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Europe has done a terrific job in unhinging itself from Russian gas supplies since the start of the Ukraine war.
The Kremlin’s share of the gas market has plummeted from 35 per cent to 8 per cent as users have switched suppliers to Norway and liquified natural gas (LNG) producers in Qatar and the US.
There has been one major leakage, which is the transit of gas via Ukraine mainly to Slovakia and Austria.
That deal came to an end on January 1 when Ukraine’s Naftogaz declined to renew its latest five-year transit deal with Russia’s Gazprom.
The mystery is why, given the comprehensive Western sanctions against Russia, this contract remained in place.
The policy was seen as an economic benefit to Kyiv, which loses some £800million in transit fees because of the cut-off. Less discussed are the other beneficiaries.
Russia links: Royal Mail bidder Daniel Kretinsky has a 49% stake in the Eustream pipeline that pumps gas to Slovakia through the company EPH
They include SPP Infrastructure, the group which controls the Eustream pipeline that pumps gas to Slovakia.
The minority 49 per cent owner in the pipeline is EPH, part of Czech sphinx Daniel Kretinsky’s sprawling empire, which includes stakes in West Ham FC and Sainsbury’s.
Putin’s gas has enriched Kretinsky and his partners, and is among the reasons Kretinsky has been able to accumulate sufficient wealth to allow him to make a £3.6billion bid for Royal Mail owner International Distribution Services.
The Slovakia/Austria pipeline has been able to operate under a waiver by the EU.
It doesn’t alter the fact that Russia’s ghastly war on Ukraine has intensified using drones and advanced rockets to attack civilian and power generation targets.
The assault has cost lives in the war-afflicted country.
Kretinsky and his fellow infrastructure investors have continued to receive dividends from the pipeline, so quite how the proposed deal for the Royal Mail passed muster under the National Security & Investment Act under such circumstances is extraordinary.
The UK was at the heart of the effort to stymie Russia’s economy, driving UK-based oligarchs out of the country, seizing billions of pounds of financial assets, ending the listings of Russian stocks in London and much more.
Even if Kyiv was the intended beneficiary of keeping the trans-Ukraine line open, it would be hard to justify profits being made from the Russian connection.
The Business Secretary Jonathan Reynolds and Royal Mail unions may consider Kretinsky a legitimate business person.But families of the dead, injured and dispossessed in Ukraine may take a different view. So should the British Government.
Export pain
Economic prospects are not getting better for Rachel Reeves.
Growth could get a lift in 2025 from cash going into the public sector after her Budget.
But wealth creation through the private sector is neglected. And with the Government soaking up much of the nation’s borrowing capacity, there is a risk private sector investment will be crowded out.
The purchasing managers’ index for manufacturing tells a continuing dismal story, with activity shrinking at the fastest pace for 11 months.
The UK tends to scoff at weakness in eurozone economies but that ignores the fact Europe is the Britain’s biggest trading partner.
This has contributed to the biggest fall in exports and new orders for ten months.
Normally, Britain can count on its dominant services sector and the City to bail us out. There is no better time for the Chancellor to boost confidence by helping to forge a new ‘equivalence’ deal for London’s derivatives market.
As critical, lifting stamp duty on share trading could be totemic for reviving spirits in battered UK stock markets.
Rocket science
Britain punches well above its weight in science as the UK’s record on Nobel prizes and tech start-ups shows.
It is deeply worrying that analysis by the FT reveals a reduction in core science subjects in the last five years. Undergraduate courses in chemistry have plummeted 25 per cent and those in biosciences by 15 per cent.
A rise in education spending of £2.3billion over two years is proposed, with cash from the VAT levy on independent education. It would be best deployed reinvigorating the appetite for laboratory and tech training.
Ministers need to close the science gap if the research edge is not to be blunted.
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