EU Leans on Germany Over Russian Loan

The European Commission is demanding that Germany defend its decision to guarantee a natural gas pipeline construction loan to Russia.

Neelie Kroes, the commission’s competition minister, wants an explanation as to why Berlin guaranteed part of the $6.2 billion natural gas pipeline that will run beneath the Baltic Sea, from Russia to Germany, bypassing the Baltic states and Poland.

The guarantee was made to Kremlin-controlled OAO Gazprom, which owns 51 percent of the pipeline, while Gerhard Schroeder was Germany’s chancellor. Schroeder is now a top executive of Gazprom in charge of that pipeline. German energy companies E.ON AG and BASF AG own 24.5 percent each in the pipeline.

The European Commission has the right to investigate large state aid payments made by EU governments and can block them or demand repayment if they are deemed illegal.

The commission has requested information from the German authorities so that we can verify that any state support is fully compatible with the EU state aid rules, a spokesman for Kroes said.