cmmittee established by Mr Tsipras for the first time put an official number on the reparations claim.

It includes the cost of a 10billion euro forced Nazi loan made by the Bank of Greece and the return of archaeological treasures.

The revised figures amount to nearly 10 per cent of Germany’s GDP.

Mr Tsipras raised the reparations issue when he met German Chancellor Angela Merkel in Berlin last month.

He has called the reparations question a ‘moral and ethical’ issue for his country.

The new figure was revealed yesterday by Greek deputy finance minister Dimitris Mardas.

‘According to our calculations, the debt linked to German reparations is 278.7bn euros,’ he told a parliamentary committee investigating responsibility for Greece’s debt crisis.

Mr Mardas said the reparations calculation had been made by Greece’s state general accounting office.

Berlin paid 115m deutschmarks to Athens in 1960 in compensation – a fraction of the Greek demand.

Greek Prime Minister Alexis Tsipras raised the issue of compensation from Germany for Nazi atrocities during the Second World War when he met German Chancellor Angela Merkel in Berlin last month (pictured)

Greece says this did not cover payments for damaged infrastructure, war crimes and the return of the forced loan.

Germany insists the reparations issue was settled in 1990 legally and politically before Germany reunified.

Syriza politicians have frequently blamed Germany for the hardship suffered by Greeks under the tough bailout conditions imposed by international lenders.

Ministers have floated the idea of seizing German assets in the country to compensate the families of victims of Nazi war crimes.

A poll carried for Greek radio found more than 80 per cent of Greeks agreed with the pusuit of Nazi war debt claims.

Yesterday Greek MPs also voted to establish a committee examining the circumstances of its 2010 bail-out by eurozone creditors and the IMF to the tune of 240billion euros.

‘After five years of parliamentary silence on the major issues that caused the bailout catastrophe, today we commence a procedure that will give answers to the questions concerning the Greek people,’ Mr Tsipras said.

Finance minister Yanis Varoufakis has claimed the economy was unfairly lumbered with the liabilities that it is now struggling to pay off as its coffers run empty.

He has claimed Europe dealt with his country’s bankruptcy by ‘loading the largest loan in human history on the weakest of shoulders - the Greek taxpayer’. 

Putin Meets With Alexis Tsipras of Greece, Raising eyebrows in Europe

Putin Meets With Alexis Tsipras of Greece, Raising eyebrows in Europe

Welcoming the Greek prime minister, Alexis Tsipras, to Moscow at a time of badly strained relations between Russia and Europe, President Vladimir V. Putin on Wednesday declared that the visit “could not have come at a better time.” 

Mr. Tsipras, who is in tough negotiations with fellow European leaders over international financial assistance that Greece needs to avoid bankruptcy, arrived here on Tuesday night. His visit has raised eyebrows across the Continent because of a perception that he may be trying to gain leverage by cozying up to Mr. Putin.