Chubais Talks about Fear of a Gazprom Planet

We used to seeing advocates of many different stripes mounting vigorous defenses of Gazprom’s activities in Europe – even their partners in E.ON and EdF have joined in to bash the European Commission’s unbundling proposal for its Gazprom clause. The pitch isn’t hard to master: Gazprom, a “reliable” company which always meets its contract obligations, is the victim of unfair political discrimination in Europe, and is not allowed the reciprocity it deserves. What I couldn’t have predicted is that the next proponent of this victim narrative would be none other than Anatoly Chubais, the maverick liberal with uncanny political survival skills, most recently surviving a direct confrontation with Igor Sechin over the privatization of UES (not many can say that). Neil Buckley has a terrifically fascinating report on comments made by Chubais about Gazprom in tomorrow’s FT, and I am left wondering who Anatoly owes a favor to… Never try to predict what this guy is going to do. Nevertheless, the argument still has the same gigantic holes in it. Gazprom does not function like a normal company, reciprocity is a vastly misunderstood topic, and, as many officials at the European Commission have pointed out, Gazprom should consider itself lucky to be given the same treatment as a respected global titan like Microsoft. Unlike in Russia, regulatory activities in Europe aren’t just instruments of intimidation.

Russian hits at EU fear of Gazprom By Neil Buckley in Moscow One of Russia’s leading liberal reformers has accused the European Union of trying to limit access to its natural gas market for Gazprom for political reasons, motivated by misguided fears about the Russian gas giant.

Anatoly Chubais, architect of Russia’s 1990s privatisation programme, told the Financial Times the EU often used discussions about the need to “unbundle” or separate ownership of production and distribution assets as “cover for its concerns about Gazprom”.After months of wrangling, EU countries recently agreed a compromise on energy market reform that would not compel companies to be unbundled. However, a suggested curb on ownership of networks by non-EU groups such as Gazprom remains, an EU official said.Russia is unhappy about the proposed curbs – which must still win European parliament approval.“It’s an attempt to wrap up in beautiful clothing an absolutely paternalistic and geopolitical viewpoint which has no relation to liberal economics,” Mr Chubais said.Mr Chubais has spent the past 10 years masterminding the break-up of UES, the Russian electricity monopoly, which will cease to exist next week after selling off its generators in the biggest liberalisation of Vladimir Putin’s presidency. His insistence that Europe is misreading Gazprom is striking as he is a frequent critic of the gas monopoly.He warned Europe’s actions were part of a broader international tendency in oil and gas towards increasing state intervention and closing domestic markets – which he warned were a “dead end” and posed big risks “for the world and for Russia”. A return to protectionism was “madness”.“When the EU tries to limit access for Gazprom…it is squeezing supply. What’s the result? Growth in prices…It means you’re forcing your population and your economy to pay for your political fears.”“Of course we made mistakes on our side, scaring people when there was no need to scare them,” Mr Chubais added. But he said western fears were excessive.“Look at this story of raising gas prices to Ukraine, Belarus, Georgia, Armenia. This was perceived by the west quite wrongly – dishonestly, if you like. And…Putin was stigmatised for energy blackmail, for turning energy into a weapon…These stock phrases have penetrated deeply into the consciousness of the European elite.”Mr Chubais insisted ending subsidised gas supplies to former Soviet states was about “stopping handing out money for free”.“Why the hell should we supply gas to Ukraine” for discount prices, he asked. “And meanwhile, forgive me, these scoundrels are stealing gas…“Putin’s actions were absolutely right – actions that by any other country would be seen as normal,” Mr Chubais insisted. “But from Russia they’re seen as energy blackmail, as the Kremlin’s tentacles stretching out to Paris or London, as the KGB strangling us; Russian gas is [seen as] more frightening than Soviet tanks.”“So here I have many more complaints about the west than I have about our own blunders.”