Interview with Russia's Former Deputy Energy Minister Vladimir Milov : Eu and Russia Should Have Access to Each Other's Markets
Alongside ownership unbundling and efficiency, security of energy supply is one of the major issues facing EU leaders when they meet on 8 and 9 March. Former Deputy Energy Minister Vladimir Milov, who helped formulate the Russian Federation's power sector reform legislation in December 2001, believes EU politicians must drastically re-think their approach to Russia.
The EU continues to emphasise the importance of the Energy Charter Treaty in relations with Russia. Is this strategy correct?
We need to rethink the whole approach. The major principle needs to be the market. But the Charter is a document with a lot of political legacy. Many people in Russia have not read the Charter, but are still very much against it. For example, ratification of the Energy Charter Treaty is different from the additional transit protocol. But the Putin government does not like binding agreements. It is therefore pointless trying to mention the Energy Charter Treaty. We need a way out of this deadlock, for example, by bringing up the issue of reciprocity. Russia continues to close off its own energy market to foreign companies. At the same time, Russia is trying to buy into the European market. If Russia wants to come to Europe and invest, then there should be real reciprocity. This is a message that may work.
In Brussels recently, Gazprom's Alexander Medvedev came out very strongly against the European Commission's plans for ownership unbundling.
It is absurd to have Medvedev as a spokesperson for Russia and Gazprom. He does not help our image. Obviously Gazprom is very closely studying any opportunities to buy assets, for instance, Ruhrgas. I would also not exclude that negotiations are taking place right now, for instance, with Centrica or ENI. Gazprom clearly wants to expand. Europeans need to decide on the conditions of reciprocity. This can serve as a meaningful tool to leverage.
Do you see current government policy hardening?
I don't think the Kremlin is keen to repeat the Yukos case on a larger scale, even if these things may still happen in modern Russia. Current policy, though, will continue for a few years. The government is sharing energy revenues, to a certain extent, with the population. There is no reason to expect change. Europe should be careful and expertly analyse what is going on. Recent developments point to the Putin government moving further away from market reforms and clearly strengthening state monopolies. This leads to corresponding problems as to supply and under-investment. …