Putin’s Cash Cow Gazprom Is in EU Regulators’ Crosshairs
Policy + Politics

Putin’s Cash Cow Gazprom Is in EU Regulators’ Crosshairs

As soon as Wednesday, the European Union’s chief anti-trust regulator is expected to file charges accusing Russian oil and gas giant Gazprom of anti-competitive behavior, including artificially inflating prices and blocking other companies from competing effectively in the European market for natural gas. 

The news represents another blow to a Russian economy that, while showing signs of recovery in recent weeks, is still expected to enter recession this year as plunging oil prices, a debased ruble and a broad regime of international sanctions continue to exact a heavy toll.

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The announcement of the charges will likely come from Margrethe Vestager, the Danish politician currently serving as the European Commissioner for Competition, who announced charges of anti-competitive behavior against U.S.-based Internet search giant Google last week. 

Vestager’s commission is expected to cite the Russian company for multiple efforts to thwart competitors and inflate prices. According to media reports, she will allege that Gazprom illegally blocked countries from re-exporting gas it had already purchased, and that it created pricing structures that artificially inflated what customers paid for gas.

The charges could result in billions of dollars in fines and a requirement that, in order to continue doing business in Europe, its largest foreign market, Gazprom make itself more transparent and stop blocking the resale of its gas.

Russia has long used Gazprom as an extension of the Kremlin’s political will, by offering favorable pricing arrangements in exchange for preferred policy stances and using price hikes, or the threat of being cut off, as punishment. 

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Charges against the company might have come sooner except that EU officials were reportedly reluctant to further antagonize Russia during the peace talks that ultimately led to the shaky truce now being observed in Ukraine.

The Russian government will almost certainly see the move as antagonistic. In a number of public appearances over the past year, Putin has regularly accused Western governments of conspiring to harm the Russian economy and to check Russia’s growing assertiveness in Eastern Europe and elsewhere. But the EU punishing Gazprom will be more than just an embarrassment for the Kremlin. The Russian government owns more than half of the company’s shares, and benefits not just from the billions in profits it generates, but also from the billion it pays in taxes. 

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