The energy sector presents one of the main systematic governance problems leading to significant losses of public wealth and providing inroads for illicit finance and foreign authoritarian influence in the region, as noted in the first SEE Good Governance report by the R2G4P anti-corruption initiative. The energy sector is of crucial importance for Southeast Europe, due to its status as a natural monopoly (often owned by the state), the social sensitivity of the people to price increases (as protests throughout the region during the past decade have demonstrated), and the large investments and financial interests at stake. The State Capture Assessment Diagnostics (SCAD) identifies the sector as highly vulnerable to monopolization. The SEE countries have faced multiple allegations for blocking gas market liberalization in favour of local oligarchic corporate networks and for the benefit of Kremlin-controlled gas suppliers. Thus, unless properly governed the sector can undermine SEE countries’ independence and development.
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Infographic: Governance of State-Owned Enterprises in the Energy Sector