Energy and Foreign Policy
EU-Russia Energy Dynamics
March 20, 2014
Overview
Role of energy in foreign policyThe security of supply crisisImpact on European and Russian foreign
policyImplications for current situation in
Ukraine
Why this case?
Shows the growing importance of energy in foreign policy
Highlights the challenges of interdependence in foreign policy
Energy as a factor in foreign policyNatural resources long history of influence
on foreign policyLevel of significance depends on
economic and political vulnerabilities of dependent states - energy dependence
See energy as strategic resourceEnergy policy impacted by state, non-
state and private actors
Two key aspects of energy for FP
The sovereign aspects of energyEnergy as inherently territorializedConsolidating domestic and foreign status
of the state
Energy’s ability to significantly impact fortunes of a state
Has major impact on revenue of energy producing states
Role of energy in foreign policy
Energy as indicator of national prosperity and underwrites national security
Energy security as variableSecurity of demandSecurity of supply
Energy as economic concernMaintaining supply and demand, minimize
energy disruptions
Role of energy in FP (Cont.)
Energy as political concernConcern over potential leverage of
exporter states over importer and transit states
Energy as foreign policy toolExporters - use to shape diplomacy,
embargos and coercionImporter - soft power objectives, sanctions
and motivation for conflict
Russia: Energy exporter
Three key aspects of power in Russian energy:
Size and ownership of resource World’s largest gas exporter and second
largest oil exporter Gazprom - state-owned
Pipelines are also state-owned Long-term contracts
Europe: Energy importer
Most European states have little or no energy reserves
On average EU is 30-50% dependent on Russian gas and 26-30% dependent on Russian oil
Also dependent on transit countries to get that energy to it
The transit states
Countries between Russia and EU through which the pipeline pass
Caught between pull of EU and RussiaTransit countries dependent on revenue
from energy moving through the pipelines but also dependent on the energy itselfSo dependent on both EU and Russia
Ukraine key transit country with two major pipeline passing through it
The crisis: The preamble
Late 2004, tension arises between Ukraine and Russia over Ukraine’s inability to pay for Russian gas
Previous Russia solution was to reduce supply to Ukraine
Problem: Russia still needs to send gas to EU, so Ukraine just took from that portion
Also have tensions over transit tariffs
The crisis
Two key causes:Remote cause- the Orange Revolution
Ukraine government shifts towards EuropeRussia sees itself losing influence of key region
and further encroachment of West
Proximate cause- inability of Ukraine to pay for Russian oil
The crisis
January 1, 2006 Russia cuts gas supplies to Ukraine
Ukraine argues entitled to 15% of transit gas
Result: several key European countries see gas deliveries drop by 14 to 40%
Russia responds by increasing flow of gas on January 2
The crisis: aftermath
RussiaArgues crisis solely about Ukraine not
paying for gasReject any notion that stoppage was
political
UkraineSee stoppage as effort to show Russian
disproval at Ukrainian shift towards West
Impact on European & Russian FP
Hardens European perceptions of Russian willingness to use energy as foreign policy tool
Dramatically exposes European dependence Russian energy
Puts need for common European energy policy on the agenda of the EUEnergy now clearly seen as strategic issue
Highlights interconnected nature of EU-Russian energy security
Lessons for foreign policy
Energy creates vulnerability in foreign policy for both exporter and importers
Energy as important mediating factor in national and regional power relations
Growing interconnections between states means conflict between two states can impact many othersFurther complicating foreign policy decision
Implications for current crisis in UkraineWhat are the implications from this for the
current crisis?What does it tells about how we might
expect the various actors will behave in the current situation?