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Tracing Russian Economic Assets – and Targets for More Sanctions

12:12 PM, Apr 2, 2014 • By STEPHEN SCHWARTZ
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Travelling from Sarajevo, the capital of Bosnia-Herzegovina, to Mostar, a city almost midway toward Dubrovnik on the Adriatic Coast, one drives through a stunningly-beautiful landscape of mountains, forests, and rivers. On a recent trip, however, I observed a surprising sight: four gas stations owned by Gazprom, the Russian energy giant.

Gazprom is an obvious target for global sanctions in response to Vladimir Putin’s land-grab in Crimea, but the extent of its operations is little-known in the West. Many people think Gazprom is only involved in the export of natural gas to Europe—a major strategic operation for both sellers and consumers—but a subsidiary, Gazprom-Neft, maintains a retail fuel business comprising 1,670 gas stations in Russia, other former Soviet “republics,” Bosnia-Herzegovina, Serbia, Romania, and Bulgaria. Of them, 40 serve Bosnia-Herzegovina, where the Muslim population is hardly sympathetic to Russian imperialism. But such is the way of business in the Balkans.

Balkan gas stations have characteristics setting them apart from those in most other countries. They are typically commercial centers, beyond the usual minimart found in a gas station. According to Gazprom’s web publicity, its facilities in Bosnia-Herzegovina include “a shop, restaurant, and a café. Customers can also use wireless internet, a carwash and a children’s playground.”

Gazprom’s reach has provoked concern elsewhere. At the beginning of March, Gazprom announced that it may raise its prices on shipment of gas to Ukraine. In Germany, Gazprom is concluding an asset swap with BASF, its long-term local partner, to enlarge its share in Wingas, a gas storage and distribution enterprise. According to the London Financial Times of March 27, Gazprom will assume 100 percent control of Wingas, in return for which BASF will gain access to gas fields in western Siberia.

Gazprom has special influence in Germany thanks in no small part to its employment of Social Democratic ex-chancellor Gerhard Schroeder as chairman of Nordstream, a Gazprom subsidiary operating a pipeline to the Baltic states. Schroeder has been questioned in Germany for his close association with Putin and Schroeder’s defense of the Russian overlord in the Crimean annexation.

As reported by Reuters, Schroeder “has criticized moves to impose sanctions and eject Russia from the G8, and has even backed a Kremlin argument comparing the annexation of Ukraine’s Crimea region to NATO’s intervention in Serbia’s Kosovo province in 1999—which he himself helped lead as the German chancellor of the day.

“‘We sent our airplanes to Serbia and together with NATO dropped bombs on a sovereign state without having a U.N. Security Council resolution,’ Schroeder said. ‘So that’s why I’m cautious about wagging my finger at anyone.’” With his finger in the Russian energy pie, Schroeder might indeed be wary of wagging it.

Gazprom is not alone as a Russian energy giant with Western customers. Lukoil, which describes itself as “the largest Russian oil business group with sales of over US$139 billion and net income of over US$11 billion,” operates gas stations in numerous locations in New Jersey, New York, Connecticut and Pennsylvania.

As reported in 2012 in the North Jersey News, Lukoil dealers in New Jersey and Pennsylvania protested when the Russian firm raised its wholesale prices by five to 10 cents per gallon for independent dealers, while adding a premium of 25 to 30 cents per gallon depending on location.

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