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.”

 

Call for Submissions – The Kremlin’s Influence Quarterly vol. 3

Oct 26 2020

The Free Russia Foundation invites submissions to The Kremlins 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 Kremlins 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 Kremlins 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.

Free Russia Foundation’s Press Release on Submission of Article 15 Communication to the International Criminal Court

Oct 06 2020

On 21 September 2020, the Free Russia Foundation submitted a Communication to the International Criminal Court Prosecutor’s Office (in The Hague, Netherlands) seeking accountability for Crimean and Russian authorities concerning international crimes perpetrated during Russia’s illegal occupation of Crimea. The Communication was prepared in cooperation with Global Rights Compliance and Center for Civil Liberties and is based on a focused inquiry conducted over the past year. In our inquiry, we documented crimes as part of a systematic, planned attack by the Russian state against civilians and groups in Crimea in order to discourage them from opposing the illegal occupation of Crimea and to force their departure from the peninsula. Crimes against civilians included unlawful arrests, beatings, torture, enforced disappearances, and other inhumane acts causing severe mental and/or physical pain. In particular, the crimes targeted the Crimean Tatars, a native ethnic group who had only recently returned to their homeland, having previously been forcefully and brutally displaced by the Soviet Union in 1944.

One of the principal coercive acts was the illegal detention and concomitant violence before, during, and after the imprisonment of political prisoners. Most of those detained were arrested by Russian and Crimean authorities on terrorism charges, but it was their legal, pro-Ukrainian advocacy that led to their imprisonment. In addition, trials of those arbitrarily detained were conducted in wholesale disregard of their fair trial rights. For example, some of those illegally imprisoned were denied a speedy trial, access to independent lawyers, and the opportunity to defend themselves against their arrest in a courtroom.

In order to force those illegally detained to confess to crimes they did not commit, Russian and Crimean authorities also perpetrated acts of torture and cruel or degrading treatment, the levying of additional charges against them, even more inhumane prison conditions, denial of communications with their families and threats made against them, enforced disappearances, and even, in at least one case, a mock execution.

Other inhumane acts include “punitive psychiatry” and the denial of adequate prison conditions, including the following: (i) feeding people inedible food or, at times, no food at all; (ii) facing severe overcrowding in prisons; (iii) denial of regular water supply; (iv) threats of assault against them by prison cellmates; and (v) adding pork to food – prohibited for observant Muslims. Further, medical attention was systematically inadequate or denied for many individuals.

Concerning acts of torture, it was perpetrated by different Russian authorities, including the FSB. Allegations include the use of electric shocks in an effort to get an accused to confess. One was beaten in the head, kidneys, arms and legs with an iron pipe. With another, fingers were broken. Still another endured spinal bruises and having a plastic bag placed over his head to the point of unconsciousness. Further, threats of sexual violence against a detained man were made. Murder as well. Hands were broken, teeth were knocked out in still another.

Trials were largely held behind closed doors for illegitimate reasons, and many of the witnesses were secret not only to the public but also to the Accused. Further, credible allegations exist that, at times, there were FSB or other agents in the room, silently instructing witnesses what to say and how the judges should rule. This adds credence to words, according to the Kyiv Post, heard by Arsen Dzhepparov from a senior FSB lieutenant who stated “I will prove by all possible – and impossible – means that [an Accused is] guilty – even if he isn’t guilty”.

Concerning the crime of persecution, nearly all of these deprivations of fundamental rights were carried out with discriminatory intent. Specifically, these groups were targeted due to their political view – namely, by peacefully opposing the illegal occupation of their country. Some were targeted on ethnic grounds or religious grounds on the basis of their Crimean Tatar background.

War crimes, another group of crimes punished at the ICC, were also perpetrated in addition to or in the alternative to the crimes against humanity. This includes the crime of torture, outrages against personal dignity, unlawful confinement, wilfully depriving protected persons of the rights of a fair and regular trial, and the transfer of the occupying power of parts of its population into the territory it occupies or the deportation of all or parts of the population of the occupied territory within or outside this territory.

All these crimes had the ultimate objective of the criminal enterprise – the removal of pro-Ukrainian elements out of Crimea and the annexation of Crimea into the Russian Federation without opposition, including the installation of pro-Russian elements, which include the emigration of more than 70,000 Russians, the illegal imposition of Russian law in the occupied territory, forcing Russian nationality on many Crimeans, and the appropriation of public property.

Ultimately, we hope that all the information gathered by the ICC in the context of its preliminary investigation will lead the ICC to investigate mid- to high-level Russian and Crimean officials on this basis. The international community expects responsible global leadership that follows the rule of law and expects it – no matter the situation – to be respected, especially from a state that is a permanent member of the UN Security Council. When this fails to happen, the international community must demand accountability. We hope that an investigation can be opened and responsible officials of the Russian Federation will be investigated. After an investigation that conforms to international best practices, responsible persons should be charged with the systematic perpetration of international crimes.

Novichok Use Implicates Putin’s Government in Navalny’s Poisoning

Sep 02 2020

Today, the German government has announced that Russian pro-democracy leader Alexey Navalny was poisoned by Novichok. Novichok is a deadly nerve agent developed by the Soviet government chemical weapons program and used on several occasions by the Russian government to kill its critics in the recent years.

To restate the obvious, Novichok is a poison that can only be accessed with the authority of the Kremlin. Therefore, today’s announcement by German officials  directly implicates the Kremlin and Putin in the high-profile assassination attempt on Navalny.

The choice of Novichok was not just a means  to silence Mr. Navalny, but a loud, brazen and menacing message sent by Putin to the world: dare to criticize me, and you may lose your life.

The announcement by the German government of its intent to formally notify the Organization for the Prohibition of Chemical Weapons (‘OPCW’) of the use of Novichok against Navalny is a meek bureaucratic half-measure that fails to acknowledge the extraordinary threat to human life posed by Putin’s regime everywhere. Taken together with Angela Merkel’s promise earlier this week to help Putin finish his Nord Stream 2 pipeline despite an international outcry amounts to condoning the poisoning and normalizing it into a new modus operandi where Putin’s murders go unpunished. Free Russia Foundation urges the leaders of the EU, its Member States and the U.S. Government to take an urgent and drastic action to punish the perpetrators of this heinous crime not only to serve justice, but to establish a powerful deterrent against new attacks by Putin’s regime globally.

Free Russia Foundation Statement on Kremlin’s Interference in Elections in Georgia

Aug 26 2020

We are deeply concerned with information recently distributed by the well-respected authoritative source Center “Dossier.” According to “Dossier,” the Kremlin is using Russian political expert Sergey Mikheev and consulting company “Politsecrets” to manipulate Georgian society, distribute disinformation and anti-democratic narratives, undermine Georgia’s Western aspirations, and interfere in free and fair elections in Georgia scheduled for October 2020.

More

Free Russia Foundation Calls for Investigation into Alexey Navalny’s Poisoning

Aug 20 2020

Free Russia Foundation is gravely concerned about the life and safety of Alexey Navalny. More