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EU regulations may yet disarm Vladimir Putin’s pipeline weapon – article from the Atlantic Council -

By Diane Francis for the US based Atlantic Council

Diane Francis is a Non-resident Senior Fellow at the Atlantic Council’s Eurasia Center, editor-at-large with the National Post in Canada, author of ten books, and author of a newsletter on America. She writes:

Russian President Vladimir Putin is currently pushing hard to secure fast track certification for his Nord Stream 2 pipeline, but these efforts will likely prove no match for the European Union’s anti-trust laws and regulatory system.

On November 17, a German regulator ordered Russia’s gas giant, Gazprom, to comply with EU anti-trust restrictions. Such compliance is non-negotiable and states that the owner of a pipeline cannot be the same entity as the owner of the natural gas it transports. Simply put, it is illegal in the EU for Gazprom to own the pipelines that carry its gas.

This requirement strikes at the heart of Putin’s pipeline scheme because it has the potential to drastically reduce his ability to control Europe’s energy market, play favorites, punish countries, and isolate Ukraine.

In line with EU regulatory requirements, Gazprom cannot direct its pipeline subsidiary to deploy abusive practices such as price fixing, predatory pricing, price discrimination, or monopolization.

These regulations mirror laws first developed by America in the late nineteenth century to reduce the power of the country’s so-called “robber baron” industrialists. They have since been widely adopted internationally to prevent similar abuses.

Gazprom argues that the official pipeline owner of Nord Stream 2 is a separate Swiss subsidiary. However, Moscow’s attempts to claim that this Swiss subsidiary is independent from Gazprom are about as credible as saying that Gazprom itself is independent from the Kremlin.

Besides, Switzerland is not part of the EU, which means its companies can flout EU laws and regulations. Instead, the regulator has insisted the pipeline be subject to German laws. In order to comply, Gazprom must transfer the pipeline to a German-based subsidiary. The entity must also be financially and legally independent from its Russian parent.

The regulator has suspended certification of the pipeline until Gazprom meets these requirements. This will likely postpone the process at least until March 2022 at the earliest. Further delays are anticipated as the European Commission must approve any new arrangement.

The significance of this regulatory regime should not be underestimated. The German regulator is autonomous and will supervise the new German Nord Stream 2 company on its territory. It has the power to prohibit and fine unlawful behavior.

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EU regulations may yet disarm Vladimir Putin’s pipeline weapon – article from the Atlantic
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