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New anti-Russian sanctions to hit European energy sector

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The US plans to tighten sanctions against Russia, scheduled for November, is causing growing concern from the international business community, in the first place, from Europeans and those economic areas in which key players demonstrate maximum interdependence, including in the energy sector.

Among those who lashed out at the US intention to impose restrictions on Russian companies Rosneft, Gazprom and LUKOIL similarly to sanctions slapped on US Rusal in April this year, is the head of British Petroleum Bob Dudley. BP owns 19.75% of Rosneft shares and is Rosneft’s major private shareholder.

According to Bob Dudley, in the event of such a tightening of US sanctions, the European energy system will crumble. “I do not think this will happen. If you impose sanctions like Rusal on Rosneft, Gazprom or LUKOIL, you will cut off European energy systems, which is a little bit too much”, he said as he spoke at an Oil & Money 2018 Conference in London.

Bob Dudley is fully aware of the contemporary realities and the potential of Russian companies, particularly since BP and Rosneft have been developing a variety of joint projects. In 2015 BP acquired 20% in the Srednebotuobinsky field in Eastern Siberia and has been prospecting for oil within the framework of a joint venture with Rosneft – “Ermak Neftegaz”.

Reports say the share in the Russian company accounts for a third of the total production of British Petroleum. “In general, we consider Rosneft a fairly good partner,” Bob Dudley said in an interview with The Bloomberg, an American business news agency.

At present, the US Congress is considering two packages of anti-Russian sanctions. In the case of “spotting Russia’s attempts to influence the course of elections in the United States”, the White House is to block the resources of major Russian banks, including Sberbank, VTB and Vnesheconombank, and energy companies. Among the latter are  “Gazprom”, “Rosneft” and “LUKOIL”.

The forecast by the BP chief that the European energy sector will face severe crisis should the US Congress launch new sanctions echoes the moods that are gaining strength in Europe. A statement to this effect came from the Eastern Committee of the German Economy (Ost-Ausschuss der Deutschen Wirtschaft e. V.) which represents the interests of about 350 German companies and associations operating in Russia and other former Soviet republics, as well as countries of South Eastern Europe. The Committee’s Managing Director Michael Harms said that business in the European Union should not suffer because of cooperation with Russia. According to reports released in Germany, Western sanctions and Russian counter-sanctions have “negatively affected” more than 70% of German companies since March 2018. A study conducted by the above organization reveals that 94% of these companies would prefer the existing sanction regime against Russia eased. The East Committee of the German economy has expressed “tremendous concern” over the possibility of the US imposing new sanctions against Russia and against European companies running  joint projects with Moscow, including those involved in the construction of the Nord Stream 2 gas pipeline.

“We believe that any attempts to see implementation of sanctions in an extraterritorial format are unacceptable and at odds with international law,” Michael Harms said. He deems as inadmissible the imposition of sanctions on European business for cooperating with Russia.

This position is shared by top management of the French energy giant Total, which has been pursuing a number of joint projects with Russia which are vital for ensuring Europe’s energy security, including in the production of liquefied natural gas (LNG). In an interview with the French edition of Capital, Total CEO Patrick Pouyanne questioned the very effectiveness of anti-Russian sanctions – in other words, he doubted the key factor that caused their coming into effect: “I believe that the sanctions are ineffective. What they lead to is the fact that leaders consolidate forces around themselves without changing their policies.”

“Business communities in most European countries – the Czech Republic, France, Germany, Spain – believe that sanctions should be lifted at an early date. Some experts think that this should happen gradually but business thinks differently,” – says Ernest Ferlenghi, president of Confindustria Russia, an association of Italian business in Russia, who is a staunch opponent to sanctions. “Every lost day provides an opportunity for our competitors, especially in Asia. They have vast opportunities, particularly the Chinese, for investing money in various projects. They become more competitive due to a strong financial resource,” – emphasizes the Italian businessman.

Significantly, the most critical position on the further tightening of sanction against Russia has come from countries and companies which guarantee stability on the European energy market, in particular, those representing Germany and Austria. The Vienna-based newspaper Der Standard cites in this connection the successful activities of the Austrian energy concern OMV: “OMV relies on Russia, its CEO Seele maintains good relations with Russia. The head of the state-subsidized concern has managed to secure what he had already succeeded in achieving as head of BASF subsidiary Wintershall – participation in the development of a large gas field in Siberia, Urengoisky.” “As for the second major project – the construction of the Nord Stream 2 pipeline from Germany to Russia through the Baltic Sea – Seele enjoys political support”, – the newspaper says.

By introducing sanctions against top Russian energy companies that closely cooperate with European business the Donald Trump administration is in fact trying to make use of national legislation to secure the US financial and economic interests in Europe. According to reports, one of the reasons for tightening sanctions is the currently observed positive trends in the implementation of Russian projects in areas where the US is particularly vulnerable  – the export of pipeline gas and the production of LNG.

As for Russian gas supplies to Europe – which Washington sees as a direct competition considering its own liquefied natural gas supplies – this year PJSC Gazprom has the potential, for the first time after 2011, to reach a production level of over 500 billion cubic meters of gas annually. At the same time, annual exports to foreign countries can hit a record high of over 200 billion cubic meters.

Meanwhile, Russia’s PJSC NOVATEK, which mainly deals with LNG production, has announced the discovery of a gas condensate field with reserves of at least 320 billion cubic meters in the Arctic, on the North Obsk license area in the waters of the Gulf of Ob. This field can become a resource base for NOVATEK’s third LNG producing facility, the Arctic LNG-3. “The discovery of a new field is an important starting point for one of our future Arctic LNG projects. The North-Ob field is unique in terms of its reserves, boasts an advantageous geographical location, and has a huge resource base. On top of that, the experience we have gained suggests that we have every potential for the successful implementation of the new LNG project,” – said Leonid Mikhelson, Chairman of the Board of PJSC NOVATEK.

By 2030 the company expects to bring LNG production to 57 million tons per year, and provided extra resources have been tapped – up to 70 million tons. This will enable Russia to successfully compete with the top LNG producer, Qatar, thereby leaving the United States far behind.

Success of Russian energy projects and expansion of Russia’s ties with European partners in energy and other major sectors of the economy present, in the eyes of the administration of US President Donald Trump and the Congressmen, a key threat to American business interests. This is what underlies Washington’s “sanctions” policy and European leaders have increasingly been making a point of it lately.

First published in our partner International Affairs

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Strong support of president Putin to Serbia

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Serbia was visited on June 3 by the first man of Russian Duma and one of the closest associates of the Russian President Vladimir Putin. The arrival of Vyacheslav Volodin in Belgrade just a few days after the brutal intrusion of Albanian special forces in the north of Kosovo and amid strong pressure on Serbia ahead of the announced meetings in Paris in early July, sends a clear message. That message could be heard at a special session of the Serbian National Assembly:

“Brotherly Serbian people, as always, can count on Russia’s help!”

This statement of Vyacheslav Volodin is extremely important because this was a message of Vladimir Putin to the Serbian people. As Vyacheslav Volodin pointed out, Vladimir Putin knew that he would speak in the Serbian parliament, so he personally sent greetings and words of support to Serbian people.

During the visit to Serbia, the Russian official praised Serbia`s economic improvement, adding that success is even greater since it has been achieved in dificult geopolitical circumstances. Vyacheslav Volodin, stated in Belgrade that the “intrusion“ of Kosovo`s special forces into the north of Kosovo was aimed at frightening the Serbs, establishing control there by force, adding that the Serbs could count on Russian help in future.

Also Volodin said that the UN Security Council Resolution 1244 should be respected. He stressed that Russia will not support the moves of the EU and the United States, that would lead to tensions.

“We believe that all parties must respect Resolution 1244, and those who do not, must be responsible. The interests of sovereign Serbia must be respected in accordance with international law,” Volodin said.

„The UN should express its stand. Its authority and also peace in the Balkans depend on its determination and concrete moves,“ Volodin also stated in Serbia`s Parliament. He criticised the European Union and US behaviour and added that „the absence of clear EU reaction to Pristina`s provocations raises doubt the bloc is capable to mediate in the Belgrade – Pristina dialogue on normalisation of relations. Volodin said that some states adopted a practise of double standards and openly interfere with the internal issues of other states.

“ We think that is unacceptable. It is necessary to confront that if we want to preserve our nation, country, its sovereignty and independence,“ Volodin said, mentioning Libya and Iraq as examples.

Speaking about the relation between the two nations, he said that the Russians, always felt they were obliged to help and protect the Serbs. Later, Volodin had a meeting with Serbian President Aleksandar Vucic and invited him to address Duma, next time when he visit Moscow.

Vucic accepted, saying it would be a great honor for him to talk about the relations between Serbia and Russia in front of Duma members.

Volodin  also announced that  Free Trade Agreement between the Eurasian Economic Union and Serbia can be signed by the end of the year. Currently, more than 800 companies with Russian capital operate in the territory of Serbia.

The message of Vyacheslav Volodin about Kosovo is in line with the message that President Vladimir Putin has been repeating for years.  The views of the President of Russia on the issue of Kosovo are not changing since the beginning of the crisis:

– February 2008 – The case of Kosovo is a terrible precedent that essentially breaks out the entire system of international relations, which was created not for decades, but for centuries.

– May 2018. – Vucic asked Putin to help Serbia in the UN and other international organizations, on what was answered that Moscow will actively monitor the talks between Belgrade and Pristina and the influence of various parameters on that issue.

–  January 2019 – Moscow is in favor of a mutually acceptable solution of Belgrade and Pristina, but based on UN Resolution 1244.

–  January 2019 – Resolution 1244 does not allow the existence of any armed formations in Kosovo other than the United Nations contingent.

However, despite the clear position of Russia on Kosovo, Serbian President takes a different policy. The goal of Aleksandar Vucic is the “demarcation” between Serbs and Albanians. And for a long time he has been secretly negotiating with the President of the self-proclaimed Kosovo Hashim Thaci. And, so far Vucic’s policy towards Kosovo has been catastrophic and has caused great damage to Serbian national interests.

By signing Brussels agreements, Vucic destroyed the defense of northern Kosovo, giving police and civil protection to Pristina. This denied the right of Serbs to self-defense, and he himself is not able to protect them. Recent events in the north of Kosovo, especially in Zubin Potok, are the direct result of the capitulation of the national and state policy of Serbian President Aleksandar Vucic towards Kosovo. Vucic aim is to force the Serbian people to accept an independent Kosovo. After recognition of Kosovo, Serbia would accelerate its full membership in NATO. Already today some associates of Aleksandar Vucic say that Serbia is surrounded by NATO, and that Serbia must adjust its policy according to the situation. If that were to happen it would be another geopolitical blow to Russia, which would be completely cut off from the Baltic to the Adriatic and the Black Sea. Therefore, NATO could further increase pressure on Russia.

 From our partner International Affairs

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Candidates for European Commission President: Who is who

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Photo: European Parliament

The race for President of the European Commission has got under way. According to the rules which are questioned by many in the European Union but have so far enjoyed majority support in the European Parliament, the new head of the “executive branch” of the European Union will be elected from among the “top candidates” (Spitzenkandidat) – those nominated by European parties which have factions in the European Parliament. A candidate will finally become President of the European Commission after he receives support from EU leaders in the European Council (the Council is currently headed by former Polish Prime Minister Donald Tusk, known for his paranoic attitude towards Russia) – this procedure should be over in June. A formal approval by the European Parliament should come next.

So who has the biggest chances and what are the political platforms of potential winners?

Judging by arithmetics, the leader of the European People’s Party (former Democratic Christians) faction in the European Parliament, Manfred Weber, is in the lead. His faction remains the largest, albeit smaller in number than before,  in Parliament – 180 members. A Bavarian,  Weber is 46 years old, and is considered to have been promoted by German Chancellor Angela Merkel. He seems to be at odds with his patroness Merkel, who supports the Nord Stream – 2 project. Last year he spoke out strongly against this project, which envisages the transportation of Russian gas to Western Europe across the bottom of the Baltic Sea: “I am against this project. It does not meet the interests of the European Union,” –  he said on April 23, 2018, in an interview with the Polska Times newspaper which was quickly picked up by news agencies.

However, analysts do not rule out a certain discrepancy of conduct on the part of Merkel, who continue to support Weber’s candidacy even after the above statement. Apparently, Merkel  has no intention of becoming the one responsible for  “burying” the Nord Stream,  which is so profitable for the German business. However, if this project is ruined by the head of the European Commission nominated by her, she will be able to get out of it safe. She would explain such a result by a “clash of opinions that is natural for democracy”.  Nord Stream-2 is the only project which the United States doesn’t approve but which Merkel supports in words. (Normally, in matters of principle, Angela Merkel does not tolerate any differences of opinion within the ruling team in the Federal Republic of Germany.)

However, as remarked by the EU Observer website, close to the Brussels-based globalist elite, Merkel may refuse to back Weber at the last moment – two Germans will not be allowed to occupy the two key positions in the EU – head of the European Commission and chairman of the European Central Bank. Moreover,  Merkel wants to put Jens Weidman, the current head of the Central Bank of Germany, in charge of the European Central Bank.

The second most likely candidate is Margrethe Vestager of the Liberals and Democrats for Europe (ALDE) party. The party’s faction, which has 109 members after the elections, is the third most powerful and is known for its anti-Russian position. The leader of the ALDE faction, Belgian Guy Verhofstadt, who is officially the main “spin doctor” of Mrs. Vestager, made a statement unacceptable from the diplomatic point of view on the global Internet resource Project Syndicate before the recent elections to the European Parliament. He accused his colleagues in the European Parliament – representatives of a number of sovereign European countries (Italy, Great Britain, Hungary)  – of being the “fifth column” of Russia in the EU. He said: “Just like the illiberalism of Hungarian Prime Minister Viktor Orban, the partnership between the European right and Vladimir Putin has been going on for too long.”

Vestager is the European Commissioner for Competition, who has been dubbed “Tax Lady” by President Trump, for her relentless pursuit of alleged monopolies in Europe. Simultaneously, Vestager calls for the extension of sanctions against Russia and for measures against Russian “energy monopolies” in Europe (what is implied by these words is easy to guess – the long demonized by European mass media Gazprom). For these views, Mrs. Vestager is openly admired by the British magazine The Economist, which came out on May 28, 2019 with the headline: “The Iron Lady of Politics from Denmark should lead the European Commission.”

Nevertheless, even Mrs. Vestager’s admirers admit in this issue of the magazine, as well as in other European media that she is unpopular in her home country, in Denmark. At home, Vestager’s candidacy for the highest post in the European Commission was publicly supported only by the leader of a “related” party – the head of the Danish Liberals Lars Lokke Rasmussen. Even Liberals and Social Democrats acknowledge that the EU was unable to protect Denmark from illegal migration,  so since 2016, Copenhagen has maintained “temporary” control on the border with countries of the Schengen zone. Naturally, a lady representing  the “ineffective” EU is unlikely to be loved at home.

Nevertheless, the structure of the current European Union does not require politicians to be popular at home in order to get a high-powered and financially attractive job in the European Commission. What presents interest in this regard is the opinion of Marlene Vind, a professor at the Faculty of Political Science at the University of Copenhagen: “The head of the European Council, Donald Tusk, just recently pointed out the need for gender balance in the EU, and this is a strong support for Vestager,” – Wind says. “Besides, you can be 100% sure that not a single Danish prime minister will say no if EU leaders offer a Danish woman such an important position in the EU.”

The third likely candidate with strong chances for success is Dutch Social Democrat, France Timmermans. A representative of the Labor Party of the Netherlands,former foreign minister of the Netherlands, and at present the first vice-president of the European Commission, he is known for his initiatives on sanctions against the Polish “retrogrades” from the “Law and Justice” Party. Timmermans can count on the support of 146 MPs from the Socialists and Democrats. In the early 1990s, he worked at the Dutch Embassy in Moscow, disseminating the “light of democracy” in Russia. Afterward he represented the Netherlands during an inquiry into the crash of the MH-17 aircraft over the Donetsk region in 2014.

From a foreign policy point of view, Timmermans represents the most exotic ideological trend in the European Union – he is dreading an “union of Putin and Trump,” which, along with the “rise of nationalist forces in Europe,” could destroy the EU.

In February 2017, already holding the post of European Commissioner Timmermans declared: “We are witnessing a hybrid war, we see it in Ukraine. Will the Baltic countries be next? We bear witness to the return of the threat of a nuclear war. …. And just imagine the Cuban missile crisis played out on Twitter between Presidents Trump and Putin,” – Timmermans said, addressing the Future Force conference. It is unlikely that anyone could have imagined it, but we could attribute it to the speaker’s wild fantasy.

The reverse of Timmermans’paranoic attitude towards Russia is the praise of the European Union, which he glorifies as a kind of unique “ecosystem” of the most civilized and peaceful nations of the planet. Probably, Mr. Timmermans forgot the “civilized” destruction of Yugoslavia by the “peaceful nations” of Europe.

This blend of “green” demagogy and the new “democratic” racism of the forces that won in the last Euro elections (they say Western Europeans are above  other nations thanks to “exclusively” European democratic institutions) is an ideology that is totally hostile to Russia.

The other candidates – Frenchman Michel Barnier, Czech Jan Zahradil and  “green” German Ska Keller – have few chances due to lack of strong factions in the European Parliament.

As it happens, in its relations with the EU Russia should not expect Brussels to change its position in the near future. But, as they say, eternity in politics does not last long. 

From our partner International Affairs

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Tensions in Kosovo: Russia closely monitors the situation

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Police of self proclaimed state of Kosovo launched raids in the early hours of Tuesday morning in the Serbs-majority north of Kosovo, sparking an angry reaction from Serbs.

More than twenty people have been arrested so far. Among those arrested is the chief of police of the village of Zubin Potok. A Kosovo police officer was wounded by a gunshot during the operation, but is not in danger of losing life. Two other officers were also injured, according to doctors in North Mitrovica.

Kosovo Police said that in Zubin Potok(north Kosovo), barricades were set up and tyres set on fire to deter police officers. Kosovo police also stated that the operation was launched to detain suspects who have allegedly been participating in or organizing criminal groups and have been involved in the smuggling of goods, misuse of official positions, bribery and trading in contraband. According to information the operation has nothing to do with the murder of Enver Zymberi, a policeman who was killed in the north of Kosovo eight years ago, nor with the investigation into the death of Kosovo Serb politician Oliver Ivanovic, who was murdered in 2018.

The head of the Serbian government’s office for Kosovo, Marko Djuric, said on Tuesday morning that the goal was to cause fear and panic.

“This morning, around 6am, special units of the ROSU (Regional Operational Support Unit) stormed in from three directions into the north of Kosovo, into the territory of all four (Serb majority) municipalities, with the aim of intimidating and provoking panic”, Djuric told Tanjug agency. He said that “separatists from Pristina have reached for more terrifying methods to scare Serbs” and want to “create an impossible climate for Serbs in Kosovo”. Meanwhile, Serbian President Aleksandar Vucic and the Interior Ministry ordered the Serbian Army to be put on full combat readiness, Tanjug reported. Tanjug also reported that Vucic launched “intensive diplomatic activities” over the raids.

“The president asked Western political authorities to control Pristina and let them know Serbia will not allow ethnic cleansing”, Tanjug said.

A Russian diplomat was also arrested. The Ministry of Foreign Affairs of Russia has stated that is unacceptable to arrest a Russia citizen in Kosovo, asking the UN mission in Kosovo for comprehensive information on his arrest and his release.

“The arrest was carried out regardless of the fact that Russian citizen has diplomatic immunity of UN staff. We consider this to be an unacceptable act as another manifestation of the provocation of the Kosovo-Albanian authorities, stated Maria Zakharova, the official spokesman of the Russian Ministry of Foreign Affairs.The Russian diplomat was released after the protest of Russian Government. However, according to unconfirmed information, he was beaten by the Kosovo Police.

The Russian State Duma instructed its Committee on International Affairs to closely monitor the situation in Serbia because of the intensification of the situation in Kosovo . On the occasion of the incidents in Kosovo, the Russian ambassador to Serbia Alexander Chepurin spoke.

“We strongly condemn the incursion of Kosovo Special Forces in Kosovo-Serb-populated areas. This is extremely dangerous and it’s not in line with all existing agreements, “said Chepurin on Twitter.

The Serbian Armed Forces are in fully combat readiness, and according to the information, its movement under full military equipment was also observed. Serbian combat jet Mig 29 flies over an administrative line with Kosovo.

“If there is any threat to order and the life of people in northern Kosovo, our army will protect our people,” stated Serbian president Aleksandar Vucic.

Concluding Thoughts

Russia is monitoring the situation in Kosovo and is ready to provide support to Serbia. The arrest and beating of Russian citizen Mikhail Krasnoshchekov, which is a member of the United Nations Interim Administration Mission in Kosovo, is actually a message to Russia by the West. As stated by the official representative of the Russian Foreign Ministry, Maria Zakharova, the incursion of special forces is another provocation and the establishment of control over the region by force:

” It is clear that such defiant behavior of Kosovars is a direct consequence of many years indulging from EU and the Uited States”,- stated Maria Zakharova.

However, an important role also has Serbian president Aleksandar Vucic. At yesterday’s session in the Serbian Parliament, the President of Serbia, as the basic message to the Serbian people, said that Serbia should accept independent Kosovo. In other words, Vucic is still fighting for demarcation, after which a small part of Kosovo would be left to Serbia. Otherwise, in his opinion, the Albanians will attack the Serbs in Kosovo. The defeatist attitude of the President of Serbia practically encouraged the Albanian separatists to take such a move which we can see today. It is precisely on the issue of Alexander Vucic’s policy towards Kosovo that Russia should take a stronger position. The Russian Foreign Ministry regularly repeats that for Russia the solution of the Kosovo problem is UN Resolution 1244. And this is the correct policy, which is in line with the Russian and Serbian national interests. However, Aleksandar Vucic, contrary to the will of the citizens of Serbia is pursuing his policy towards Kosovo.

  First published in our partner International Affairs

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