Are Energy Charter Treaty (ECT) bosses enjoying the limelight at taxpayers’ expense amidst a final EU withdrawal?

Are Energy Charter Treaty (ECT) bosses enjoying the limelight at taxpayers’ expense amidst a final EU withdrawal?

No turning back on an EU pullout from the Energy Charter Treaty

It is now official. The European Union will leave the Energy Charter Treaty (ECT). The much maligned energy pact, carefully designed and established by Brussels in the 1990s in order to protect European investment in ‘lawless’ yet resource-rich Russia, Central Asia and the Caspian, is now abandoned by its creators.

Following the official notification by the European Commission (7 July 2023), the coordinated withdrawal from the ECT by the EU and its member states is no longer a matter of speculation. It is the looming and imminent reality. While France, Germany, Poland and Luxembourg have already taken the formal and legal steps necessary to leave the Treaty, the remaining EU countries are queuing at the exit. Portugal announced that it would withdraw following July’s EU Energy Council.

Speculation is also rife that non-EU heavy-weight ECT member states, such as the United Kingdom, are also lining up to pull out of the Treaty. This news comes despite earlier arguments by Brexiteers that London will embrace a multilateral trade and investment culture beyond the EU, of which the ECT forms a large part.

Apart from the United Kingdom, other non-EU ECT members are also said to be considering their options following the official notification by the Commission. Uzbekistan had already declined to host the ECT Chairmanship in 2023, in what was seen as another blow for the Organisation.

What went so badly wrong with the ECT?

So what went so badly wrong with the ECT, given that it has always been perceived as Brussels’ (and the Commission’s) baby? Mothers are normally protective of their children. In this case it may be so that the ECT child fell out of favour over the years, after the mother nurtured further children such as the Energy Community Treaty, the European Green Deal and the ‘Fit for 55’ package.

Madrid, Berlin and Rome were outraged. Enough was enough when it came to investment protection – at least as far as multilateral binding agreements within the legal space of the EU were concerned. The Commission had to do something. ECT top boss at the time, Secretary General Urban Rusnak of Slovakia, at first strongly backed by the EU, became Brussels’ bad boy.

While the ECT was adopted well before the Paris Agreement on Climate surfaced in November 2015, the Paris Agreement itself in fact became the Commission’s blessing in disguise. Almost immediately following Paris, the ECT became subject to a tirade of scathing attacks from the European climate lobby and was stamped with the label of protector of the fossil fuels industry.

Green NGOs from around Europe mobbed the ECT in the media like bees around the hive.

Inconvenient truths were ignored, however. Many voices started to call on the EU to pull out of the ECT. Even Greta Thunberg called on the European Commission to pull the EU out of the Treaty.

Another questionable EU masterstroke

And here things become interesting when it comes to the Treaty’s current demise. One of Brussels’ leading voices who joined in the ECT-bashing bandwagon was one Claude Turmes esq, Luxembourg’s happy-go-lucky energy minister, who was long-known in Brussels as a somewhat eccentric Green MEP.

Dr. Urban Rusnak.

Like many of the Commission’s other brainwaves, things did not exactly go according to the script. The selection procedure to appoint Lentz was fiercely resisted within the 53-country strong ECT governing body, particularly by the many non-EU members. Many of these countries backed Rusnak to continue as Secretary-General in advance of an ECT governing body meeting which took place in April 2021, where the appointment of the future Secretary General was to be sealed.

Following the quarrelsome selection procedure and the Commission going out of its way to prevent Rusnak from running during the April 2021 governing body, Lentz became the ECT’s top boss, with some high hopes.

Appointments made in Tokyo – with a little help from Brussels

While the appointment of Guy Lentz as the EU’s single-candidate-top-boss of the organisation is interesting, the appointment of the ECT’s No.2 boss deserves no lesser attention. Since Russia’s withdrawal from the ECT around a decade ago, Japan’s role within the Organisation has been on the rise. Tokyo held the Chairmanship of the ECT in 2016 and a Japanese national was given carte blanche to be the organisation’s No.2 ranked official as of 2017. While the ECT is largely the EU’s baby,

Japan is the single largest country contributor to the organisation’s budget due to the might of its economy, churning out some 800,000+ Euros per year from the public purse to pay ECT salaries. Around a quarter of this amount goes towards the annual benefits package of the ECT’s No.2 official, a Japanese national, who became resident in Brussels.

From early 2017 to mid-2019, the ECT’s No.2 boss was a Japanese engineer-academic, Masami Nakata, who served as Rusnak’s deputy. Nakata had little, if any, energy background and had no previous management experience before being parachuted by Tokyo into the ECT position.

However, in mid-2019, she was fired from the organisation in sensational circumstances for authoring a clandestine report full of scathing allegations against Rusnak and for seeking to discredit the organisation in public. While Nakata’s dismissal caused tension between Rusnak and Tokyo, the latter continued to push for another Japanese national to replace her as the organisation’s No.2.

During the first half of 2021, the Japanese Ministry of Foreign Affairs conducted an ebullient demarche pushing for Atsuko Hirose, a former Japanese government employee, to be appointed as ECT Deputy Secretary General. The appointment procedure for the ECT Deputy Secretary General was a little more competitive than the parallel procedure for the ECT top post, with candidates from Georgia, Kyrgyzstan and Ukraine facing off against Japan’s Hirose.

All three candidates facing up to the pre-retirement-aged Japanese woman had decades of energy experience – the Georgian candidate alone had worked 14 years with the IEA in Paris and with the ECT prior to that.

Money talks, however, as does the lobby power of the world’s most powerful governments and their diplomatic networks, when it comes to employment at international organisations. Atusko Hirose became the ECT’s Deputy Secretary General barely three months before EU-monopoly candidate Guy Lentz was appointed as the top boss.

At face value, this was not a bad nor irrational combination of top figures to lead the ECT. Japan and the EU member states collectively account for well over 3 million Euros of the organisation’s 4 million Euro annual budget. Both the EU and Japan had publicly backed the Treaty’s modernisation process, which started under Rusnak and was heading towards a conclusion before he was succeeded by Lentz.

The bright future which did not happen

The ECT’s modernisation involved complex multi-party negotiations (50+ countries) which were already ongoing for two years when Lentz and Hirose took up their appointments. An agreement on modernisation between the ECT member states, for which the Commission was pushing hard, was anticipated for summer 2022. There was substantial expectation that the organisation could be reformed. The clouds of the climate storm hovering over the Treaty during the Rusnak years appeared to be receding – in a newly emerging era for the Organisation overseen by the new duo of Lentz and Hirose.

Fast forward to summer 2023. Barely a year-and-a-half has passed since the duo have taken up their appointments at the organisation.

The ECT – the iconic Treaty created by the EU in the 1990s to promote energy investment and trade across Europe and Asia – is on the brink of total and utter disintegration. The EU’s biggest and probably most powerful member countries – France, Germany, Italy – are either withdrawing or have already withdrawn from the Agreement. The European Energy Commissioner, Kadri Simson, has announced that the entire EU will withdraw with imminent effect.

The Commissioner’s announcement follows on from President Macron of France proclaiming on twitter towards the end of last year that the ECT is no longer compatible with Europe’s future energy landscape.

Robert Habeck, Germany’s star vice-Chancellor and Minister for Economic Affairs and Climate Action, has himself penned a letter to Secretary General Lentz announcing Germany’s pull out. Even the colourful Claude Turmes, the man who endorsed Lentz’s monopoly appointment as Secretary General, tweeted Luxembourg’s own withdrawal from the Treaty in late 2022, in what was yet another flamboyant u-turn.

As the ECT empire burns, Nero fiddles…

Why has the situation changed so rapidly and so radically for the ECT and what have the Organisation’s two top bosses – Guy Lentz and Atsuko Hirose – done to prevent the crisis from deepening following their appointments?

While the mandate of the two top officials justifying their cumulative compensation packages of half a million Euros of taxpayers’ money is based on promoting and defending the organisation’s objectives, it seems that the duo have a somewhat different interpretation of their roles. While Rusnak and his late-predecessor Secretary General before him, Belgian diplomat Andre Mernier, conducted hundreds of missions to engage stakeholders and promote the organisation’s objectives far and wide, the ECT’s new Secretary General appears to preferred to slumber through the crisis.

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