The European Union has opened an initial antitrust case against Gazprom, the Russian government-owned gas and energy giant. It is accusing Gazprom of abusing its market power to jack up prices and punish E.U. member states for noncompliance with its demands. As always with such cases, there is plenty of politics. The E.U. delayed bringing the case for more than a year, in part because it feared that it would further damage the relationship between Russia and the West. Rawi Abdelal, a political scientist at Harvard Business School, has written a lot about Gazprom, including this article (ungated earlier version here) for the Review of International Political Economy. The following presents some of the arguments that Abdelal makes, and tries to apply them to the current crisis.
Gazprom is not a simple arm of the Russian government
Much of the commentary about Gazprom in the last few years has been driven by the fear that Gazprom is making Europe more and more dependent on its gas supplies, and thus more and more beholden to the Russian state’s foreign policy goals. Abdelal argues that this is mistaken. For sure, a majority of Gazprom is owned by the Russian government. However, the Russian government desperately needs the money that Gazprom makes in rich foreign markets to subsidize a cheap gas policy for Russia’s domestic market and favored satellite states. The result is, in Abdelal’s words, that Gazprom is “desperately dependent on [the] European market. Consequently, the state’s interests directed Gazprom, or at least its exporting business unit, to act as an efficient, profit-maximizing firm.” Abdelal reports that Gazprom revenues made up 8 percent of Russia’s GDP, and Gazprom taxes and dividends accounted for 12 to 13 percent of the Russian federal budget.
Read the full piece at The Washington Post.
- Publication Type:Other Writing
- Publication Date:04/23/2015