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Friday, October 19, 2007

Will Angela Merkel stand up for Gazprom?

10/15/2007 MOSCOW (RIA Novosti political commentator Yelena Shesternina) - Vladimir Putin, accompanied by 13 ministers and heads of federal agencies, is leaving for Germany to attend another round of Russian-German consultations (the ninth in a series that has been held alternately in Russia and Germany since 1998). A delegation of equal importance - consisting of 11 ministers led by Angela Merkel - will depart for Wiesbaden in Hessen from the German side. The St. Petersburg Dialogue public forum has also timed its plenary meeting to coincide with the consultations. Both the Russian president and the German chancellor will address it. For Russian foreign policy, October has beaten nearly all records for state visits. Within one week the Russian capital hosted French President Nicolas Sarkozy and U.S. Secretary of State Condoleezza Rice, who was accompanied by Defense Secretary Robert Gates. On October 14 and 15, there are scheduled meetings in Germany, which shall be followed by a Caspian summit in Tehran. On October 26, Russian politicians will travel to Lisbon to attend a Russia-EU summit where officials from Moscow and Brussels will finally try to agree upon a new basic agreement. However, there is little chance that Poland will lift its veto.
In Germany, no such insurmountable problems loom.
Although pessimists predicted that with Gerhard Schroeder gone Vladimir Putin would find it much more difficult to establish a common language with the German chancellor and her team, thus far things have progressed smoothly. Since the beginning of the year Merkel and Putin have had four meetings. And every time they were productive - trade between the two countries is surging and last year reached a record sum of 50 billion euros (this compares with 13.5 billion euros for France). Also, German investments in the Russian economy in the first half of 2007 surpassed two billion euros. The latest meeting in a similar format between Russia and Germany was held in Tomsk in April of last year and produced eight agreements, the largest being a framework one between Gazprom and BASF on asset swapping. It specified the conditions under which the German partners could take part in the mining and transportation of resources from the Yuzhno-Russky deposit. At a final news conference Putin tried to placate those who thought Europe could become a hostage to "Russian gas expansion." "We keep hearing about a Russia-dependence threat and that Russian companies should be restricted in their access to European markets," he said. "But step into our shoes and look through our eyes. What should we do when we hear the same thing day in and day out? We perceive this as a threat to limit our access to the markets and begin looking for alternative markets." In Wiesbaden, too, Putin will likely talk about Europe's protectionist measures against Russia, especially since the occasion is fitting. In September, the European Commission drafted a plan, which could affect Gazprom in addition to other overseas companies. Essentially, the plan will raise a barrier for investments into the European energy infrastructure from non-European Union members. Two alternatives are given: either overseas companies are forced to give up their distribution networks, or these networks will be passed on to independent companies for administration.
In such a situation Russia is looking to Germany for protection.
Representatives of the German Ministry of Economics have hinted that such measures to hedge networks against "possible takeovers by foreign companies can be used only in individual cases." Former German chancellor Gerhard Schroeder actually described the EU policy as "shortsighted" saying that "Europe will create new obstacles to energy suppliers instead of making deliveries safer." Putin will have exactly two days to try to persuade the German chancellor to lobby the European Union to give Russian firms unrestricted access to Europe's energy market. It is unknown if Angela Merkel will even agree with Putin's ideas. Quite recently she came forward with an initiative to adopt a law on restricting investment from Russia and China in Germany - under the pretext that "an inflow of capital from Asia is threatening national security." In addition, a number of analysts claim it was she who suggested the idea of limiting energy investments from Russia to the EU. However, Moscow has planned to reciprocate protectionist EU steps. Putin has warned: if Europe passes laws imposing limits on Russian investments, Russia will respond in kind. The summit in Wiesbaden will be covered by more than a thousand accredited journalists - not only Russian or German. The interest is understandable. Aside from the economic issues, Putin and Merkel are almost certain to discuss politics - Iran, the status of Kosovo, the situation around the Conventional Armed Forces in Europe Treaty (Merkel has already articulated the German position by urging Russia to rejoin the treaty) and U.S. plans to deploy elements of a missile defense system in the Czech Republic and Poland (although Merkel calls the Russian proposals addressed to the White House "interesting", she still says she is not against the deployment of anti-missiles and a radar in Eastern Europe). In addition to Merkel, Putin is also expected to make a favorable impression on Germans - according to the latest polls, Russia's image in that country has declined in the past three years. A study by Die Welt shows that 73% of Germans "see the Kremlin in the role of an energy supplier as a threat", and 76% "are concerned by the weakening of democracy in Russia."

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