Gazprom: Casting Out the Giant

Europe is taking no chances: Its regulators have okayed a plan that would block Gazprom from buying pipelines and other energy assets in the European Union. The move, partly a result of President Putin's more assertive foreign policy, is likely to be mirrored in other Western countries.

The EU's regulatory arm voted today to bar state-influenced or -owned companies from outside the EU from controlling gas pipelines or power companies within its borders. Gazprom wasn't named, but it's obvious at whom the regulation is at least in part aimed.

Whether fair or not, Gazprom has gotten a reputation for mixing business and politics; if a certain country irritates the Kremlin, the thinking goes, it could be subject to a brief cutoff of its gas supplies, or even longer.

That certainly seems to have been the case in terms of Gazprom's attitude toward Georgia, and arguably also toward the Baltics. Gazprom's defenders and its public relations agents say -- not entirely convincingly up to now -- that the company has acted only against free-loaders.

Putin's recent habit of barreling his chest and delivering patriotic statements has helped to seal the case as far as Europe is concerned. With a 30% reliance on Russian gas supplies already, the EU is loathe also to allow Gazprom to control actual hard assets and retail networks.

Gazprom has been aggressively in the market for energy assets abroad. For the same reasons as the Europeans, the U.S., Canada and others are likely to continue to be guarded in permitting such purchases.

Here is the operative phrase in today's on-line Wall Street Journal: Foreign energy companies operating in the EU will have to be certified to prove they are free from government influence. Read story

The proposed regulations still must be approved by a majority of the EU's member countries, after which they would come into effect in three or four years.