Has Germany shot itself in the foot by expropriating Rosneft’s assets?

By Jose Nino

On April 20, 2023, Germany's lower house of the Parliament supported changes to the Energy Security Act that facilitated the quick sale of Russian energy giant Rosneft's stake in the Schewdt refinery without having to previously nationalise these assets.

Earlier this week, Rosneft filed a lawsuit against the German government's extension of the trusteeship and petitioned for compensation for the financial losses it had incurred during the first six months of the order.

Since the "special military operation" phase of the Russo-Ukrainian conflict broke out, Germany and its partners in the European Union and North Atlantic Treaty Organisation (NATO) have engaged in a de facto proxy war against Russia. All of the nations of the collective West have imposed stiff economic sanctions on Russia and have largely decoupled their economic activity from it.

In addition, these countries have sent considerable military aid to Ukraine in an effort to bog Russia down in Ukraine.

This latest move to expropriate Rosneft assets represents a significant escalation on the part of the German government against Russia.

Founded in 1993, Rosneft is one of Russia's largest companies and rakes in revenue figures of approximately $111 billion. On a global scale, Rosneft is a titan in its own right, standing in 24th place in terms of revenue, with operations in over 20 countries worldwide.

Germany has historically been reliant on Russia for its energy needs. Prior to Russia kicking off its special military operation in Ukraine, 55 per cent of gas consumption in Germany was imported from Russia. However, after Russia's military incursion into Ukraine, the German government has been frantically working to find alternative countries to be its primary gas suppliers.

Thus far, it has bought more natural gas from the likes of the Netherlands and Norway, while working desperately to broaden its infrastructure for the importation of liquefied natural gas (LNG) from the US and Qatar.

Despite an ostensive reduction in its reliance on Russian oil and gas, Germany has incurred significant costs in terms of rising energy prices. According to a study released by Allianz Trade earlier in January, German industry is expected to pay roughly 40 per cent more for energy in 2023 than in 2021. Alternative energy sources such as American LNG also tends to be more expensive. The transition towards LNG, specifically the purchase and upkeep of floating terminals, will be both costly and time-consuming for Germany.

Thus far, Germany has provided over 14.2 billion euros of aid to Ukraine since February 24, 2022. Prior to Russia's invasion, Germany maintained a tight juggling act of trying to balance its diplomatic relations with Russia, which was largely condemned and sanctioned for its move to incorporate Crimea into its fold and provide military assistance to rebels in the eastern breakaway regions of Donetsk and Lugansk during 2014, while maintaining tight energy trade relations with the Slavic nuclear power.

Then German Chancellor Angela Merkel was party to the establishment of Minsk agreements - a set of international agreements that aimed to end the war in the Donbas between Russian-backed separatist groups and Ukrainian armed forces.

The original Minsk agreement ended up failing and was followed up by a modified agreement, Minsk II, which was hammered out on February 12, 2015. The agreement featured a series of measures, which included a ceasefire, the withdrawal of heavy weapons from the Donbas front line, wartime prisoner releases, and constitutional reforms in Ukraine that would grant autonomy to several parts of the Donbas. Although fighting scaled down after the agreement's signing, it never completely ceased. Moreover, the Minsk agreement's provisions were not completely implemented.

Russia's suspicions of the collective West not acting in good faith with regards to the enforcement of the Minsk agreements have largely been confirmed after Merkel and former French President Francois Hollande revealed that they did not comply with the Minsk agreements and just use them to buy time so that Ukraine could reconstitute itself both politically and militarily to launch a potential counteroffensive against the rebels who largely controlled the breakaway regions of the Donbas.

As a result of these failures to enforce the Minsk accords, Russia felt compelled to take full-fledged military action on February 24, 2022.

Broadly speaking, Germany's latest hostile actions towards Russia indicates that it's increasingly drifting towards the Anglo-American fold in geopolitical terms. Part of British grand strategy, in addition to its hegemonic successor in the US, has been to employ divide and rule throughout the European continent. One aspect of this strategy has been to keep Russia out of the European system altogether.

While Russia had taken gradual steps towards normalizing relations with the West after the dissolution of the Soviet Union, once it started asserting its geopolitical interests in Georgia (2008) and Ukraine (2014 to the present), it has become increasingly alienated from the West.

The Russo-Ukrainian conflict has only accelerated this trend, with Russia now looking eastward and forging a robust strategic partnership with China. Should Germany and its Western allies continue sanctioning Russia and extending the war in Ukraine through the constant provision of military aid, the Chinese-Russian alliance will only deepen. On top of that, the total decoupling of energy trade with Russia could lead to significant declines in living standards across the European continent.

At the end of the day, Europe will come out as the big loser by following London and Washington's geopolitical strategy against Russia.

(Jose Nino is a writer and political operative. His interest lies in history, economics, and politics and he has written for organisations like the American Institute for Economic Research, the Cayman Financial Review, and the Mises Institute and been featured on high profile podcasts like the Tom Woods Show. The views expressed are personal)

Source: IANS