Sunday 31 October 2021
Gazprom versus Moldova
How Russia is blackmailing a state with gas
By Denis Trubetskoy, Kiev
After long negotiations, Moldova and the Russian state-owned company Gazprom agree on a new five-year contract. A supply crisis in the small country has thus been averted. The price for this could be Moldova’s European course.
When pro-Western politician Maia Sandu was elected President of the Republic of Moldova in November 2020, she stressed that she wanted to maintain good relations with Russia. But since the Moldovan parliament confirmed a new government appointed by Sandu in August, there has been a serious crisis between Moldova and Moscow. Faced with an impending gas shortage, the small country between Romania and Ukraine was already forced to declare a state of emergency.
On Friday, representatives of Moldova and the management of the Russian state-owned company Gazprom agreed on a new five-year contract during negotiations in Saint Petersburg. Gazprom had previously threatened to stop delivering gas to Moldova from December. For Moldova, the gas crisis has ended for the time being. The political price for the agreement, however, could be high. As the “Financial Times” reported, citing its own sources, Gazprom would offer Moldova gas at a lower price if the government in Chisinau renegotiated its free trade agreement with the EU and postponed the energy market reforms agreed with the European Union.
Whether President Sandu actually changes her course remains to be seen in the coming months. In any case, the negotiation process was a prime example of how Russia is trying to use a country’s dependence on Russian gas to distance it from the EU.
After the previous gas contract expired in September, Moldova had to pay around US $ 790 per 1,000 cubic meters in October as part of a short-term interim contract – around five times more than in 2020. The general European record gas prices also played a role in the price increase. But Gazprom also put pressure on Chisinau in another way: A week ago, Gazprom spokesman Sergei Kupriyanov insisted that Moldova repay debts from previous deliveries before signing a new contract. Kupriyanov put the debt including delay penalties at 709 million US dollars.
“Element of Hybrid War”
At first glance, it may be politically understandable that Russia will not concede a supposedly pro-Western government a low gas price and will collect old debts in Moldova. But it’s not that easy. “These ‘historical debts’ start in 1994,” said Moldovan Deputy Prime Minister Andrei Spinu. “We are ready to negotiate on these issues, but only after a thorough examination by the responsible company, Moldovagaz, to determine the origin of the debt.” Because Gazprom is the main shareholder of Moldovagaz, it is de facto a subsidiary of the Russian state.
Valeriu Pasha, an expert from WatchDog Moldova, calls the debt “artificial”. It is not the Republic of Moldova that owes Gazprom, but Moldovagaz – a company that is largely owned by Gazprom. Nobody has checked the contracts on which the monetary claims are based: Gazprom has pumped a lot more money out of Moldovagaz than it delivered gas, Pasha told the BBC’s Russian editorial team.
In Moldova, they are certain that for Gazprom and Russia it was less about Moscow – as the Kremlin pointed out – wanting to avoid losses to its own national budget. Much more important is the aspect of political relations with Chișinău, which have deteriorated after Maia Sandu’s election victory, despite all assurances. “It is part of Russia’s usual strategy to increase economic costs and reduce growth in the near abroad in order to prevent fruitful development and the continuation of European integration,” says Valeriu Pasha, who considers this to be an element of the “hybrid War “held by the Russian government.
According to Pasha, however, it is also the responsibility of the Moldovan government, which has not bothered to diversify its energy supply in 30 years, which is why the country can continue to be blackmailed by Gazprom. In fact, Chisinau has hardly developed any serious alternatives to Russian gas. Recent emergency purchases in Poland, the Netherlands and Ukraine have not proven particularly successful. In any case, the scenario of purchasing gas primarily from Romania and Ukraine in the future would probably fail because both countries cannot export enough.
Gazprom also has a weak point in Moldova, namely the deliveries to the breakaway and Moscow-backed Transnistria, which are technically not possible without Moldova. That should also have played a role in the conclusion of the new contract. Nevertheless, given the harsh rhetoric in Moscow over the past few weeks, it is hard to imagine that President Sandu’s government has not made serious concessions to Gazprom. In any case, the specific conditions of the new contract remain unknown. The Russian news agency TASS reports that the new price formula would mean a price between 500 and 600 US dollars. This is twice more than the last contract, but at least significantly less than Chisinau had to pay in October.