Mr. Chairman and Commission Members, I would like to add my voice to the rule of law concerns raised during the Commission’s June 23, 2009 hearing entitled “The Medvedev Thaw: Is it real? Will it last?” In my view, Russia in many ways, continues to lack a fundamental respect for the religious, political and economic freedoms inherent in the Helsinki Process and the Organization for Security and Cooperation in Europe. The Commissions hearing is a testament to my concerns.
Beyond my strong concerns about these Russia’s behavior in these individual areas, I also have broader concerns about U.S. national interests concerning rule of law. The lack of support for democratic principles inside Russia has implications for its external behavior as well.
In this regard, one key strategic area for the United States and Europe is energy policy. Russia’s inability to consistently respect and honor international commercial and political rules has had, and will continue to have, a substantial impact on the United States and our allies. Rather than becoming more integrated into the global economy and its rules, Russia has chosen a path where it sets its own rules on matters of energy policy, largely because Russia controls much of Europe’s energy supply.
However, there currently exists a mechanism for holding Russia accountable on rule of law commitments in energy – The Energy Charter Treaty (ECT) – a 1990’s treaty signed by Russia and 50 other nations, most in Europe. Russia is bound by the treaty, having signed it, and is bound by the requirements of the New York convention on international arbitrations that would be used to enforce claims under the ECT.
I raise this issue because the Russian government is engaged in the largest arbitration ever under the ECT – a $33 billion arbitration dispute with GML, the majority shareholder of Yukos, formerly Russia largest private oil company. How the initial phase of this case is decided later this year and Russia’s reaction could provide the U.S. with clues on rule of law issues.
With these thoughts in mind, I would like to submit for the record and for my colleagues a recent Wall Street Journal article on Russian energy policy and the Energy Charter Treaty.
Please click here for a statement submitted by Commissioner Pitts