How Russia pushed Moldova’s pro-Western government to the brink of a gas crisis

Analysts say that’s exactly how Russia can use energy dependence to bully a new government that has turned away from Moscow and toward the West.

Moldova’s gas crunch ended late Friday with a new five-year contract with Russian state gas giant Gazprom.

But the country is left as a cautionary tale. As international gas prices hit record highs this month, critics accused Russia, Europe’s top supplier, of stoking the continent’s inflation by holding back supplies. At the same time, Russia is pressing for final approval of Nord Stream 2, a nearly completed gas pipeline linking Russia to Germany that will strengthen Russia’s hand in Europe’s energy markets.

Russian President Vladimir Putin has called accusations that Moscow is using energy to squeeze Europe “politically motivated blather.”

Josep Borrell, the European Union’s top diplomat, on Thursday accused Moscow of “weaponizing” its gas monopoly in Moldova, which elected pro-Western President Maia Sandu last year and then voters backed her party in parliamentary elections this summer. He said Gazprom’s sharp price increase “was related with political problems.” 

In her fifth-floor apartment in Moldova’s capital, Chisinau, Furnica, 49, was well aware that her country’s future was solely in the hands of Russia, which sees Moldova and many other former Soviet republics as part of its sphere of influence.

“We have to fight to the end, of course, but how do we fight?” Furnica said. “There’s nothing we can do.”

Exploring alternatives

Moldova, a country of about 2.6 million people wedged between Romania and Ukraine, has always had its natural gas exclusively piped from Russia. But when the contract with Gazprom expired at the end of September, just as gas prices across Europe peaked, Gazprom raised its rate to nearly $800 per thousand cubic meters, or more than four times what Moldova paid last year.

Moldovan officials said that was too much.

Gazprom also demanded Moldova pay its debt to the company — some $700 million, according to Gazprom — or it would shut off the gas, plunging Moldovans into uncertainty ahead of winter.

Moscow’s line was this: market forces drove gas prices up just as Moldova’s contract with Gazprom expired. The talks between the two parties were “strictly commercial,” Kremlin spokesman Dmitry Peskov said.

But countries with friendly relations with Russia tend to get sweeter deals on energy contracts. Belarus, a close Moscow ally, recently negotiated a significantly lower price for next year. Earlier this month, Serbian President Aleksandar Vucic said he expected Belgrade to get “the most advantageous price” even as the rates shot up.

“I know Putin and we will have the best price,” Vucic said.

Moscow also tried to set conditions on a new Moldova contract, including amending Chisinau’s free-trade agreement with the European Union, according to the Financial Times. That deal is vital to Moldova, as 70 percent of its exports — ranging from electrical machinery to wine — go to Europe.

“I wouldn’t put the [free-trade agreement] on the table for negotiation with a third party,” said Dumitru Alaiba, a parliamentarian who chairs the commission on economy, budget and finance.

“This is the moment to really do the right thing, get a good deal and learn our lessons,” he added. “You can never be a stable country and predictable for your people, for your businesses, if you only rely on one source. It doesn’t matter from where.”

While Moldovan officials negotiated with Gazprom, the country made small, symbolic purchases of gas from alternate suppliers — the first time Moldova ever bought gas from non-Russian sources.

The volumes — small amounts from Poland and the Netherlands — weren’t enough to cover Moldova’s gas needs for one day, energy analysts said. The point was to test the mechanisms for delivering gas to Moldova from somewhere other than Russia.

“This experience shows the incredible vulnerability that a country like Moldova feels when it is dependent on one source of gas,” said Mihai Popsoi, the deputy speaker of Moldova’s parliament.

“The vulnerability is augmented by the fact that we also have one importer, one distributor and one transporter,” Popsoi added, referring to Moldovagaz, a subsidiary of Gazprom. “We are working on this unbundling of the sector. … This crisis is yet another indicator that this had to be done long before.”

Higher prices

The wood-burning furnace in Anna Parasiuc’s home has been more of a prop in recent years, something she and her two sons would occasionally light “just for fun.”

But even as most Moldovans doubted they’d really be left without gas for the winter, Parasiuc joked that she had a built-in plan B in her boys’ bedroom. It would have undoubtedly been cheaper.

Parasiuc, 37, tries to use as little gas as possible to heat her home in the winter. During the fall, when temperatures are often above 50 degrees the day, she will shut off the gas completely during the day. In the winter, she sets the heat on the minimum amount.

“I don’t even want to imagine what the new gas bills will be like,” Parasiuc said. “I don’t even want to start the calculations in my head.”

Popsoi, the deputy speaker of Moldova’s parliament, said that the cost burden on Moldovans “will go up significantly.”

“We will do our best to compensate this price hike so that people can afford to pay,” he added. “We need to find a solution not to leave families and companies bankrupt.”

Moldova paid Gazprom an average of $148 per thousand cubic meters last year. No price details about the new contract with Gazprom were disclosed.

Moldovan Deputy Prime Minister Andrei Spinu, who represented Chisinau in the Gazprom negotiations, said in a Facebook post Saturday that he expects the price for November will be around $450 per thousand cubic meters.

The deal “does not provide for any political conditionality,” Spinu said. He added that the pro-Moscow breakaway region of Transnistria, a narrow strip of land along the Moldova-Ukraine border, is not mentioned “in any way.”

The new agreement also involves an audit of the $700 million debt that Gazprom says Moldova owes, but that Moldovan officials have contested.

“Last year, when pro-Russian socialists controlled the parliamentary majority, there was no problem signing a deal with Gazprom,” said Sergiu Tofilat, who was Moldovan President Maia Sandu’s energy adviser.

“But now, when we have a pro-European government, they suddenly remind us about the debt.”