Russian-Ukrainian Gas Deal is a Trilateral Victory

Vladimir Putin Emmanuel Macron Angela Merkel Volodymyr Zelensky
Vladimir Putin, Emmanuel Macron, Angela Merkel and Volodymyr Zelensky, the leaders of Russia, France, Germany and Ukraine, attend a summit in Paris, December 9, 2019 (Bundesregierung)

Russia and Ukraine have agreed to secure the flow of natural gas to Europe for the next five years. A deal between the two countries satisfies the economic needs of all three parties involved. Russia guarantees the export of its gas, Ukraine continues to benefit financially from transiting the gas, and the EU receives a steady supply of gas for the immediate future.

Gazprom, the Russian gas monopoly, will pipe 65 billion cubic metres of gas into Europe in 2020. The amount will fall to 40 billion over the next four years. The agreement mentions the possibility of extending the contract by another ten years upon maturity.

Ukraine will receive up to $7 billion in transit fees, which would be around 5 percent of its national budget.

An agreement has not (yet) been reached on direct gas supplies to Ukraine. For the time being, it only stands to benefit financially.

Naftogaz, the Ukrainian gas company, will also receive $2.9 billion from Gazprom in overdue transit payments following an arbitration court ruling in Sweden. In return, Ukraine has agreed to drop $12.2 billion in additional legal claims. Read more “Russian-Ukrainian Gas Deal is a Trilateral Victory”

Germany’s Surplus Obsession Hurts the Eurozone

Angela Merkel
German chancellor Angela Merkel attends the G7 summit in Biarritz, France, August 25, 2019 (Bundesregierung)

If the German economy does poorly, so will the eurozone’s. A mere .2 percent growth is projected for the first quarter of 2020. This should be a wakeup call to German policymakers.

There are the usual suspects: underdeveloped infrastructure, underinvestment in education, export dependency.

They all stem from Germany’s obsession with surpluses. Revenues generated by exports are not reinjected into the economy. Rather, they sit comfortably in savings accounts. This is the reason for negative interest rates.

Not spending money is one way to get rich. But to grow its economy, or prevent a slowdown, Germany must put its money to work: invest in education, infrastructure and public goods.

Its reluctance to do so affects everyone in the euro area. Germany accounts for nearly 30 percent of the eurozone’s GDP. If Germany spent more at home, it would reduce its current account surplus and increase demand for the products and services of other European nations. Read more “Germany’s Surplus Obsession Hurts the Eurozone”

Nord Stream Sanctions Are No Way to Treat European Allies

American president Donald Trump speaks with German chancellor Angela Merkel at the G20 summit in Hamburg, July 6, 2017
American president Donald Trump speaks with German chancellor Angela Merkel at the G20 summit in Hamburg, July 6, 2017 (Bundesregierung)

Senators in the United States have approved sanctions against companies that are involved in building the Nord Stream 2 pipeline between Russia and Germany.

The sanctions, which President Donald Trump has yet to sign into law, are a last-ditch attempt to halt the pipeline’s construction, which the Americans argue will only increase Europe’s dependence on Russian gas and hurt Ukraine’s position as a transit nation.

They’re not wrong, but placing sanctions on allies is no way to go about it, especially when they have no alternative. Read more “Nord Stream Sanctions Are No Way to Treat European Allies”

The Trans-Anatolian Pipeline, Explained

Welded pipes of the Trans-Adriatic Pipeline are lowered in northern Greece, November 2016
Welded pipes of the Trans-Adriatic Pipeline are lowered in northern Greece, November 2016 (TAP)

After four years of construction, the Trans-Anatolian Natural Gas Pipeline (TANAP) has started pumping gas into Europe.

TANAP is part of Europe’s Southern Gas Corridor, connecting the South Caucasus Pipeline (completed) with the Trans-Adriatic Pipeline (still under construction). It aims to transport natural gas from Azerbaijan all the way through to Italy, where it flows into the European market.

Once the system is fully operational, it should be able to pipe 16 billion cubic meters of natural gas into Europe per year. Read more “The Trans-Anatolian Pipeline, Explained”

China-Russia Gas Pipeline Should Concentrate Minds in Brussels

The Power of Siberia natural gas pipeline in Russia's Far East
The Power of Siberia natural gas pipeline in Russia’s Far East (Gazprom)

Russia has started piping gas to China through a new pipeline, called Power of Siberia. After five years of construction, it will be able to send up to 38 billion cubic meters of gas to China per year.

The pipeline marks a reorientation of Russian energy policy away from the European market, which should give European policymakers some concern. Read more “China-Russia Gas Pipeline Should Concentrate Minds in Brussels”

Balkans Propose Mini-Schengen

Chancellor Angela Merkel of Germany and Prime Ministers Mateusz Morawiecki of Poland, Boyko Borissov of Bulgaria and Zoran Zaev of North Macedonia deliver a news conference at the Western Balkans Summit in Poznań, July 5
Chancellor Angela Merkel of Germany and Prime Ministers Mateusz Morawiecki of Poland, Boyko Borissov of Bulgaria and Zoran Zaev of North Macedonia deliver a news conference at the Western Balkans Summit in Poznań, July 5 (Government of the Republic of Northern Macedonia)

Their EU accession blocked by France, Albania and North Macedonia are opting for a regional, if temporary, solution. Together with Serbia, the Balkan states are looking to create their own version of the EU’s passport-free Schengen Area.

  • Citizens of the three countries would no longer need a passport to cross the border, but only have to show an ID card.
  • Labor movement would be liberalized through the mutual recognition of diplomas and qualifications.
  • Students could go on exchange.
  • Capital flows would be smoothened.

The other non-EU countries in the region — Bosnia, Montenegro and Kosovo — have been given the green light to join. Read more “Balkans Propose Mini-Schengen”

EU Breaks Promise to Balkan States

German chancellor Angela Merkel and French president Emmanuel Macron speak privately while entering a meeting with other European leaders in Brussels, March 22
German chancellor Angela Merkel and French president Emmanuel Macron speak privately while entering a meeting with other European leaders in Brussels, March 22 (Bundesregierung)

Last week, French president Emmanuel Macron blocked the start of EU accession talks for Albania and North Macedonia, arguing that the Balkan states haven’t made enough progress to qualify and that the EU must reform internally before admitting new members.

His concerns were shared by the leaders of Denmark and the Netherlands.

They are not without merit. It would be naive to assume that decades of institutionalized corruption and crime, particularly in Albania, have been washed away over the course of a few years.

That said, progress has been made. North Macedonia’s name change is far from trivial. It represents a willingness to move on from the past. Albania has reformed its judicial system, encouraged by the prospect of membership.

If the French were so adamant about halting enlargement, they should never have made promises to Albania and North Macedonia in the first place.

Poland’s Andrzej Duda said it best: “Western Balkans states are taking part in a race that does not have a finishing line.” Read more “EU Breaks Promise to Balkan States”

Poland Needs EU Support to Meet Climate Goals

Turów Power Station in Bogatynia, Poland, December 3, 2009
Turów Power Station in Bogatynia, Poland, December 3, 2009 (Wikimedia Commons)

Poland will not be able to meet the EU’s 2050 zero-emissions target without additional funds. In an interview with the Financial Times, the country’s chief energy advisor, Piotr Naimski, argues that the European Union needs to take its particular circumstances into account.

Poland’s extreme reliance on coal makes the goal to reduce net emissions to zero a tall order. Coal generates about 80 percent of Poland’s electricity. It also curbs its reliance on Russian energy, which is of geopolitical significance.

There is a political consideration as well. Mining unions are still strong in Poland. The industry has long provided well-paying jobs with a high degree of stability. Miners enjoy special retirement provisions. This makes them a powerful voting bloc. Read more “Poland Needs EU Support to Meet Climate Goals”

Germany Under Pressure to Spend

Angela Merkel Mark Rutte
German chancellor Angela Merkel receives Dutch prime minister Mark Rutte in Berlin, May 16 (Bundesregierung)

In the face of weakening economic growth, outgoing European Central Bank president Mario Draghi has called on the fiscally conservative governments of Germany and the Netherlands to spend more.

The Dutch are heeding his advice with plans for a long-term economic investment fund. Will the Germans follow suit? Read more “Germany Under Pressure to Spend”