Why a Green Marshall Plan for the Sahel Is Imperative
Egmont Institute: The EU as a Soft Power Superpower: Why a Green Marshall Plan for the Sahel Is Imperative
This research paper argues that the European Union should roll out a European Green Marshall Plan for ecosystem restoration and local governance in the Sahel region, located between the Sahara to the north and the Sudanian savanna to the south. Ecological degradation and related climate change put mounting pressure on the region. In combination with cyclical resource-related conflicts and the presence of terrorist and insurgent groups, this has created an increasingly volatile situation. European security and stability are indirectly at stake. The EU’s ‘Old War’ footing and support for illegitimate, corrupt, and autocratic governments to ‘mow the lawn’ of terrorists and insurgents fails to address and often undermines fundamental human security needs in the region.
The authors propose a remodelling of EU foreign and security policy to shift focus from current securitization efforts towards facilitating a green, bottom-up transition that empowers local communities’ ecological stewardship by using their existing knowledge, skills, and dynamics, and Farmer-Managed Natural Regeneration (FMNR). Failure to make these changes toward a human security-centred approach means the EU’s current security and climate-related policies risk further undermining rather than contributing to regional security.
+++++++++++++
The Strategist, Canberra, AUS: Australia and Japan as allies
The?visit to Japan ?by Deputy Prime Minister and Defence Minister Richard Marles is another step in the fading of the qualifiers:?‘quasi alliance’ ,?‘small “a” ally’ ?and?‘alliance lite’ .
The qualifiers apply because this is a pact without a treaty—no formal pledge to go to war together.
The quasi-alliance moniker describes the third leg of the trilateral, supporting the US–Japan alliance and the US–Australia alliance.
The small ‘a’ and lite descriptors fade because over the past two decades Japan has risen to become a defence partner for Australia that ranks beside New Zealand and Britain.
Japan sits on the second tier, with the traditional Anglo allies, below the peak where the US presides as the prime and paramount ally. The chatter grows about whether to admit Japan to the ultimate Anglo club, the?Five ?Eyes ?intelligence-sharing ?partnership , comprising Australia, Canada, New Zealand, the UK and the US.
In the first decade of this century, Canberra was the eager suitor, pushing Tokyo to do more, building the Australia–Japan–US trilateral. In the second decade, Japan stepped up under Shinzo Abe, showing uncharacteristic vigour and ambition. This decade is shaping as the moment Japan remakes itself as a military power.
In launching the trilateral in that first decade, John Howard’s government took the lead and Japan warmed slowly. When Foreign Minister Alexander Downer?first broached ?the trilateral with his Japanese counterpart, he was told Australia was too insignificant as a security player for Tokyo to bother. Equally, Canberra was eager to go further than Tokyo in the ambit of the?joint declaration on security cooperation ?that Howard and Abe signed in 2007. Australia wanted a treaty, while Japan would go only as far as a declaration.
In his second coming as prime minister in that second decade, Abe changed much in ways that?matter greatly for Australia . The ‘Indo-Pacific’ may have been a US naval theory, but Abe’s adoption made it a diplomatic and military construct with heft; Australia joined Japan as the first adopter. Abe was equally important in growing the trilateral, the?second coming of the Quad , and saving the?Trans-Pacific Partnership ?after US President Donald Trump pulled out—a TPP without the US could only exist with Japan at its heart.
The quasi-alliance has its fullest expression within the trilateral. The three defence ministers had their 10th meeting last week during the Shangri-La Dialogue in Singapore. Their?‘vision statement’ ?has the now essential language about opposing ‘coercion and destabilising behaviour’ and standing against ‘unilateral attempts to change the status quo by force’, underscoring ‘the importance of peace and stability across the Taiwan Strait’.
To Australian eyes, the trilateral statement now has the same tone and style of an AUSMIN communiqué, with the effort to list ‘concrete’ outcomes such as exercises for interoperability and readiness; coordinated responses to regional disasters and crises; deepened cooperation on maritime capacity building; and a framework for research, development, test and evaluation to advance trilateral cooperation on advanced technologies and strategic capabilities.
When Abe departed the leadership in 2020, Australia confronted the question of how much the quasi-alliance was based on his personality and how much on permanent shifts in Japan’s policy personality. Abe pushed for a?stronger, more autonomous ?Japan rather than a?comfortable ?Japan declining gently into middle-power ease.
The answer offered by Indo-Pacific expert Michael Green in his new book,?Line of advantage: Japan’s grand strategy in the era of Abe Shinzo , is that the trajectory is set—the Abe era will last much longer than the Abe tenure.
Green argues that Japan has done more than any other country to devise a strategy to manage China’s rising economic and military power, to ‘compete but not to the death’. Green’s?prediction :
From now on for 10, 20, 30 years, people will be referring to Abe’s doctrine and Abe’s approach. There will be variations. There will be changes. There could be big changes if we have war in Asia or if the US retreats from Asia, but I don’t anticipate those. In terms of intent and trajectory, I think Japan will be very reliable and will be a thought leader and will be respected in Asia.
The shape of the Abe era came into sharper focus on 8 June when Japan’s cabinet approved a plan for a massive increase in defence spending from?1% to 2% of GDP . The 2% pledge is buried in footnote comparisons to NATO spending, so the transformation of Prime Minister Fumio Kishida from?dove to samurai ?is still work in progress.
In his speech to the Shangri-La Dialogue, Kishida promised: ‘I am determined to fundamentally reinforce Japan’s defence capabilities within the next five years and secure a substantial increase of Japan’s defence budget needed to effect such reinforcement.’
In tandem with reinforcing its alliance with the US, Kishida said, Japan would strengthen ‘security cooperation with other like-minded countries’. A new era, he said, needed a new ‘realism’.
Kishida noted that Germany had pledged to lift its defence spending to 2% of GDP, adding, ‘I myself have a strong sense of urgency that Ukraine today may be East Asia tomorrow.’
A Japan pushing fast to double its military spending will change much. After Kishida’s speech, the director-general of the International Institute for Strategic Studies, John Chipman, pointed out that if Japan and Germany reached the NATO standard of 2% of GDP for defence, that’d make Japan the third-biggest defence spender in the world, behind only the US and China, while Germany would lift to number four.
Australia’s new prime minister, Anthony Albanese, has already had his first meeting with Kishida, at the?Quad summit ?on 24 May. They are set to meet again at the NATO summit in Madrid in a fortnight’s time.
Just as NATO is always about alliance politics, these days Australia and Japan have their own alliance dialogue within the trilateral with the US.
+++++++++++
The Strategist: The Russians who are leaving
14 Jun 2022|Slawomir Sierakowski
In the broader discussion about Russia’s war on Ukraine, an important but overlooked element is the?exodus of Russians ?from their homeland. Though it’s impossible to determine the scale of this phenomenon, we can expect the outflow to continue, especially if the United States pursues a policy to lure highly skilled specialists and sustain a Russian brain drain, as President Joe Biden has?proposed .
The Russian diaspora could be a key partner in building a new Russia after Vladimir Putin no longer rules. But the emigrants can’t count on a warm welcome in Europe, where?resentment ?against even ‘ordinary Russians’ is now widespread.
To be sure, the sentiment is somewhat understandable, given that Putin’s ‘special military operation’ in Ukraine apparently?commands high support ?among the Russian public. Such findings from pollsters can’t be ignored. Though the Kremlin has unleashed the full might of its propaganda machine, it’s not as though we’re living in the 1940s. Russians who want the truth can get it.
Still, we should question whether polling data can capture the true state of Russian public opinion, even when it’s gathered by the independent, highly respected Levada Center. In a democracy, pollsters ask citizens to rank their preference for multiple candidates, and the results offer a straightforward picture of where the public stands (with a small margin of error). But what are we to make of polls that give people a ‘choice’ between a figure with?83% support ?and no one else?
To respond ‘no’ is to put oneself outside the bounds of normalcy. Even if you don’t support Putin, you might not want to take the position of being ‘different from everyone else’, much less be completely candid with pollsters asking politically sensitive questions. Given these complications, the best we can do is to assume that support for Putin is indeed widespread. Though he certainly isn’t backed by 70–80% of Russians, he may have the support of around half.
But even if it were true that only 10–20% of Russians oppose Putin, that’s still 14–28 million people. Why alienate them by issuing broad condemnations of Russian society? Making enemies of these potential allies is neither fair nor politically wise.
Regardless of whether Russia wins or loses the war, it will not cease to exist. More to the point, the problem is not this or that Russian leader (have they really been so different from each other historically?) or ‘ordinary Russians’. The problem with Russia stems from a political culture shaped by?Byzantine Orthodoxy ?and?Mongol domination , and an economy based on?raw materials extraction .
These factors all work against democracy. If people’s incomes are derived from natural resources and distributed by the powers that be, what kind of regime should we expect? If changing this model is possible, it will take many years and would require the disintegration of the state, most likely along ethnic lines. It would also require a new mentality in Western Europe, which so often was naive about Russia.
Emigrants would be natural candidates to lead this process, provided they meet certain conditions. In the past, those who fled from Russia or the Soviet Union abhorred the regime but shared the belief that Russia can and should truly be great, which?a priori?means that it includes Ukraine; even dissidents like Aleksandr Solzhenitsyn and Joseph Brodsky?thought this way . If the most recent cohort of emigrants shares this view, there’s nothing to talk about. The West should do them no favours.
But let’s hope that today’s emigrants are different or can change their position. An interesting point of reference is the story of Polish emigration after 1945. For a long time, Poles clung desperately to their long-lost status as a regional power, harbouring illusions that Lithuania, Belarus and parts of western Ukraine belonged in Poland.
They pointed out that up until 1939, Wilno (now Vilnius, the Lithuanian capital) and Lwow (now the Ukrainian city of Lviv) were within Polish borders. And many Poles even dreamed of restoring the Polish–Lithuanian Commonwealth that existed before the partitions of 1772–95. Even today, if Poles are being honest, they will admit that while they consider the Russian bombardments of Kharkiv and Kyiv to be tragic, they see the threat to?historical buildings ?in?Lviv ?as being far worse.
After World War II, the largest share of?Polish emigrants ?went to London, but they retained a sense of possessiveness over what had been lost. Many spoke of?Lwów-i-Wilno, just as Russians still insist on?Krymnash ?(‘Our Crimea’). Anyone who accepted that Poland’s eastern border lay on the Bug River was considered a traitor.
Only very slowly did a wise alternative to this way of thinking emerge. It started in Paris, where a small centre organised around the Literary Institute and Jerzy Giedroyc’s?Kultura?magazine began to formulate a?doctrine ?known as the ULB, which stated: ‘There will be no independent Poland without an independent Ukraine, Belarus and Lithuania.’
The point was not to advance some starry-eyed cosmopolitan vision. Rather, ULB was about hard political realism: if Poles continued to fight the nations between Germany and Russia, they would continue to lose. Only by cooperating could the smaller nations of Central and Eastern Europe strike out for independence. This insight now serves as the?foundation ?of Polish foreign policy (even for the current nationalist government), and one can imagine a future in which it would be embraced by ‘ordinary Russians’.
....
Slawomir Sierakowski, founder of the Krytyka Polityczna movement, is a senior fellow at the German Council on Foreign Relations. This article is presented in partnership with?Project Syndicate ?? 2022. Image:?Anadolu Agency /Getty Images.
+++++++
GPF: Israel Calls Hezbollah’s Bluff
In its maritime dispute with Lebanon, Israel has been undeterred by Hezbollah’s empty threats.
By?Hilal Khashan ?- June 16, 2022
Earlier this month, the Israeli-contracted Energean Power gas rig reached the Suez Canal from Singapore on its way to the Karish gas field, located in a disputed maritime zone between Israel and Lebanon. The Lebanese government responded by asking the U.S. to dispatch its envoy for energy affairs, Amos Hochstein, to Beirut to resume stalled negotiations over the contested area. Hezbollah leader Hassan Nasrallah also warned that Hezbollah could block Israeli activities in the area to protect Lebanese resources and territorial claims.
Despite the hostile rhetoric toward Israel, however, Lebanon’s issue is primarily a product of its sectarian political system and domestic rivalries. Hezbollah’s claims to defend Lebanese gas wealth against Israeli ambitions are part of its propaganda, aimed at justifying maintaining its own military arsenal. It can’t risk instigating an armed conflict with Israel over this affair and therefore will pressure the Lebanese government to reach a deal.
Origins of the Dispute
The origin of the dispute goes back to the controversial 1923 Paulet-Newcombe Agreement that drew the border between the Lebanon and Palestine mandates. In 2000, when Israel withdrew from southern Lebanon, the United Nations produced a map to determine if Israel had fully pulled out of Lebanese territory. The map included a maritime boundary line and was readily accepted by Lebanon. However, when seismic surveys in the mid-2000s showed potentially substantial gas deposits in the Levantine basin covering the coasts of Syria, Lebanon and Israel, Beirut rejected the previously agreed-to boundaries and demanded a larger share of the sea than the 2000 arrangement would have allowed. Part of the disputed area is what’s called Block 9, a portion of the sea that has shown particularly promising results in these studies.
In 2012, the Lebanese government rejected U.S. mediator Frederic Hof’s offer to resolve the disagreement by giving Lebanon two-thirds and Israel one-third of the entire disputed area totaling 330 square miles. But the lack of diplomatic relations between the two countries has prevented an agreement from being reached. According to Israel, security issues and its lack of diplomatic recognition also complicate the conflict. The enclosed Eastern Mediterranean basin also precludes countries in the region from claiming an exclusive economic zone extending 200 nautical miles from their coasts, as allowed for under the U.N. Convention on the Law of the Sea. The two countries were on the verge of signing a deal based on Hof’s proposal in 2013, but Lebanon’s political instability prevented it from happening. That year, the U.S. dispatched another mediator, Amos Hochstein, to negotiate a settlement. However, Lebanese vacillation, frequent change of demands, and obsession with irrelevant details forced the U.S. to shelve these efforts last year.
领英推荐
Gas as a Domestic Issue
Lebanon has long been aware of the potential of its untapped resources. In 1926, the French high commissioner for the Levant authorized exploration activities on Lebanese lands and waters. Subsequent seismic surveys showed great potential for finding natural gas. Though the 1975-1989 civil war postponed assessment of its petroleum potential, Lebanon commissioned British firm Spectrum to conduct a two-dimensional survey of its waters in 2002. The study showed a great possibility of striking significant hydrocarbon assets in Lebanon’s exclusive economic zone. Estimates suggest that its exploitable gas deposits could total 12 trillion to 25 trillion cubic feet.
However, Lebanon’s fundamental problem in accessing these resources is its own domestic squabbling, not Israel. U.S. diplomats have been appalled by Lebanese intransigence about a minor dispute and the loss of billions of dollars in revenue that could have staved off the country’s financial collapse. But like everything else in Lebanon, the hydrocarbon issue has been complicated by sectarian friction. Blocks 1 and 2 lie in the waters of Sunni-majority areas in the north, while blocks 3-6 overlook Maronite-populated areas and blocks 7-10 lie on the coast of the Shiite south.
While Lebanese and Israeli delegates negotiated indirectly under the auspices of U.N. and U.S. mediators, politicians in Beirut disagreed over what they wanted. President Michel Aoun refused to ratify Decree 6433, a government-backed plan pushed by Lebanon’s negotiating team that would have extended the country’s claims in the disputed waters from a boundary known as Line 23 to Line 29, adding 552 square miles to its maritime zone. Aoun initially justified his unwillingness to sign the decree by saying it was issued in 2020 by a caretaker Cabinet that lacked the mandate to make policy. He would have settled for limiting Lebanon’s claim to Line 23 if it gave the country full access to the Qana gas field, which would have meant recognizing Israel’s sovereignty over the Karish gas field. He hoped this concession, which put him at odds with Lebanese Shiites, would sway the U.S. to remove sanctions against his son-in-law and presidential aspirant Jibran Bassil. Last year, U.S. Under Secretary of State for Political Affairs David Hale praised Aoun for dropping Lebanon’s claim to Line 29, though the dispute remained unsettled.
In 2020, the Lebanese government came under pressure from Christian factions to explore for gas in undisputed areas farther north. TotalEnergies began drilling in Block 4, but to the government’s disappointment, it found no gas in commercial quantities, forcing Lebanon to refocus hopes on the areas under dispute with Israel, including Block 9, which is the most promising of the blocks included in Lebanese claims.
For years, Lebanese officials mismanaged this issue, just as they have mishandled other public resources. In a country where civil society groups that could advocate for the public good are absent, officials have been preoccupied with managing their own wealth. Lebanon refused to establish a national hydrocarbon company and a sovereign wealth fund. Politicians spent two years squabbling over sectarian representation before establishing a national petroleum administration, finally deciding to rotate the chief executive officer annually. This is a reflection of a political system that rests on a loose sectarian alliance striving to maintain balance among its constituent factions. Moreover, Sunni prime ministers have consistently delayed signing documents related to gas exploitation fearing exclusion from the profits that could result from significant discoveries, given that much of the potential gas deposits lie next to Shiite and Maronite Christian-majority areas.
This behavior has stunned the U.N., the U.S. and energy companies, all of which wasted valuable time because of Lebanese politicians’ obsession with minute details and unnecessary delays. High taxes on profits have also discouraged many companies from getting involved in exploration activities.
Hezbollah’s Limitations
Since negotiations with Israel stalled last year, Hezbollah has pushed the government behind the scenes to request that Hochstein return to Beirut to resolve the standoff. Its desire for mediation indicates that Hezbollah knows it can’t force Israel into accepting its terms – despite its repeated hostile rhetoric and threats toward the Israelis.
Iran created Hezbollah in 1985 under the pretext of resisting the Israeli occupation of south Lebanon, but after Israeli forces withdrew in 2000, Hezbollah’s anti-Israel mission ended. To justify keeping its military wing, Hezbollah launched minor cross-border operations to abduct Israeli troops and swap them with Lebanese prisoners. In 2006, a raid to kidnap soldiers did not go according to plan, precipitating a war neither side wanted. Since then, Hezbollah has not launched attacks on Israel, focusing instead on acting as Iran’s premier regional proxy.
Over the past decade, Israel has launched hundreds of airstrikes against Iranian and Hezbollah positions in Syria. It even targeted Damascus airport, destroying its runways and other vital facilities. Iran and Hezbollah, meanwhile, have consistently avoided retaliation.
Israel’s military chief said the army has thousands of targets it could attack in the next war against Hezbollah, ranging from military commands to missile systems and houses where Hezbollah munitions are stored. This would include all residential structures in south Lebanon where the United Nations Interim Forces operate. It would be suicidal therefore for Hezbollah to provoke Israel into a military confrontation. It has thus conveniently extricated itself from the maritime dispute, stressing that it would take action only if the government in Beirut determines that Israel took what rightfully belonged to Lebanon. The urgency with which the government invited Hochstein to resume his mediation efforts suggests that it too is eager to avoid armed conflict at any cost.
Diplomacy Will Prevail
After five rounds of negotiation, the U.S.-led talks broke down last year when Lebanon refused to accept a compromise deal that would have given Israel control of the Karish gas field and Lebanon two-thirds of the Qana field. The sticking point at that time was Beirut’s insistence on extending its claims to Line 29.
Hochstein expressed surprise when Lebanese officials alerted him about the arrival of the Energean Power gas rig, which he had informed them a year ago would arrive this month to explore for gas. Still, he returned to Beirut to help resolve the dispute, assured that the Lebanese wouldn’t obstruct his efforts this time. Lebanon’s bargaining position is weak. Its politicians can’t form a government, and the parliament is unlikely to elect a new president when Aoun’s term ends in September. Failure to accept Hochstein’s proposal won’t stop Israel, which will proceed with its plans to explore for gas undeterred by Nasrallah’s threats.
Meanwhile, Hochstein suggested another plan to help ease Lebanon’s chronic power shortage. He promised the Lebanese energy minister that Egypt and Jordan would be given the go-ahead to supply Lebanon with gas and electricity through Syrian territory, exempting them from sanctions that would otherwise be imposed for doing business with the Assad regime. Hochstein also promised to convince Iraq to extend fuel donations to Lebanon for another year. After running out of room to haggle and realizing that Hezbollah won’t challenge Israel’s activities in the disputed maritime areas, Lebanese negotiators are now facing a moment of truth.
About the author. Hilal Khashan
Hilal Khashan is a Professor of political science at the American University of Beirut. He is a respected author and analyst of Middle Eastern affairs. He is the author of six books, including Hizbullah: A Mission to Nowhere. (Lanham, MD: Lexington Books, 2019.) He is currently writing a book titled Saudi Arabia: The Dilemma of Political Reform and the Illusion of Economic Development. He is also the author of more than 110 articles that appeared in journals such as Orbis, The Journal of Conflict Resolution, The Brown Journal of World Affairs, Middle East Quarterly, Third World Quarterly, Israel Affairs, Journal of Religion and Society, Nationalism and Ethnic Politics, and The British Journal of Middle Eastern Studies.
++++++++++++
WSJ: How Germany Took Over Russia’s Vast Gas-Trading Empire
A reluctant steward, Berlin is now racing against the clock to save Gazprom’s global trading activities and sell them, all while securing its own supply
After?Moscow invaded Ukraine , the German government pledged to wean the country off Russian natural gas. This week, it said it would lend billions of euros to the German subsidiary of Russian gas giant Gazprom PJSC to prevent its collapse.
The emergency bailout of roughly 10 billion euros, equivalent to $10.4 billion,?announced on Tuesday , came just weeks after Berlin took control of Gazprom’s German business.
The saga has come to exemplify the difficulties and contradictions Berlin faces as it slowly?pivots away from a heavy reliance on Russian energy ?while scrambling to ensure that Russian supplies keep flowing in the short term to feed its gas-hungry economy. It also shows how President?Vladimir Putin ’s Russia for years used energy to embed itself into the fabric of the global economy.
The fate of Gazprom Germania GmbH, as the subsidiary is called, could have implications far beyond Germany. Despite its name, the company has a global network, with offices as far as Texas, Mexico and Singapore. Its U.K. subsidiary has been one of the largest gas providers to businesses and institutions in the country, with 30,000 customers that have included the National Health Service, shops, pubs and English soccer club Chelsea.
The story of how Berlin became the reluctant steward of a large chunk of Gazprom’s international business began on March 31, when the Russian giant said it had relinquished ownership of its German subsidiary.
The announcement left government officials in Berlin puzzled and alarmed: The subsidiary supplied much of Germany’s gas and owned critical infrastructure in the country such as thousands of miles of pipelines and vast storage facilities. Before the war in Ukraine, more than half of Germany’s gas imports came from Russia.
German officials said they later learned that control of the unit was transferred to a Moscow disc jockey and car salesman. They believe that the Russian company might have sought to void Gazprom’s contracts with its European customers to force a renegotiation under more favorable terms and, ultimately, higher prices.
Within hours, German Chancellor?Olaf Scholz, key ministers and aides stepped in. After failing to persuade executives of energy companies to take over the business, Mr. Scholz and his aides activated plan B, putting the company under the trusteeship of Germany’s energy watchdog. This was possible because Gazprom hadn’t notified Germany ahead of the change of ownership, as German law requires. Before the decision was announced on April 4, an adviser to Mr. Scholz called the Russian ambassador to tell him that the business was now under government control.
The government must now audit the sprawling consortium, unearth any hidden liabilities lurking in the opaque network of companies, and either nationalize some parts or carve up and auction off the assets, all without disrupting the flow of Russian gas to Germany that is vital to the economy.
Gazprom didn’t respond to a request for comment.
“We’ve been trying to understand the extremely complex interrelationships that exist at the 49 subsidiaries, to assess risks and to focus on the security of supply of Germany and our European neighbors,” said Klaus Müller, head of the Federal Network Agency, the regulator now managing the business. “There is simply no road map, no role model for the situation we are in right now…It’s a unique situation in German economic history.”
Scores of government officials and external experts are now sifting through the companies’ accounts. Key among them is J?rg Kukies, a former?Goldman Sachs Group ?Inc.?banker turned economic adviser to Mr. Scholz. Mr. Kukies, a derivatives expert, advised Mr. Scholz against nationalizing the firm because of the risk that it might be harboring liabilities big enough to put a dent in the government’s budget, according to officials.
Gazprom and the company’s Russian managers in Germany have so far refused to assist the government in its audit, several officials said.
“This is a deliberately intransparent construct and we are trying to force more transparency but they are doing everything to prevent that…It is not a friendly cooperation,” one official said.
A top Germania executive denied this. He said he was cooperating with authorities, as well as with Boston Consulting Group and CMS Hasche Sigle, private consultants hired by the government to help manage the Russian holding and investigate its books.
A considerable number of Germania’s employees in Germany are Russian nationals, the executive said. Some Russian nationals who provide technical and IT support would be moved from St. Petersburg, Russia, to Dubai in order to be able to continue their work, the executive said.
Germania, which generated revenue of €12.8 billion in 2020, owns Wingas GmbH, one of Germany’s largest natural-gas distributors, with major industrial customers.
Germania also owns physical assets such as gas-storage infrastructure across Germany, including Rehden, the EU’s biggest gas reservoir, as well as facilities in other countries such as the Netherlands, Austria and the Czech Republic. These are the main candidates to be potentially sold off.
The proceeds, which Berlin estimates at up to €3 billion, would be passed on to Gazprom. Several?companies expressed interest in talks with the government, the official said, but carving out the healthy bits of the conglomerate would be legally challenging.
A compressor station in Radeland, Germany, intended to receive gas flows from Russia under the Nord Stream 2 project, which has been put on hold. PHOTO:?KRISZTIAN BOCSI/BLOOMBERG NEWS
“The last thing we want to do is trigger a damage claim that would be approved by a German court and in that way increase the cash pile that we are sending to Mr. Putin,” the official said.
Germania has a series of long-term gas supply contracts with Gazprom. Ensuring that those contracts are retained is crucial, German officials said, because they lock in older, lower gas prices. Renegotiating new contracts would mean higher prices, making the infrastructure unattractive to potential buyers.
“When we bought the gas storages, no one else wanted them—because no one else could keep them full, and that remains the case,” the former Gazprom Germania executive said.
In May, Russia sanctioned some 30 Germania subsidiaries—it spared most of those parts of the business involved in supplying gas to Germany—which could make these businesses hard to sell too. The goal of the Russian sanctions, officials said, wasn’t to stop flows but to make the gas more expensive for the company and squeeze Germany.
German officials said this made a bailout inevitable because the company was struggling to obtain financing from capital markets spooked by sanctions between Russia and the West. The company was also being forced to purchase increasingly expensive gas on the spot market.
Set up in the 1990s by former East German officials and staffed by ex-members of the Stasi secret police to handle gas exports to Germany, Germania later expanded to become one of Gazprom’s most important international arms through a series of acquisitions and consolidations.
During the Cold War, the Soviet Union opened subsidiaries in major European countries where it sold gas to facilitate payments and trading contacts. In the 2000s, Gazprom branched out from delivering the gas wholesale into selling it directly to customers, storing it and trading in derivatives.
Over time, those businesses were consolidated under Gazprom Germania and the company’s leadership reported directly to Gazprom’s headquarters.
“They started to feel that the real money is not being made in the wholesale selling of gas but downstream,” said Sergey Vakulenko, an independent energy expert and former Russian energy executive.
A key part of the expansion plan was Gazprom Marketing & Trading Ltd., a London-based Germania subsidiary. It acts both as a traditional commodities trader buying and reselling gas and, similarly to a hedge fund, betting on gas-price derivatives. It generated revenue of around 2.6 billion pounds, equivalent to $3.2 billion, in 2020.
The derivatives business was particularly risky, said Adi Imsirovic, a former executive at Gazprom Marketing & Trading. “Any large trading company, especially in this volatile market, could have hedging positions that can suddenly swing a hundred million dollars,” he said.
“Taking over a trading company is risky,” he added. “You never know what you’re going to get until you check the books.”
The Astora underground natural-gas storage facility in Rehden, Germany. PHOTO:?DAVID HECKER/GETTY IMAGES
The End+++++++++++++++++