Austria rolls out red carpet for Putin

BRUSSELS - Austria has criticised Western sanctions on Russia and signed a contract to build a Russian pipeline despite EU legal concerns.

The developments came during a high profile visit to Vienna by Russian leader Vladimir Putin and Alexei Miller, the head of Russian energy champion, Gazprom.

Putin, who was recently snubbed by the leaders of the G7 nations over his attack on Ukraine, met with Austrian President Heinz Fischer and with Chancellor Werner Faymann. He also laid a wreath at a WWII monument in central Vienna and met business chiefs in the Austrian Chamber of Commerce.

He accused the US of trying to derail the pipeline project, South Stream, which is to pump half of Russia’s gas supply to Europe from 2016 onward, weakening Ukraine by bypassing its transit network.

“They [the US] themselves want to supply gas to the European market. But I assure you, it will not be cheaper than Russian gas. Pipeline gas is always cheaper than liquefied gas … the Americans are competitors. This is a normal situation. And they are doing everything possible to break up this contract”, Putin said.

He said South Stream, like Nord Stream, an existing Russian-German gas pipeline, will increase Europe’s energy security “in the context of the current developments in Ukraine”.

He also made a series of counter-claims against Western complaints.

In response to US and EU accusations he has poured arms, special forces, spies and mercenaries into east Ukraine, he said “we did not use the [Russian] armed forces directly for any combat operations” in Ukraine.

In response to accusations the Crimea referendum on secession was fake, he called it “the free expression of will by the people of Crimea”.

Amid criticism on the human rights situation inside Russia, including new laws against promotion of gay rights, he said “stereotypes that exist regarding Russia, including on the so-called issues of sex minorities, to a large extent this is a fictional idea”.

His Austrian hosts did not challenge any of his remarks.

Fischer criticised the current EU sanctions on Russia, saying: “Nobody benefits from sanctions … They aren’t helping to produce any profit for anybody”.

He also defended South Stream, saying: “No one can explain to me - and I can't explain to the Austrian people - why a pipeline that crosses EU and Nato countries can't go 50 km into Austria”.

Faymann praised Putin’s “recent de-escalation measures”.

Christoph Leitl, the head of the Austrian business lobby and a centre-right politician, joked that Austria has a territorial claim to Ukraine because part of it belonged to Austria in 1914, reports Reuters.

Putin replied with his own joke, saying: “"What is that supposed to mean? What are you proposing?"

On the business front, the head of Austrian energy firm OMV Gerhard Roiss and Gazprom’s Miller signed a contract to create South Stream Austria - a 50-50 joint venture that will build the €200 million, 50-km-long section of the pipeline in Austria.

OMV predicted it will start operations in 2016.

“Europe needs Russian gas and it will need more Russian gas as its own supply dwindles”, Roiss said. Miller noted that if Ukraine “begins to siphon off” EU-bound gas this winter because Russia stopped supplies to Ukraine in a price dispute, then “we will increase supplies via Nord Stream”.

The OMV-Gazprom deal is a direct challenge to the European Commission, which says EU states must renegotiate their intergovernmental agreements with Russia to fall in line with EU law.

Putin’s visit came shortly after he called on his upper house to rescind a mandate for Russian soldiers to enter Ukraine to protect Russian speakers if need be.

The mandate was issued in March and the EU has repeatedly asked him to get rid of it in order to de-escalate the situation.

The Russian leader also came to Vienna shortly after pro-Russia rebels in east Ukraine killed 11 Ukrainian soldiers despite Ukraine’s unilateral ceasefire and despite the fact that some rebel leaders had begun peace talks with Ukrainian authorities.

The Russian stock market and the ruble made gains after Putin’s announcement on the mandate.

But some of his remarks in Vienna indicate that his political position has not changed.

“Of course, we will always protect ethnic Russians in Ukraine and the part of the Ukrainian population, the Ukrainian people, who feel not just an ethnic but also a cultural connection to Russia, who feel themselves part of the greater Russian community”, he said in the Austrian capital.

EU leaders will at a summit in Brussels on Friday decide whether to impose further sanctions on Russia.

For his part, Swedish FM Carl Bildt at an EU meeting in Luxembourg on Tuesday criticised Austria’s decision to invite Putin.

He said the visit “is [Putin] trying to split the European Union … that’s what the Russians always do when they are in a cornered position”.

Three separate EU diplomatic sources told this website there is no appetite for further sanctions against Russia at this stage, despite the public threats.