Robert Amsterdam

I attach here an "abridged" translation of an op/ed article I wrote, published in today's „die Tageszeitung“ newspaper of Germany. A scan of the original print version of the article can be downloaded here.

Careless and Ignorant

By Robert Amsterdam

Today a tremendous amount of attention in Germany is focused on questions about the true nature of the German-Russian relationship – and its impact on energy security in Germany and throughout Europe. In the meantime, it is the German consumer who is ultimately paying for the antics of the German energy companies and financial institutions tied to Russia.

Politicians and business leaders attempt to justify Germany’s decision to partner with Russia against Europe in various ways. One is by reference to the tragic history of German-Russian relations – a moral justification for deference to Moscow’s needs, as long German industries are benefiting. Another justification for partnering with Moscow is that Russia cannot be compared to Nigeria – those who wish to address human rights should first analyse the situation in countries comparatively far worse off than Russia. From Klaus Mangold to Gerhard Schroeder, Germany’s apologists of Russian energy imperialism view Moscow’s bullying tactics through only one angle of concern – was Germany given enough notice?

As a source of capital and for the veneer of legitimacy that German partnerships lend to the Russian state, German industry is in fact funding Russian hubris in foreign energy relations, and Russian intransigence in refusing to ratify the Energy Charter.

Germany’s departure from morality, ethics and democratic thinking in its cosy energy politicking with Russia is in fact inconsistent with longer term German interests. Those who attempt to spread false characterisations of the situation risk doing great damage to the European ideal in general and to German democracy in particular.

How did the cozy German-Russian relationship develop? Some basic investigatory work would reveal a revolving door of energy executives travelling between the major German energy companies and the SDP. Combine that kind of activity with political contributions and the ethical void of Germany’s most recent ex-Chancellor, and Germany’s current energy strategy is both understandable and shameful.

The Russians are delighting in the new influence that their cooptation of Germany has yielded. Through their relations with Germany the Russians have driven a wedge into Europe while simultaneously creating dependencies across the continent for their energy supplies.

For the past five years Mr Schroeder has consistently ignored the gradual rollback of political rights in Russia – which is surprising considering his earlier concern, as Chancellor, over Russia’s human rights record, particularly in Chechnya. Mr Schroeder has consistently derailed attempts to exert Western pressure on Moscow over its growing abuses of power. While Russia was backsliding, Mr Schroeder focused only on deeper commercial and political ties for Germany. Mr Schroeder’s silence over the regressions of the Russian leadership shows to what extent he was co-opted by Russia’s new energy barons.

It is not a secret that Russo-European energy relations have become increasingly asymmetrical, in Russia’s favour. The new umbilical cord joining Germany to Mother Russia will be the uneconomic Nord Stream pipeline. Currently in the advanced stages of planning, the costs of the undersea pipeline will run some three times as expensive as a new pipeline running along existing routes over land. The Nord Stream pipeline will risk the fragile ecosystem of the Baltic Sea at tremendous expense – just so that the Russians can avoid transit fees?

With the pipeline delivering exports directly into Germany, Russia will then be able to cut off gas to Ukraine, Poland and the Baltic States without directly affecting European supplies – and based on Russia’s recent behavior, there is nothing to suggest that this is not a real threat. Ultimately, pipelines serve primarily the suppliers’ interests, particularly when connected to long-term contracts. The Russians lure European business with pledges of upstream assets.

Yet post-Yukos, post-Sahkalin and, soon, post-BP, what are those pledges really worth? The Russian administration has established a track record of bending rules and bullying foreign investors, with the active support of the prosecutor, tax authorities, regulatory agencies and courts. The authorities are not afraid to push aside even the biggest foreign investors. And foreign investors are not the first victims. The centralisation of power in Moscow in recent years has constituted a drastic retreat from commitments to a competitive market economy, democracy and the rule of law.

In addition to lack of respect for fundamental property rights and other legal rights, the unwillingness of the Russians to open up their market is not only fundamentally unfair, but also guarantees energy insecurity.

The truth is that the Russian leadership clearly does not respect sanctity of property, on its own soil. Yet it covets the midstream or downstream assets in Europe.

The corruption and negligence of Russian state energy enterprises are well documented by no less than the IEA and World Bank. In Germany, meanwhile, it seems extremely difficult for the truth to come to light. Is this perhaps explainable by the enormous commercial interests that Germany’s main banks have in assisting the Kremlin in its illegal, yet faraway, expropriations?

The Yukos Affair would never have reached an expropriatory crescendo without the silence, if not active support, of the German banking and political elite. Their main concern, as the Yukos Affair unfolded, was how Germany and its banks could profit from state theft. This moral disengagement was not only dangerous for Russia but also for the strength of democratic principles in Germany. Surely German citizens are aware that the support by Chancellor Schroeder of a regime that closes the press, attacks NGOs, expropriates property in show trials and targets ethnic minorities is simply inconsistent with the German idea and that of Europe.

Meanwhile, the energy prescription for Germany – and Europe – should be based purely on risk management – through the diversification of supply sources, massive investments in LNG and a strong push in favour of the Nabucco pipeline and interconnectors between the Mediterranean rim countries. Such developments push Europe towards one rational energy market.

A persistent stance against corruption is the sine qua non for energy security. Russia’s Gazprom cannot be a partner to Europe while it fails to invest in its own infrastructure, arranges the deportation of responsible lobbyists for corporate governance, invests 14 billion dollars in non-core assets, such as news media, and is run from the Office of the Presidential Administration of Russia.

In 2006 the World Bank ranked Russia 151st of 208 countries in terms of political stability, democratic voice and accountability, effectiveness of government, quality of regulatory bodies, rule of law and control over corruption. That put Russia overall in the league of Swaziland and Zambia, and just ahead of East Timor. What does that say about the impact of its partnership with Germany?