The effect of LNG and newly sourced gas in the Southern Gas Corridor will spread across the CEE and the SEE and put the heat on Russia’s gas monopoly. In other words, if hidden and overt preferential treatment for Gazexport is revoked, this will result in lower prices or market shares for the incumbent monopoly. Reverse supplies via the Trans-Balkan Pipeline could start as early as January 1st, 2020, bringing gas from Turkey, Greece, and the Southern Gas Corridor to clients in Romania, Moldova, Ukraine, and Slovakia even before Turk Stream gas crosses the Bulgarian border. Demand for Nord Stream-2 south and eastbound gas exports via Opal and Eugal gas pipelines should wane with lower price differentials amid rising competition from the Southern Gas Corridor and LNG.
Sanctions on their own won’t stop Nord Stream-2, the market, and the EU directives can obliterate the effect sought by the Kremlin and turn what President Putin perceives as an asset into a liability. Gas pipelines are not a threat – politicians like Putin certainly are. The national security line in addressing the issues starts from the basics – Is Russia a threat? Perceptions matter. For many politicians in old Europe, located in offices at a safe distance from Russia, the threat notion is vague, remote, and academic. They do not discern Putin’s Russia as a threat. Perception matter. For many politics in old Europe. For the Austrian business, born and bred in brokering deals between Russia and Eastern Europe, this is routine and legitimate “business”.
The fate of two key elements of Russia’s energy ‘streams’ strategy – the Nord and Turkish streams – will be decided this fall. The Damocles sword is hovering above both, and at any moment the U.S. government could impose sanctions that would immediately terminate both projects. Although such a scenario is probable, it is by no means certain. President Trump remained deliberately vague on the imminence of the sanctions during his recent press conference at the White House with Polish President Duda. US Secretary of Energy Rick Perry recently visited Moscow and, among various topics, discussed the sanctions options with his Russian counterpart as part of a broader, more positive package. Both Nord and Turkish Stream have reached a decisive stage, where action is desperately needed.
– What is fundamentally new with the new round of US sanctions – scope or impact? How far are secondary sanctions likely to reach given the less than warm welcome for US sanctions in parts of the EU? – Politically and psychologically the most fundamental is Section 242 – personal sanctions against top Russian political/business figures. As for secondary sanctions European companies will be bound to take them into account, otherwise they will be automatically punished financially by losing their contracts. – We understand apart from Russian companies and individuals, there are Ukrainian and Polish companies? How likely is that more CEE partners of Russian companies could join the list notably if they continue business as usual with Russian state companies? What will be the effect on Nord
The System Spill over By proximity, Bulgaria mirrors Russian autocratic tendencies, including mimicking the state oligarchy model. Unlike Russia, however, the Bulgarian version can’t be sustained on “natural” resources – oil, gas, nuclear fuel-based wealth. Redistribution can be effectuated on added value and GDP growth, or thereafter on the budget accumulated taxed economic output. Bulgaria’s autocracy has limited margins for self-propelled growth and wealth sharing, which implies greater reliance on grand corruption mechanisms. The Kremlin’s GDP sustains its dynamics even on holidays as the oil and gas industry turns round the clock. Bulgarian GDP, however, must be generated and incomes earned. In Russia, the population exhibits extreme patience, willing to accept sacrifice in the name of “stability” (note the overlay in the jargon of the ruling
On September 22, 2017, Sberbank CEO, Herman Gref, announced the state-owned Russian bank plans to withdraw from several European countries. The reason given was pressure from sanctions. According to Gref, “…it is extremely challenging to work under sanctions in Europe.” Under existing European sanctions passed in 2014, Sberbank is barred from raising debt of more than 30 days’ maturity in Europe. The US recently tightened this limit from 30 to 14 days, in response to Russia’s illegal involvement in last year’s presidential election. Mr. Gref did not reveal which countries Sberbank plans to leave or what it plans for its offices there. However, it looks like the “exodus” has already started: in 2017, Sberbank has sold it banking institution in Slovenia and is trying to sell two Ukrainian subsidiaries
Despite all the might of the US Congress and its ability to block Trump’s move on Russia, the legislative branch still has no executive powers – it can hardly initiate or implement any proactive or preventive policy to secure America’s and the West’s perimeter for independent policies against Russia. The White House is overcommitted to reassuring Trump’s survival in the Russia-gate affair and the investigation kernel is still ahead. The focus on shielding individual members of the Trump family during the investigation, as well as the chaotic cadres’ changes in the White House, are not exactly a mark of the US president’s strength, capacity to lead and change the world. Putin can further speculate on the disagreements in transatlantic relations, which does not imply immediate enthusiasm and capacity
The month of August in Russian politics brings a special mystic connotation. Even more so for President Putin’s rule – most of the major events, crashes, disasters, and political crises happen in August. This August begins with President Trump’s signing of upgraded sanctions, which turned the Kremlin off balance. The Cold War between the US and Russia is now officially open on both sides, as of August 1. The mere fact that Putin deems necessary to turn up in person on Russia’s central TV channel to clarify his policy line on the new US sanctions means only one thing – the bets are the highest possible, this is personal and there is no place left for intermediaries and interpreters. Some time ago, the Russian MFA
Bulgariaanalytica.org has written twice before (Alex Alexiev and Enders Wimbush, Russia in Decline) about this study and is returning to the subject again now that the results of the study have been published in a book, which may well be the most important book on Russia since Vladimir Putin came to power in 1999. The book is the result of a collective effort by eighteen prominent American and Russian political analysts and economists assembled by the Jamestown Foundation for the purpose of assessing the state of Russia in 2016, the 17th year of the Putin’s de facto leadership era in Russia. The verdict of the experts is essentially unanimous, Russia today is in a state of “a serious and sustained decline.” What that decline augurs for the future