December 10, 2022

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Cosprom vs. Moldova: How Russia uses gas to threaten a state

Cosprom vs. Moldova
How Russia threatens a state with gas

Von Denis Trupetskoy, Q.

After lengthy negotiations, Moldova and the Russian state-owned company Gazprom have agreed to a new five-year agreement. Thus the supply crisis in the small country was avoided. The price for this could be Moldova’s European lesson.

When pro-Western politician Mia Sandu was elected President of the Republic of Moldova in November 2020, he stressed that he wanted to maintain good relations with Russia. But a serious crisis has erupted between Moldova and Moscow since the Moldovan parliament confirmed a new government appointed by Sandu in August. Faced with the impending gas shortage, the small country between Romania and Ukraine was already forced to declare a state of emergency.

On Friday, representatives of Moldova and the leadership of the Russian state-owned company Gosprom agreed to a new five-year agreement during talks in St. Petersburg. Gosprom had previously threatened to cut off gas supplies to Moldova from December. For Moldova, the gas crisis is now over. However, the political cost of the deal can be high. “The Financial Times” cited its own sources, saying that if the Chisinau government reconsidered its free trade agreement with the EU and postponed the energy market reforms agreed with the EU, Gosprom would supply Moldova gas at a lower price.

It remains to be seen in the coming months whether President Chandu will actually change his course. However, the negotiation process is a prime example of how Russia seeks to use its bias to exclude Russian gas from the EU.

After the previous gas deal expired in September, Moldova had to pay about $ 790 per 1,000 cubic meters as part of a short-term interim agreement in October – five times more than by 2020. Stock on price rise. But Gosbrom put pressure on Chisinau in another way: a week ago, Gosbrom spokesman Sergei Kubryanov insisted that Moldova repay debts from previous distributions before signing a new contract. Kubrianov put the debt at $ 709 million, including a late fine.

“Element of Hybrid War”

At first glance, it may seem politically understandable that Russia would not agree to lower gas prices for the so-called pro-Western government and collect old debts in Moldova. But it is not so easy. “These ‘historic loans’ begin in 1994,” said Moldovan Deputy Prime Minister Andrei Spinu. “We are ready to negotiate on these issues, but the origin of the loan can be determined only after a thorough examination by the responsible company Moldovagaz.” Since Gosprom is a major shareholder in Moldova, it is a subsidiary of the Russian government.

Valerie Pasha, an expert at Watchtower Moldova, says the loan is “artificial”. Credit to Cosprom is not the Republic of Moldova, but Moldova – it is largely owned by Cosprom. No one has checked deals based on monetary claims: Gosbrom has pumped out more money from Moldova than it has provided gas, Pasha told the BBC’s Russian editorial board.

In Moldova, as for Gosprom and Russia, there was less about Moscow – as the Kremlin points out – that wants to avoid losses in its own national budget. After Mia Sandu’s election victory, despite all the promises, the aspect of political relations with Cicino became very important. “Increasing economic costs and reducing growth abroad is part of Russia’s usual strategy to prevent the continuation of effective growth and European integration,” says Valerie Pasha, who sees this as part of a “hybrid war”. Conducted by the Russian government.

However, according to Pasha, this is the responsibility of the Moldovan government, which has not bothered to diversify its energy supply in 30 years, which is why the country can continue to be threatened by Gosprom. In fact, Chisinau did not create any serious alternatives to Russian gas. Recent emergency purchases in Poland, the Netherlands and Ukraine have not been particularly successful. However, in the future the situation of buying gas primarily from Romania and Ukraine will fail because both countries will not be able to export enough.

Gosprom has a weak point in Moldova, namely secession and delivery to Moscow-backed Transnistria, which is technically impossible without Moldova. That too must have played a role in the conclusion of the new contract. Nevertheless, given the harsh rhetoric in Moscow over the past few weeks, it is hard to imagine that President Sandu’s government has not offered harsh concessions to Gazprom. In any case, the specific terms of the new agreement are unknown. According to the Russian news agency TASS, the new price formula will be between $ 500 and $ 600. This is twice as much as the last contract, but at least significantly less than what Chisinau had to pay in October.

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