The EU-Russia Energy Dialogue – or the problem of imposing sanctions

by Patrick Truffer. Patrick Truffer graduated from the Swiss Federal Institute of Technology in Zürich with a Bachelor of Arts in Public Affairs and completes a Master of Arts program in International Relations at the Freien Universität Berlin.

Institutionalism – a further development of liberalism – assumes that universal norms and international institutions can overcome the anarchy in the international system of nation-states. Universal norms and international institutions integrate states, increase their mutual interdependence, and thus help to prevent war. This interdependence in turn leads to a relative devaluation of military power due to concern over relative losses in the event of an armed conflict (cf.: Seka Smith, “Teil 5: Zum Ewigen Frieden: Die Triade des demokratischen Friedens“, offiziere.ch, 29.03.2013). Furthermore, this interdependence complicates the imposing of sanctions.

EU-Energy-Import-2011In the field of energy supply, such interdependence exists between the EU and Russia. The EU depends on Russian fossil fuel exports due to the high demand for energy in the EU, Russia’s significant energy reserves and Russia’s geographical proximity. With a share of 35%, Russia is by far the EU’s largest supplier of crude oil and is also a key supplier of natural gas (30%) and solid fuel (26%) imports in the EU (European Commission, “EU Energy in Figures, Statistical Pocketbook,” 2013, 24). In return, the EU is by far Russia’s largest trading partner. Both the EU and Russia have an interest in a secure flow of energy. The EU-Russia energy dialogue initiated in 2000 is based on this common interest and is aimed at establishing a close partnership in investment, infrastructure, trade, and energy efficiency. This partnership is also intended to have a positive effect on other issues as well (European Commission, “Communication from President Prodi, Vice President de Palacio and Commissioner Patten to the Commission – The EU-Russia Energy Dialogue“, 2001).

Russia’s role during the Crimean crisis and the unrest in eastern Ukraine, along with the EU’s response, pose a severe test for the EU-Russia energy dialogue. As a result, the current status of the EU-Russia energy dialogue must be questioned and as well as defining any role it could play in improving mutual understanding and accommodation in general. In this essay, the current status of the EU-Russia energy dialogue and its most important achievements will be discussed in the first chapter, while the second chapter will address the main points of contention. The conclusion will show today’s role of the EU-Russia Energy Dialogue.

EU-Russia Energy Dialogue main achievements
With the EU-Russia Energy Dialogue, the EU hoped to establish a close partnership with Russia in the energy sector. The dialogue was meant to serve as a model for cooperation in other areas. By contrast, Russia saw it primarily as a means for safeguarding economic interests. It is not surprising that, to date, the EU and Russia have not gone beyond a supplier-consumer relationship in the energy sector. The dialogue mainly focuses on technical areas (Lars-Christian U. Talseth, “The EU-Russia Energy Dialogue – Travelling without Moving,” SWP Working Paper FG 5, 01.04.2012, 3f). The most outstanding achievement was the establishment of an early warning mechanism in response to supply disruptions during the gas disputes between Russia and Ukraine. This is to ensure an early exchange of information between the EU and Russia in case of imminent delivery interruptions. The related memorandum was renewed in 2011, and within the framework of the EU-Russia Energy Dialogue’s measures for prevention, enables the bridging and mitigation of consequences (Günther Oettinger and Sergei Shmatko, “Memorandum on a mechanism for preventing and overcoming emergency situations in the energy sector within the framework of the EU-Russia Energy Dialogue (Early Warning Mechanism),” EU-Russia Energy Dialogue, 24 Feb 2011, section 11).

This is not the first time such an initiative has been launched. Indeed, the interlocutors of the Energy Dialogue have been very successful at coming up with new ways of discussing old grievances, hence the proliferation of such “roadmaps”, “common spaces” and “partnerships”. But according to Russian officials I have spoken to, the new energy roadmap has been met with little enthusiasm on the Russian side, and a corresponding indifference within the EU. The Russians claim that their input has been mostly ignored by the EU Commission, which has also launched its own 2050 energy roadmap, and is thus more interested in going it alone. — Lars-Christian U. Talseth, “The EU-Russia Energy Dialogue – Travelling without Moving,” SWP Working Paper FG 5, 01.04.2012, 5.

The adoption of a common “Roadmap on EU-Russia Energy Cooperation until 2050” in March 2013 could take common relations in the energy sector to a new level, provided that the recommendations it contains are implemented seriously. However, there has been little progress in the last ten years with regard to the priorities listed therein, which are almost identical to those in the establishment of the EU-Russia Energy Dialogue. There is still uncertainty as to what extent Russian interests were considered in this roadmap and as to how realistic its implementation is. In particular, the current tensions due to Russia’s role during the Crimean crisis, the unrest in eastern Ukraine and the sanctions adopted by the EU, represent crucial hurdles. After overcoming them, a long-term rebuilding of mutual trust will be necessary.

Main points of contention
With regard to the liberalization of the energy market, there were already disagreements between the EU and Russia before the EU-Russia Energy Dialogue. Not without bias is the EU’s interest in a deregulated energy market, whereby, for example, third-party companies would have access to pipelines. This is the aim of the Energy Charter Treaty propagated by the EU and valid for all EU Member States. For reasons having to do with power politics, Russia is not interested in the liberalization of its energy market, nor in unfettered access to state-controlled and monopolized pipelines. The Energy Charter Treaty was signed by Russia in 1994 but has not been ratified. With the third energy package, which calls for a separation of production, transport and distribution of all energy companies operating in the EU, the EU is placing Russia under increasing pressure via the conclusion of contracts. Specifically, the EU is calling for the sale of the distribution networks or their subordination to an independent operator (on the Russian side also called the “anti-Gazprom clause”; Lisa Pick, “EU-Russia energy relations: a critical analysis,” The POLIS Journal 7, Summer 2012, 330f). With respect to the early bilateral agreements concluded between the EU countries neighbouring the South Stream project and Russia, the European Commission called for the renegotiation of contracts at the end of 2013. And finally, under the sanctions in mid-March 2014, the EU has suspended their participation in the South Stream project.

putin_saintbEven otherwise, the various pipeline projects have given rise to disputes. For example, the Nord Stream project between Gazprom, German, Dutch and French companies does not take into account the energy market liberalization targeted by the EU. Gazprom’s majority share (51%), and the takeover of large parts of the German natural gas infrastructure (including strategic gas storage), establish additional dependencies on Russia. In addition, the Nord Stream pipeline circumvents the Eastern European countries, which has also led to controversy within the EU (Andrew E. Kramer, “Russia Gas Pipeline Heightens East Europe’s Fears“, The New York Times, 12.10.2009).

Conclusion
The relations between the EU and Russia in the energy sector are characterized less by achievements and disputes, than by strong interdependence. In the medium to long term, the EU is dependent upon Russian energy supplies, and in turn Russia is dependent on the European energy market and its revenues. The EU-Russia Energy Dialogue plays an important role as a diplomatic platform in this regard, even if its original goals – a close partnership and serving as a model for other policy areas – could not be reached. To date, the EU-Russia Energy Dialogue has been unable to sustainably influence mutual understanding and accommodation in the energy sector – as before, the EU and Russia are maintaining a supplier-consumer relationship. Despite areas of common interest, e.g. with respect to securing the energy flow, the points of contention are too prominent, particularly the issue of market liberalization.

Serious implementation of the common roadmap could bring the EU’s relations with Russia in the energy sector to a new level in the long term. In particular, a great potential for cooperation exists in the areas of energy efficiency and renewable energy (cf.: Caroline Kuzemko, “Ideas, power and change: explaining EU-Russia energy relations“, Journal of European Public Policy 21, no. 1, 2014, 69). This is seriously complicated by Russia’s role during the Crimean crisis and the unrest in eastern Ukraine, along with the EU’s response to the situation. The associated tensions must be overcome as quickly as possible and the lost trust rebuilt. The imposition of economic sanctions by the EU could stymie the EU-Russia Energy Dialogue for years – with negative consequences for both sides.

This entry was posted in Basics, English, Patrick Truffer.

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