Moldovan Concern about Gazprom Takeover of Union Fenosa

C O N F I D E N T I A L CHISINAU 000788

SIPDIS

STATE FOR EEB/ESC/IEC AND EUR/UMB

E.O. 12958: DECL: 07/28/2018
TAGS: ECON ENRG PGOV MD
SUBJECT: Moldovan Concern about Gazprom Takeover of Union Fenosa

Classified By: Charge d'Affaires Rudolf V. Perina for reasons 1.4(b)
and (d)


1. (C) Moldovan Prime Minister Greceanii (please protect) asked for
an urgent one-on-one meeting with CDA July 28 to voice her concern
about possible Gazprom takeover of the Spanish firm Union Fenosa,
which controls about 70 percent of electricity distribution in
Moldova.


2. (C) Greceanii said the GOM had learned that a 45 percent stake in
Union Fenosa might be auctioned as early as this week. There were a
number of Western European firms interested in the acquisition but
Gazprom was expected to bid as well. Greceanii said that if allowed
to compete, Gazprom would outbid other firms because it realized the
strategic importance of the deal and strongly wanted control of Union
Fenosa. She said that Russian control of Moldova's electrical sector
would give it a complete stranglehold on the country and bring to an
end Moldovan independence and European orientation.


3. (C) When asked by CDA what the GOM was requesting, she answered
that the U.S. should persuade the holding firm ACS not to sell its
stake in Union Fenosa in open bidding but rather directly to a
Western firm. CDA expressed skepticism that the U.S. could take such
action but promised to transmit the GOM's concerns to Washington.


4. (C) In a subsequent discussion, local Union Fenosa Executive
President Silvia Radu confirmed that a 45 percent acquisition of
Union Fenosa's global assets would give Gazprom 97 percent control of
Moldovan operations. However, given the impact of Gazprom control of
Union Fenosa assets in other countries, including Spain, she doubted
that such a deal would be politically acceptable to Madrid.
Presidential Advisor Mark Tkaciuc, in a separate conversation, said
the GOM reaction to a possible Gazprom takeover would be to "revert
to authoritarian communism" and nationalize the sector rather than
allow Russian control.


5. (C) COMMENT: There is little doubt that a Gazprom takeover of the
Moldovan electrical sector would give Moscow devastating and
virtually complete control of the country's energy resources. While
the intention of ACS to sell Union Fenosa has been reported in the
local press, Greceanii's sudden and urgent concern about the sale
implied some inside information about Gazprom's determination to be
the high bidder. It probably also reflected the fears of Moldova's
pro-Western political leaders regarding encroaching Russian influence
in the country. We did not promise Greceanii a reply, but if there is
any background information about the sale from Department or Embassy
Madrid that we could pass to her, it would be much appreciated.
End comment.

PERINA