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Moscow Times
December 16, 2005
Do Politicians And Pipelines Readily Mix?

The buzz in Berlin this week about the ethics of former German Chancellor Gerhard Schröder taking a job on Gazprom's Baltic pipeline has been highly critical. In Moscow, on the other hand, Schröder's involvement has been welcomed as likely to improve EU-Russia energy relations and bring more transparency to Gazprom, which has been criticized over the use of murky middlemen in its gas sales.

These conclusions may, however, not be mutually exclusive.

Let's assume, for argument's sake, that Schröder's motives are entirely honorable: As a firm believer in the pipeline, he wants to ensure that Germany and Western Europe have a secure supply of gas over the coming decades, and believes that he has the ear of his good friend, President Vladimir Putin, to that cause.

He will also aim to look after the interests of the German shareholders in the Swiss-registered pipeline company to keep the $5 billion project more or less on budget.

Yet how much Schröder -- a lawyer, not an energy executive, by profession -- will be able to influence anything apart from the pipeline's construction is not clear.

Gazprom's use of various intermediaries to sell its gas has historically resulted in the company, and the Russian state, not getting the full market price for its gas. These arrangements would be outside Schröder's purview, as would anything involving transparency in Gazprom itself.

For Gazprom, getting Schröder on board looks like a canny way to cement energy ties between Moscow and Berlin and get access to Schröder's still-current contacts book of top European decision-makers.

But it is not clear that Schröder brings much to the table here, either. As the company that controls Europe's gas tap for the foreseeable future, what kind of introduction does Gazprom need?

And if Schröder's appointment is part of the drive to clean up Gazprom's image in the West ahead of the company's share liberalization, the way it has been handled is more likely to raise suspicions with investors than reassure them.

If it turns out there is no pressing reason why Schröder and Gazprom need each other, all we are left with is the tawdry picture of a retiring politician engaged in a spot of ill-advised nest feathering while tying his reputation to Gazprom's. Strange, too, as Schröder could presumably take his pick of any number of lucrative jobs.

Schröder's appointment, like the reported offer of a top job at Rosneft to former U.S. Commerce Secretary Don Evans, suggests something more worrying: that the Kremlin is more interested in co-opting prominent Western politicians to state energy firms, apparently in some kind of quid pro quo for favors past or future, than seeking independent business expertise from abroad.