March 28, 2014 10:06 am
EU can cope with Russian retaliation, says trade official
http://www.ft.com/intl/cms/s/0/da0a2d32-b5cb-11e3-b40e-00144feabdc0.html?ftcamp=published_links%2Frss%2Fhome_us%2Ffeed%2F%2Fproduct&siteedition=intl#axzz2xFvrX6UW
Europe’s top trade official struck a defiant stance against Moscow on Thursday and argued that the EU would have a strong hand if the Crimea crisis descended into a broader economic showdown.
Karel De Gucht, the EU’s trade commissioner, said Europe had an array of weapons at its disposal including a long-awaited competition case against Gazprom, which can set restrictions on the Russian energy company’s ability to control supply routes and prices. “The idea that we are strangled by Russia is not true,” he told the Financial Times in an interview.
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IN BRUSSELS
More broadly, Mr De Gucht countered Vladimir Putin, Russia’s president, who has argued that wider sanctions would inflict equal pain on Russia and the 28-nation bloc. In fact, Russia’s financial dependence on energy exports made it especially vulnerable, the commissioner argued.
“If you owe a little bit of money to the bank and you cannot pay it, then you have a big problem. If you owe a lot of money to the bank, the bank is in trouble. That also applies to our relationship with Russia. I am not impressed by their position,” he said.
Mr De Gucht’s perspective on Europe’s ability to resist a greater stand-off with Russia is critical as he is one of the leading commissioners charged with weighing up the feasibility of deeper sanctions against Moscow, most likely to be imposed if Russian troops enter eastern or southern Ukraine.
The Belgian commissioner rejected the assertion that Europe, which imports 30 per cent of its gas from Russia, could only build up greater resilience slowly. “Sometimes, history can move very fast,” he said. “If they were trying to strangle us, we would of course call on the US for access to their gas, independently from a free trade agreement. That would be a hugely political factor.”
In depth
Russia has annexed the southern Ukrainian peninsula of Crimea, raising fears of a return to the politics of the cold war
He argued that America’s increasing gas exports would pile greater pressure on Gazprom and added that a deal over Iran’s disputed nuclear programme could also open up the world’s second biggest gas reserves for export to Europe.
Although Gazprom is cutting prices in EU, the company paints a rosy picture of its prospects in Europe. Its market share rose to 30 per cent last year from 26 per cent in 2012 and Alexander Medvedev, the deputy chief executive, argues that trend is likely to continue.
But Mr De Gucht insisted Russia’s longer term prospects were more fragile because Europe was ramping up investment in infrastructure such as liquefied natural gas terminals and cross-border gas and electricity interconnectors, which allow countries to diversify their supplies.
In the event of a deeper Russian incursion in Ukraine, he said that the EU would have to take a snap political decision on how to divide the pain of sanctions between member states.
“That is the kind of decision you can only take when there’s the political need to do so but it’s obvious that if Russia were to proceed in the south and east of Ukraine that political need would exist [overnight].”
Angela Merkel, Germany’s chancellor, on Thursday added her voice to call for the EU to cut its energy dependence on Russia. “There will be a new approach to our overall energy policy.” In the EU there was a very high dependency on Russian oil and gas, with Germany being far from the most dependent, she said.
