Ilya Zaslavskiy
Ilya Zaslavskiy

Research expert of Free Russia Foundation, energy and political risks consultant


Conclusions from exposing security threats of Nord Stream-2 and post-Soviet corruption in the West

As part of my work for Free Russia Foundation, I am carrying out research on two projects. The first one is devoted to influencing that Gazprom and its pipeline projects have in the EU. The second is an ongoing project called Underminers which focuses on agents of post-Soviet corruption in the West and will be fully launched in the fall. Between May and July this year we presented some of the findings from these two projects in Washington and in six European capitals. We got some insightful feedback and would like to share it here.

On May 24, our report paper The Kremlin’s Gas Games in Europe: Implications for Policy Makers was presented at the U.S. Senate, where Senator Jeanne Shaheen formulated her long standing opposition to the pipeline due to its security implications for the European Union and transatlantic relations. A few days later Kremlin-controlled media outlet Life.Ru commented on our event with deceitful propaganda, saying that “Russian opposition lobbies new sanctions against Gazprom” and that the real reason for that is the greed of US LNG companies that simply want to replace Russian gas in Europe. Incidentally, just a few days ago this outlet was reportedly defunded by Kremlin which shows that lies do not sell forever.

Meanwhile, about the same time, Trump administration signed long awaited legislation to fight corruption and gross human rights violators around the world called Global Magnitsky Act. However, we at FRF remain skeptical about actual political will within the executive to use this instrument wholeheartedly against post-Soviet kleptocracies, although we remain hopeful that the Congress will not reduce its pressure in this policy area.

In Europe, we started in Sofia where we held two presentations at The Centre for the Study of Democracy of which the paper on Gazprom was the most publicly discussed. Bulgaria is heavily influenced by Russian energy companies and Gazprom’s proposal to extend Turkish Stream into the country remains one of the most contentious issues in the region. Our colleagues from CSD suggested that Gazprom’s pipeline projects by-passing Ukraine represent a financial and security threat to Bulgaria itself, not only to Ukraine, and that corruption of Russian energy companies has a pervasive negative impact on democratic institutions and domestic politics. However, there was a lot of discussion about the need for a wider and more coherent European and US response to Kremlin’s aggression. There is a strong pro-Putin faction among Bulgarian policy-makers that has been continuously supported by Moscow with money, propaganda and other destructive means, including through what CSD calls Russian amplifiers, i.e. Kremlin-connected kleptocratic operatives in Bulgaria.

Our next stop was in London at Chatham House and The Henry Jackson Society. The first meeting was under Chatham House rules, so without giving any concrete affiliation, I can say that there was a number of Gazprom’s European partners who advocated in favor of Nord Stream 2, claiming that it is strictly a commercial project financially lucrative to Europe, that its construction might give impetus to Eastern Europe to reform its gas networks after transit payments from Russia stop and that Ukraine has been “a basket case for 25 years.” We offered our counter arguments, claiming that Nord Stream 2 as previously Nord Stream 1 and expansion of pipelines within Russia for the South Stream had been highly corrupt and benefited Putin’s cronies, that such corruption at the expense of taxpayers would not be confined to Russia alone and is being already exported to Europe, that Ukraine has proven to be a more reliable partner despite Kremlin’s provocations in 2006 and 2009, especially in the last three years and that security implications of Kremlin’s gas plans are much wider than just bypassing Ukraine.

Discussion of post-Soviet underminers of democracy in London had to be timid because of the outdated libel laws of the country that really favor oligarchs, not free press and critically minded researchers, but the turnout at the event was impressive. I was personally surprised to see a former master of a major Oxford college who previously approved donations to the University from Russian kleptocrats but now seemed to have changed his views on this subject. The need to distinguish between corruption and corrosive practices and other key takeaways from the event was brilliantly summarized here.

At our next event in Warsaw jointly held with Za Wolna Rosja association and Buziness Alert we primarily focused on political and security threats of Gazprom to Central and Eastern Europe and EU laws, principles and institutions. Ernest Wyciszkiewicz, Director of the Centre for Polish-Russian Dialogue and Understanding, rightfully pointed out that German policymakers, when not talking to the press, treat Gazprom’s pipeline projects as political and so should each country in the EU without any pretense that this is only about economics and commercial gain. Interestingly, Belarussian TV station (not controlled by Minsk) covered the event in detail, showing that this Russian-speaking Belarusian diaspora also understands the problem and does not want Belarus to end up at the mercy of Gazprom and its partners in Berlin if Germany became the main receiving hub for Russian gas in Europe.

We then had a closed session organized by https://www.martenscentre.eu with EU parliamentarians from the ruling EPP coalition in Strasbourg (covered only by Latvian media as one of the organizers was from Latvia), where there was almost a total unity on understanding threats from Kremlin-led pipeline projects and corruption for European aspirations of transparency, governance and energy competition and diversification. However, one deputy said that EU is a hopeless place where we won’t be able to overcome the influence of lobbyists and politicians paid by Kremlin and that FRF should concentrate its efforts of changing attitudes in Washington, D.C., a stance that shows how bleak the EU picture is for some policymakers. Notably, as if to prove his point, we subsequently learned that this event was somehow crashed by representatives of Gazprom lobbyists and Russian diplomats who quietly recorded our discussion.

However, the most complicated event was in Berlin at the German Council on Foreign Relations where I had to face two panelists in favor of Nord Stream 2 and an audience which was heavily attended by Gazprom’s representatives, partners and supporters. We had to discuss some of the same points as proposed by energy companies at the Chatham House few days before, while Kirsten Westphal from Berlin fund of science and politics (SWP) offered a very narrow gas supply/demand view of Western European security and both panelists and representatives of energy companies questioned my “allegations” of widespread corruption in Gazprom and its export to Germany and Europe. This took place despite me citing concrete and multiple undisputable investigations carried out both by western and Russian independent media outlets.

Even more shocking was a remark of one of the organizers of the event to me that “your position against Gazprom was too American and this is why your actual points were not properly appreciated by the audience.” While I definitely spoke as a representative of the Free Russia Foundation and an expert on gas with a background in both Russia and the U.S., I think the commentator was actually right and the anti-American sentiment and ways how Moscow skillfully exploits it are indeed highly present in Germany nowadays. Luckily later that day we met with a group of Russian-speaking activists residing in Berlin that are not duped by Kremlin propaganda and appreciates the need to counter kleptocratic export to the EU.

Our last stop was in Kyiv where we did not have to explain these obvious things about the corruption of Gazprom and Kremlin’s subversive propaganda in Europe. The most prominent event was at Ukrainian Crisis Center together with local think tanks and Deputy Minister of Energy Natalia Boyko. While experts had different views on the actual prospects of Gazprom pipelines intended to by-pass Ukraine, all seemed to agree that Kyiv should remain proactive and its response should be focused on domestic reforms: liberalization of its own gas sector, strict abiding by existing international contracts and being a reliable partner keen to be integrated into European gas regulatory and business norms. TV and radio interviews showed that there is genuinely free journalism now in Ukraine capable of asking critical questions about our expert abilities, EU and US adherence to democracy and joint security, pervasive power of trans-border corruption and stumbling blocks in Ukrainian politics.

Notably, very similar topics – such as US and EU ability to counter post-Soviet kleptocracy – were raised at the Helsinki Commission upon our return to Washington, D.C. I have been raising the issue of influence of Kremlin-controlled oligarchs on the US for years, including lately on Trump’s administration, and was pleasantly surprised that this topic got attention and brought large audience to the event (see here) and comments from top-level experts like Dan Fried, a former top State Department official on sanctions policy.

Finally, the topic of corruption of Gazprom and Kremlin-connected oligarchs in the energy sector also got a brilliant coverage for a Russian-speaking audience, as an expert of the Free Russian Foundation, Vladimir Milov, who is a former deputy minister of energy, is now part of the main opposition movement in Russia led by Aleksei Navalny. Milov runs his own YouTube show in Moscow and his program on economy called Where Is the Money? is part of NavalnyLive YouTube program and has hundreds of thousands of views. For those of you who understand Russian here is an hour-long program from early August where we freely discuss all main Kremlin state energy companies and infrastructure projects and how they influence the whole region with their pervasive corruption.

We continue active research and exposure of post-Soviet corruption. The Free Russian Foundation is going to issue a special report on Nord Stream 2 pipeline in the fall, while the project Underminers will see a major boost for its launch scheduled for the end of September. Mark your calendars, as on October 11, 2017 Kleptocracy Initiative of the Hudson Institute will present our research paper on How Non-State Actors Export Kleptocratic Norms to the West (exact time and announcements will be provided closer to the event). This study seeks to provide some theoretical basis and key concepts for the very practical ideas of the Underminers project which we hope will educate about the export of corrosive practices from Eurasia and we welcome your interest and participation in this discussion and research.

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