Fueling controversy

Former German Chancellor Gerhard Schroeder's government offered to guarantee Gazprom a EUR 1 (zł.3.9) billion  loan to help build the controversial Baltic gas pipeline. The German Ministry of Economy has confirmed that the loan guarantee was made on October 24, less than a month before new Chancellor Angela Merkel took office.

Poland maintains strong opposition to the pipeline, which would allow Russian gas to be delivered directly to Western Europe without passing through Poland, leaving it unable to balance Russia's stranglehold on gas supplies with control over access to western markets. Two weeks ago Schroeder - an active proponent of the deal - took the position of chairman of the supervisory board of NEGPC, the company entrusted with building the Baltic pipeline.

German media and politicians now criticize Schroeder for accepting a job in a company whose interests he backed and lobbied for while in office. The agreement with Russia on the construction of the pipeline was signed just 10 days before the elections which removed Schroeder from power.

The loan was reportedly intended to finance the construction of a segment of the pipeline which would link St. Petersburg with gas fields in Siberia. According to Sueddeutsche Zeitung, the German government would pay up to EUR 900 (zł.3,570) million in the case of the Russian company's insolvency. As the paper reports, government loan guarantees are usually given to German exporters. However, in the case of foreign companies they are only given in special circumstances, such as when there is concern over the country's energy security.

In a written statement the former Chancellor claims that he had no idea the guarantee had been made. Furthermore, he claims that the offer was made by two banks - Deutsche Bank and KfW, and that Gazprom wasn't interested in the offer.