Putin’s PRC Visit Failed to Advance Power of Siberia 2
John C. K. Daly
Executive Summary:
Shares of Gazprom dropped sharply after Russian President Vladimir Putin’s May visit to the People’s Republic of China (PRC) ended without progress on the Power of Siberia 2 natural gas pipeline.
Gazprom lost about $1.4 billion in value on May 20 alone amid renewed doubts over Russian access to PRC gas markets. Russia is hoping to replace European markets for its natural gas—which largely closed after the Kremlin’s full-scale invasion of Ukraine—with the PRC’s.
Gazprom currently relies on Power of Siberia 1 to deliver its natural gas to the PRC, but it lacks the capacity to replace the volume of gas that flowed to Europe, intensifying pressure to reach a deal with the PRC on Power of Siberia 2.
The PRC is pushing for near-domestic gas prices and flexible volumes, while Russia insists on higher prices and “take-or-pay” guarantees. Even if an agreement is reached, Power of Siberia 2 would take years to build, and PRC demand would not fully offset lost European gas revenues.
Moscow Concerned About Armenia’s Wavering EAEU Membership
Luke Rodeheffer
Executive Summary:
The Eurasian Economic Union (EAEU) is continuing to pursue free trade across member-states, but Armenia’s membership is in doubt following the Armenian Prime Minister’s pro-Western Civil Contract party’s victory in the country’s June 7 parliamentary elections.
Trade volume among member states remains low for a free trade bloc, and the economic effects of Armenia’s potential exit would likely be negligible for the EAEU as a whole.
Moscow’s and other member states’ responses to the possibility of Armenia leaving the bloc have highlighted that the EAEU is as much a political project as an economic one.
Growing Water Shortages in Central Asia Threaten Region and its Neighbors
Paul Goble
Executive Summary:
Water shortages in Central Asia have become so severe that they can no longer be resolved by water-sharing agreements between the so-called “water surplus” upstream countries of Kyrgyzstan and Tajikistan and the “water short” downstream countries.
This crisis is undermining not only growth and stability in the region’s countries but also regional cooperation, and is increasingly involving neighboring countries, from whom the region seeks water, threatening massive refugee flows if it does not get it.
For the foreseeable future, the need for water and the inability of the Central Asian countries to solve this problem on their own are thus likely to be a major cause of conflict within the region and between its countries and the People’s Republic of China, Russia and Afghanistan.
A key ally of Kaja Kallas has stepped forward to defend the EU’s foreign policy chief as she faces a barrage of political attacks, including from fellow European commissioners.
Brussels has been set alight by selective reports suggesting the imminent abolition of her External Action Service, the EEAS, prompting Kallas to reassure the EU’s diplomats around the world.
“Those who are trying somehow to orchestrate this kind of criticism are working against the common interest of Europe," said Marko Mihkelson, chair of the Estonian parliament’s foreign affairs committee.
Representing the EU’s foreign policy is no simple task. The High Representative occupies a dual-hatted role, wedged between the Commission and national foreign ministers while wielding only limited formal powers.
“It’s almost ‘Mission Impossible’ to be at the same time very clear in your position and then represent [everyone else’s] position,” Mihkelson told Rapporteur by phone. The 56-year-old former journalist has known Kallas for more than a decade. She brought him into their centrist Reform party.
Kallas’ allies argue that Ursula von der Leyen’s Commission has increasingly built parallel structures that have eaten into Kallas’ territory. First by hiving off Middle East policy into a new directorate-general, then by creating a defence commissioner, and now by seeking greater control over intelligence coordination and efforts to fight disinformation. Only yesterday, a Commission spokesperson publicly shot down Kallas’ push for more trade measures against Israel.
“Knowing Kaja well, she is an Iron Lady,” Mihkelson said. “She fought back heavy criticism in Estonia, so she’s fully prepared for these kinds of attacks and she knows what is right and what is wrong.”
Asked what it said about the EU if many of the attacks were coming from within its own institutions, Mihkelson said: “If that is the case, and obviously there are some hints that the internal fight is one of the backgrounds of this growing criticism, that is extremely sad to hear.”
Instead, EU institutions should be fully focused on the threat posed by Russia, he argued.
But isn’t Kallas, as many critics allege, too hawkish on Russia? She has sought to stretch the debate beyond where many EU states are comfortable, including proposing limits on Russia’s armed forces as part of any peace settlement – conditions the Kremlin would be unlikely to accept.
No, said Mihkelson. Europe is lucky to have someone so clear-eyed about the existential threat from the east.
He pointed out that Kirill Dmitriev, one of Vladimir Putin’s negotiators, had relished speculation about the EEAS’ demise.
“The history of the EEAS is relatively short,” Mihkelson said. “We should not be too critical about that, because it’s only the beginning of a long journey – hopefully.”
