Maduro, Schröder, and the Rosneft. Energy Blog

Aug 15 2017

One of  last week’s key stories was another major instance of political activity unrelated to business on the part of the Russian state-owned oil giant Rosneft.

At the same time, the company’s name is now linked to two political figures: Venezuelan President Nicolas Maduro, who struggles to keep his presidency at any cost, and ex-chancellor of Germany Gerhard Schröder, who is also well-known as one of the key lobbyists for Russian energy companies in Western Europe.

Reuters, referring to the high-ranking manager of the state oil company Petroleos de Venezuela, has recently reported that in at least two situations the Venezuelan government used funds provided by Russia to avoid a looming bond default. Russia and Rosneft have become a key source of Funding for the government of Nicholas Maduro, who is trying to avoid both a sovereign default and a political coup.  The ruling regime is increasingly turning to Russia for loans and in return offers valuable oil assets as collateral. This information was reported right after the news that Rosneft paid $ 6 billion in prepayments for the supply of oil from Venezuela.

Free Russia asked Vladimir Milov, the director of the Energy Policy Institute to comment:

“It looks quite clear that decisive actions of the Maduro regime – aggressive pushing through the establishment of the Constituent Assembly, effectively overriding the opposition-led Parliament – have some financial backing from outside powers, namely Russia. Otherwise, why would oil-rich Russia buy oil from Venezuela worth $6 billion (that’s about the size of the annual oil output of Vietnam), and even provide full advance payment for it – whereas Rosneft’s own production volume is one of the biggest in the world (5,7 million barrels per day). Even if that is not enough to meet the company’s downstream needs, extra oil could have been easily bought in the market for better conditions without such generous advances.

The answer clearly is politics. Putin wants to support the Maduro regime, but it’s difficult to do it via state or state-bank loans – Venezuela’s “quality” as a borrower is a joke, there’s something of a consensus in the market that this state is near default. Then Rosneft comes along with “prepayments”. This scheme does not leverage the Russian state or the Russian banks with “toxic” assets and it will be repaid in a natural form (being out of cash, Venezuela nonetheless still produces physical oil).
Despite Rosneft’s claims that “it does not intend” to buy more Venezuelan crude with prepayment, who knows. So far, the scheme has worked, and so far, saved the Venezuelan regime from collapse. There’s a price to be paid: many newswires reported Rosneft’s net earnings dropped by 20% during the first half of this year.  The primary reason for this was the increase in the costs of purchased oil by over 30% (we’re back to the question of why would one of the biggest oil-producing companies be interested in buying oil at world prices from someone else). Generous oil purchases from Venezuela have clearly contributed to that. If the Maduro regime needs more money from Putin, here’s a scheme which can always be expanded. That may explain Maduro’s decisiveness.”

As for ex-Chancellor Gerhard Schroeder, his future is also likely to be closely connected to Rosneft.  Schroeder was nominated to the Board of Directors by the Russian government on August 11th.

We have asked the Free Russia Foundation’s energy expert, Ilya Zaslavsky, to share his thoughts on this:

“The news that Gerhard Schröder will be an independent member of Rosneft’s Board of Directors is another stain on the history of his moral fall, as an unprincipled politician and man. It is quite widely known that right before he left the post of German Chancellor he approved the Gazprom gas pipeline project Severny Potok-1.  He then quickly received a warm high-paying place in the company in 2005, where he was in the company of Putin’s friend from Stasi Matthias Warnig (now head of Nord Stream).

The term “shroedification” was born exactly out of such well-known facts which. This term denotes the fact of a veiled bribe from the Kremlin to the former great political figures from the West, so that they justify and in every way serve the subversive interests of Moscow in democratic countries.

It is less known that Schroeder served the interests of the Kremlin, and also helped the Russian oligarchs some years before the Nord Stream 1,  to make the Institute of independent directors in the Russian corporations vacant.  In 2009, after corporate raiding and the capture of TNK-BP by oligarchs close to the Kremlin and Igor Sechin, Mikhail Fridman and his partners from the consortium of AAR, Schroeder and Alexander Shokhin has been called independent directors of the company. However, it was clear to everyone that they would be “independent” only in favor of the Russian part of the company’s owners who seized the operational control of TNK-BP with the help of the FSB and other law enforcement agencies.

Rosneft, a company where Igor Sechin rules, bypasses commercial logic when it comes to the interests of the Kremlin, both inside and outside of Russia, is now going through hard times thanks to such mediocre leadership. As the latest accounts show, the company essentially has a debt of $ 82 billion, out of which, on behalf of the Kremlin, it actually gave $13.5 billion to the kleptocratic regime of Venezuela. Servants like Schroeder are obviously called upon by the company to try to “normalize” such results.”

 

At the same time, the company’s name is now linked to two political figures: Venezuelan President Nicolas Maduro, who struggles to keep his presidency at any cost, and ex-chancellor of Germany Gerhard Schröder, who is also well-known as one of the key lobbyists for Russian energy companies in Western Europe.

Reuters, referring to the high-ranking manager of the state oil company Petroleos de Venezuela, has recently reported that in at least two situations the Venezuelan government used funds provided by Russia to avoid a looming bond default. Russia and Rosneft have become a key source of Funding for the government of Nicholas Maduro, who is trying to avoid both a sovereign default and a political coup.  The ruling regime is increasingly turning to Russia for loans and in return offers valuable oil assets as collateral. This information was reported right after the news that Rosneft paid $ 6 billion in prepayments for the supply of oil from Venezuela.

Free Russia asked Vladimir Milov, the director of the Energy Policy Institute to comment:

“It looks quite clear that decisive actions of the Maduro regime – aggressive pushing through the establishment of the Constituent Assembly, effectively overriding the opposition-led Parliament – have some financial backing from outside powers, namely Russia. Otherwise, why would oil-rich Russia buy oil from Venezuela worth $6 billion (that’s about the size of the annual oil output of Vietnam), and even provide full advance payment for it – whereas Rosneft’s own production volume is one of the biggest in the world (5,7 million barrels per day). Even if that is not enough to meet the company’s downstream needs, extra oil could have been easily bought in the market for better conditions without such generous advances.

The answer clearly is politics. Putin wants to support the Maduro regime, but it’s difficult to do it via state or state-bank loans – Venezuela’s “quality” as a borrower is a joke, there’s something of a consensus in the market that this state is near default. Then Rosneft comes along with “prepayments”. This scheme does not leverage the Russian state or the Russian banks with “toxic” assets and it will be repaid in a natural form (being out of cash, Venezuela nonetheless still produces physical oil).
Despite Rosneft’s claims that “it does not intend” to buy more Venezuelan crude with prepayment, who knows. So far, the scheme has worked, and so far, saved the Venezuelan regime from collapse. There’s a price to be paid: many newswires reported Rosneft’s net earnings dropped by 20% during the first half of this year.  The primary reason for this was the increase in the costs of purchased oil by over 30% (we’re back to the question of why would one of the biggest oil-producing companies be interested in buying oil at world prices from someone else). Generous oil purchases from Venezuela have clearly contributed to that. If the Maduro regime needs more money from Putin, here’s a scheme which can always be expanded. That may explain Maduro’s decisiveness.”

As for ex-Chancellor Gerhard Schroeder, his future is also likely to be closely connected to Rosneft.  Schroeder was nominated to the Board of Directors by the Russian government on August 11th.

We have asked the Free Russia Foundation’s energy expert, Ilya Zaslavsky, to share his thoughts on this:

“The news that Gerhard Schröder will be an independent member of Rosneft’s Board of Directors is another stain on the history of his moral fall, as an unprincipled politician and man. It is quite widely known that right before he left the post of German Chancellor he approved the Gazprom gas pipeline project Severny Potok-1.  He then quickly received a warm high-paying place in the company in 2005, where he was in the company of Putin’s friend from Stasi Matthias Warnig (now head of Nord Stream).

The term “shroedification” was born exactly out of such well-known facts which. This term denotes the fact of a veiled bribe from the Kremlin to the former great political figures from the West, so that they justify and in every way serve the subversive interests of Moscow in democratic countries.

It is less known that Schroeder served the interests of the Kremlin, and also helped the Russian oligarchs some years before the Nord Stream 1,  to make the Institute of independent directors in the Russian corporations vacant.  In 2009, after corporate raiding and the capture of TNK-BP by oligarchs close to the Kremlin and Igor Sechin, Mikhail Fridman and his partners from the consortium of AAR, Schroeder and Alexander Shokhin has been called independent directors of the company. However, it was clear to everyone that they would be “independent” only in favor of the Russian part of the company’s owners who seized the operational control of TNK-BP with the help of the FSB and other law enforcement agencies.

Rosneft, a company where Igor Sechin rules, bypasses commercial logic when it comes to the interests of the Kremlin, both inside and outside of Russia, is now going through hard times thanks to such mediocre leadership. As the latest accounts show, the company essentially has a debt of $ 82 billion, out of which, on behalf of the Kremlin, it actually gave $13.5 billion to the kleptocratic regime of Venezuela. Servants like Schroeder are obviously called upon by the company to try to “normalize” such results.”

 

Lukashenka’s Ryanair Hijacking Proves Human Rights is a Global Security Issue

May 24 2021

The forced diversion and landing in Minsk of a May 23, 2021 Ryanair flight en route from Greece to Lithuania, and the subsequent arrest of dissident Roman Protasevich who was aboard the flight, by the illegitimate Lukashenka regime pose an overt political and military challenge to Europe, NATO and the broad global community.  NATO members must respond forcefully by demanding (1) the immediate release of Protasevich and other political prisoners in Belarus, and (2) a prompt transition to a government that represents the will of the people of Belarus. 

The West’s passivity in the face of massive, continuous and growing oppression of the Belarusian people since summer 2020 has emboldened Lukashenka to commit what some European leaders have appropriately termed an act of “state terrorism.”

The West has shown a manifest disposition to appease Putin’s regime —Lukashenka’s sole security guarantor. It has made inappropriate overtures for a Putin-Biden summit and waived  Nord Stream 2 sanctions mandated by Congress. These actions and signals have come against the backdrop of the 2020 Russian constitutional coup, the assassination attempt against Navalny and his subsequent imprisonment on patently bogus charges, the arrests of close to 13,000 Russian activists, and the outlawing of all opposition movements and activities. All this has led Putin and Lukashenka to conclude that they eliminate their political opponents with impunity.  

Today’s state-ordered hijacking of an international passenger airplane—employing intelligence agents aboard the flight,  and accomplished via an advanced fighter-interceptor—to apprehend an exiled activist, underscores that violation of human rights is not only a domestic issue, but a matter of international safety and security.  Western governments unwilling to stand up for the victims of Putin’s and Lukashenka’s regimes are inviting future crimes against their own citizens. 

Absent a meaningful and swift response, the escalation of violence and intensity of international crimes committed  by Lukashenka’s and Putin’s regime will continue, destabilizing the world and discrediting the Western democratic institutions. 

CALL FOR SUBMISSIONS – THE KREMLIN’S INFLUENCE QUARTERLY

May 20 2021

The Free Russia Foundation invites submissions to The Kremlin’s Influence Quarterly, a journal that explores and analyzes manifestations of the malign influence of Putin’s Russia in Europe.

We understand malign influence in the European context as a specific type of influence that directly or indirectly subverts and undermines European values and democratic institutions. We follow the Treaty on European Union in understanding European values that are the following: human dignity, freedom, democracy, equality, the rule of law, and respect for human rights. Democratic institutions are guardians of European values, and among them, we highlight representative political parties; free and fair elections; an impartial justice system; free, independent and pluralistic media; and civil society.

Your contribution to The Kremlin’s Influence Quarterly would focus on one European country from the EU, Eastern Partnership or Western Balkans, and on one particular area where you want to explore Russian malign influence: politics, diplomacy, military domain, business, media, civil society, academia, religion, crime, or law.

Each chapter in The Kremlin’s Influence Quarterly should be around 5 thousand words including footnotes. The Free Russia Foundation offers an honorarium for contributions accepted for publication in the journal.

If you are interested in submitting a chapter, please send us a brief description of your chapter and its title (250 words) to the following e-mail address: info@4freerussia.org. Please put The Kremlin’s Influence Quarterly as a subject line of your message.

Criminal operations by Russia’s GRU worldwide: expert discussion

May 06 2021

Please join Free Russia Foundation for an expert brief and discussion on latest criminal operations conducted by Russia’s GRU worldwide with:

  • Christo Grozev, Bellingcat— the legendary investigator who uncovered the Kremlin’s involvement, perpetrators and timeline of Navalny’s assassination attempt. 
  • Jakub Janda, Director of the European Values Think Tank (the Czech Republic) where he researches Russia’s hostile influence operations in the West
  • Michael Weiss, Director of Special Investigations at Free Russia Foundation where he leads the Lubyanka Files project, which consists of translating and curating KGB training manuals still used in modern Russia for the purposes of educating Vladimir Putin’s spies.

The event will take place on Tuesday, May 11 from 11 am to 12:30pm New York Time (17:00 in Brussels) and include an extensive Q&A with the audience moderated by Ilya Zaslavskiy, Senior Fellow at Free Russia Foundation and head of Underminers.info, a research project on post-Soviet kleptocracy

The event will be broadcast live at: https://www.facebook.com/events/223365735790798/

  • The discussion will cover Russia’s most recent and ongoing covert violent operations, direct political interference, oligarchic penetration with money and influence; 
  • GRU’s structure and approach to conducting operations in Europe
  • Trends and forecasts on how data availability will impact both, the Kremlin’s operations and their investigation by governments and activists; 
  • EU and national European government response and facilitation of operations on their soil; 
  • Recommendations for effective counter to the security and political threats posed by Russian security services. 

YouTube Against Navalny’s Smart Voting

May 06 2021

On May 6, 2020, at least five YouTube channels belonging to key Russian opposition leaders and platforms received notifications from YouTube that some of their content had been removed due to its being qualified as “spam, deceptive practices and scams”. 

They included: 

Ilya Yashin (343k YouTube subscribers)

Vladimir Milov (218k YouTube subscribers) 

Leonid Volkov (117k YouTube subscribers)

Novaya Gazeta (277k YouTube Subscribers) 

Sota Vision (248k YouTube Subscribers)

Most likely, there are other Russian pro-democracy channels that have received similar notifications at the same time, and we are putting together the list of all affected by this censorship campaign. 

The identical letters received from YouTube by the five account holders stated:

“Our team has reviewed your content, and, unfortunately, we think it violates our spam, deceptive practices and scams policy. We’ve removed the following content from YouTube:

URL: https://votesmart.appspot.com/

YouTube has removed urls from descriptions of videos posted on these accounts that linked to Alexey Navalny’s Smart Voting website (votesmart.appspot.com).

By doing this, and to our great shock and disbelief, YouTube has acted to enforce the Kremlin’s policies by qualifying Alexey Navalny’s Smart Voting system and its website as “spam, deceptive practices and scams”. 

This action has not only technically disrupted communication for the Russian civil society which is now under a deadly siege by Putin’s regime, but it has rendered a serious and lasting damage to its reputation and legitimacy of Smart Voting approach. 

In reality, Smart Voting system is not a spam, scam or a “deceptive practice”, but instead it’s a fully legitimate system of choosing and supporting candidates in Russian elections who have a chance of winning against the ruling “United Russia” party candidates. There’s absolutely nothing illegal, deceptive or fraudulent about the Smart Voting or any materials on its website.

We don’t know the reasons behind such YouTube actions, but they are an unacceptable suppression of a constitutionally guaranteed freedom of the Russian people and help the Kremlin’s suppression of civil rights and freedoms by banning the Smart Voting system and not allowing free political competition with the ruling “United Russia” party. 

This is an extremely dangerous precedent in an environment where opposition activities in Russia are being literally outlawed;  key opposition figures are jailed, exiled, arrested and attacked with criminal investigations; independent election campaigning is prohibited; and social media networks remain among the very few channels still available to the Russian opposition to communicate with the ordinary Russians.

We demand a  swift and decisive action on this matter from the international community, to make sure that YouTube corrects its stance toward Russian opposition channels, and ensures that such suppression of peaceful, legal  pro-democracy voices does not happen again. 

FRF Lauds New US Sanctions Targeting the Kremlin’s Perpetrators in Crimea, Calls for Their Expansion

Apr 15 2021

On April 15, 2021,  President Biden signed new sanctions against a number of officials and agents of the Russian Federation in connection with malign international activities conducted by the Russian government.

The list of individuals sanctioned by the new law includes Leonid Mikhalyuk, director of the Federal Security Service in the Russian-occupied Crimea.

A report issued by Free Russia Foundation, Media Initiative for Human Rights and Ukrainian Helsinki Human Rights Union in December 202, identified 16 officials from Russian law enforcement and security agencies as well as the judiciary operating on the territory of the Ukrainian Crimean Peninsula currently occupied by the Russian Federation. These individuals have been either directly involved or have overseen political persecution of three prominent Crimean human rights defenders – Emir-Usein Kuku, Sever Mustafayev and Emil Kurbedinov.

Leonid Mikhailiuk is one of these officials. He has been directly involved and directed the repressive campaign in the occupied Crimea, including persecution of innocent people on terrorism charges and massive illegal searches. The persecution of Server Mustafayev was conducted under his supervision. As the head of the FSB branch in Crimea, he is in charge of its operation and all operatives working on politically motivated cases are his subordinates. 

Within the extremely centralized system of the Russian security services, Mikhailiuk is clearly at the top rank of organized political persecution and human rights violations.

Free Russia Foundation welcomes the new sanctions and hopes that all other individuals identified in the report will also be held accountable.