Ioannis P. Sotiropoulos,Ph.D.

Department of Turkish Studies and Modern Asian Studies

National and Kapodistrian University of Athens

IENE, Monthly Analysis, no 149, November 2014

“The secret of politics; Make a good treaty with Russia.”.

Otto von Bismarck

Introduction

The energy nature of the close European relationship with Moscow is not a new reality; energy has been determining the economic-political framework of the Russo-European relations at least for the past two decades. In terms of the Systemic Geopolitical Analysis, the Geopolitical Factor of Energy, being directly interdepended with the Geopolitical Pylon of Economy, functions catalytically in the economic and political process of homogenisation of the Eurasian Geopolitical Complex, presently and as well as in the medium-term. Nonetheless, in light of the recent rapid political, diplomatic and military developments that shake EU-Russian relations, the question that arises is to what extent the limitations that the Active Geopolitical Supra-system poses via its Geopolitical Poles of Power are adequate to, seriously and systematically, hinder, the uninterrupted course of the aforementioned geopolitical process.

The current energy-based relationship

It is widely known that the European Union as a Supra-national international organization, imports approximately 30% of the natural gas that it consumes for industrial and household consumption from Russia, and more specifically from the state-owned company Gazprom. On an individual member-state level, this percentage is decreased in countries that consume different kind of energy sources.  Indicatively, despite its oil production is in decline, Romania has secured its consuming mixture to a large extent due to its oil production, so far and France has been utilizing nuclear energy continuously from the 1960s onwards. On the contrary, almost all Eastern Europe States are completely dependent on Russian natural gas, with a percentage that varies from 80-100%. Such states include Lithuania, Latvia, Estonia, Moldova, Slovakia, Bulgaria, Hungary, Slovenia and Poland. (Refer to table 1). In addition, despite any diversification efforts, or storage of energy supplies, mainly from 2009 onwards, there are core EU states that depend greatly on Russian gas, such as Germany, Austria and Italy.

Source: Financial Times, 14 October 2014

The limits of the relationship

The recent Russo-Ukrainian crisis has deduced, in relation to the energy variable as the geopolitical correlation factor between EU-Russia, two important conclusions. Firstly, that the mutual interests of the said relationship are so colossal that its continuation was never doubted in practice, despite the sanctions that the Western Community imposed on Moscow. Secondly, that despite the alignment of interests of Brussels-Berlin-Moscow on the energy level, such crises entail in one hand the risk of jeopardizing such a relationship, or comprise its mutual benefits and on the other raise once again an ‘energy alert’, as it did in 2006 and 2009 crises, in the Brussels administrative center, in relation to the burning matter of EU energy security.

It is not unreasonable that right after the escalation of the crisis in the 2nd quarter of 2013, the EU began to process new and better ways to reduce its energy dependency on Moscow.  The European efforts to minimize dependency on Moscow showed the first signs after the energy crisis of 2006, however, in essence, they began after the Source: Financial Times, 14 October 2014

2009 severe Russo-Ukrainian crisis, when the European Community began to be seriously and systematically became concerned with the issue of energy security.  Indeed, the recent EU diversification efforts have resulted in slightly lower Russian shares in the energy market. However, according to Christian Oliver, and Henry Foy: ‘Europe’s imports from Russia rose 16% last year to hit a record high.’[1] Nonetheless, in implementing energy efficiency initiatives relating to energy directives, by the year 2020 EU will have reduced energy consumption by approximately 20%.[2]  In the same vein, on 24 October, EU governments agreed to reduce greenhouse gas emissions by 40% by 2030, compared to the base year of 1990.[3] Commenting on the latter, EU’s Climate Commissioner, Connie Hedegaard, stated: “We have sent a strong signal to other big economies and all other countries: we have done our homework, now we urge you to follow Europe’s example.”. There is no doubt that all of the above could increase EU’s degree of independence from imports; nevertheless the result is not of catalytic nature that would change the heavy dependence of the European industry on Russian natural gas imports, due to the character of the European energy strategy that grosso modo, lacks certain visible results in its effort to increase its energy security, targeting in the long term.

The Eastern European EU member-states, which geographically comprised the USSR’s buffer zone for 55 years since the end of WWI, with the exception of Romania, lack basic energy resources and modern infrastructure in oil and gas production, since almost their entire energy mixture comes from the Russian Soviet Socialistic Republic, their political, economic and strategic patron.  Consequently, joining the EU, they brought- in their amalgam of energy problems, without having much to offer in terms of energy resources and infrastructure, and due to their inherent economic and cultural singularities most of them are still under Moscow’s supply ‘domination’.  This hinders even further the energy dependent EU, creating opportunistic inclinations and centrifugal tendencies.  On the other hand, no one can blame them, since even powerful, core European states such as Germany, France or Austria, sign bilateral energy agreements with Russia, undermining the common European energy policy, at a time when the Western Community’s relations with Moscow are at the nadir, since the dissolution of the USSR, for the sake of their national interests. [4]  For example, the constant and monumental Bulgarian regression on the matter of the construction of South-Stream indicates the different perception that an EU member-state may have for the European solidarity on matters of European energy security and the best way to align it with its national interest.[5]  Indeed, there are tangible examples of European countries that opt for their narrow national interests on their energy policy, indifferent to the common stance that EU has prescribed against other countries, hereon Russia, as we have identified, described and analysed in previous scientific publications. [6] 

On the antipode, it is remarkable that studies for the energy emancipation of energy-intensive Europe, investigated the possibility of creating Liquefied Natural Gas (LNG) proposed that: “New LNG terminals should be constructed everywhere in Europe, and especially in countries with high gas consumption that until now have depended exclusively on gas pipelines (Germany and the Baltic States). These terminals should be given the formal status of ‘projects in the interest of European solidarity’.”.[7]  In technical terms, LNG technology is adequately developed and of flexible nature in transportation via sea routes. Above all, it is extremely “… flexible supply, from diversified suppliers, even if the resources of the latter are not unlimited.”[8]  According to this, a European LNG initiative theoreticallycould easily overkill European Russian gas imports. However, this is not yet feasible at such an enormous scale since according to Claude Mandil it is….. “[only] in limited quantities and it will be expensive.”.[9]

It is a fact that particularly the more powerful EU members may be doing ‘business as usual’ with Moscow, while at the same time preserving a selective disposition as to the application of Western sanctions, however on the matter of construction of future pipeline, EU as a Supra-national organisation is firm on the support of TAP vs South-Stream, as the pipeline that will serve European energy needs, starting in near future, weaning the Old Continent from the Russian energy mixture.

It ismainly due to the fact that is part of the long Southern Gas Corridor consists an important element of EU energy policy. Once TAP is realised, it will significantly contribute to EU energy security, since except of the provision of 20b/y, will ensure the viability of the Southern Gas Corridor, connecting Europe with Caspian Sea for the future.

In this vein, the EU stance obstructs the South-Stream consortium as well as the state authorities that co-operate for its construction, stonewalling on legal/regulatory grounds, as according to Brussels design of South-Stream is not compliant with European regulations on energy and competitiveness.  More specifically, within the healthy neo-liberal framework of market liberalization in the natural gas sector and energy in general, from a legal point of view the principle of Ownership Unbundling applies, whereby the concurrent ownership and exploitation/operation of a natural gas transport network by the same entity (company, consortium) is, legally, incompatible.[10] Consequently, the EU considers that the agreements that the countries through which the pipeline passes have signed with Gazprom, are not compatible with European Law, since the pipeline would be owned by a natural gas producer without granting access to third parties.  In contrast, at the same time it facilitates the construction and speedier operation of TAP, by deciding in May 2013 to relieve it from the obligation to comply with the said principle of Ownership Unbundling and subsequent demands such as the legal assurance of third party access to the provision of the initial capacity of the pipeline.  Similarly, SOCAR acquired a share (20%), while it bought-off 66% of DESFA, the Hellenic management company of the Greek network (distribution and exploitation),[11] a procedure that is to be completed at the end of 2014, despite its ‘improper’, according to EU’s regulations, nature.  Finally, TAP, contrary to the South Stream has received the Project of Community Interest (PCI) status, since it has been declared a Project of Energy Community Interest-(PECI), in a total of 35 PECIs so far, a designation acquired by the Energy Community Secretariat, on the substantial ground that they “have the highest positive impact in the largest possible number of Contracting Parties”.[12] Of course, on 16 October the outgoing EU energy commissioner Gunther Oettinger stated in Brussels that  “South Stream is fully acceptable but is not a priority at the moment”,[13] anticipating the normalisations of the relations of the South-Stream fervent supporters, the governments of  Hungary, Austria and Slovenia, with the European Commission.

The South Stream Pipeline Project

The Atlantic factor and NATO

The strategic relationships of the EU and US and that of the US with Russia have always been a very significant factor of influence in the geopolitical system EU-Russia.  It is a fact that the Russo-Ukrainian crisis created the geostrategic sub-framework that increases the possibility for the radical deterioration in the relations between US-Russia,[14] a fact that involves Europe directly through NATO.  Indeed, NATO as a tradition Pylon of Power in the acting Supra-system,[15] regardless of its current problematic political and military deterring function, sets, particularly after the Summit in Newport of Wales in early October, very specific measures for the upgrade of its capabilities in Europe, for which it is going to contribute itself as a Supra-national defensive alliance, the US as its leading power as well as its national member states.  It is not a coincidence that the outgoing NATO General Secretary, Anders Fogh Rasmussen, during the aforementioned Summit referred to Russia and the Islamic State as the ‘key enemies’ of the Alliance.  In this sense, the Readiness Action Plan (RAP) was put in force. The Plan dictates the ground deployment of Eastern Europe Member states of a Joint Expeditionary Force (JEF) in advanced positions, along with the relevant upgraded military infrastructure, in an attempt for the alliance to fulfil its obligations for collective defence of the Treaty according to Article 5 that dictates: “The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all and consequently they agree that, if such an armed attack occurs, each of them, in exercise of the right of individual or collective self-defence recognised by Article 51 of the Charter of the United Nations, will assist the Party or Parties so attacked by taking forthwith, individually and in concert with the other Parties, such action as it deems necessary, including the use of armed force, to restore and maintain the security of the North Atlantic area. Any such armed attack and all measures taken as a result thereof shall immediately be reported to the Security Council. Such measures shall be terminated when the Security Council has taken the measures necessary to restore and maintain international peace and security.”[16]

On the other hand, it is clear that within the context of economic inter-dependence, Moscow needs the European market in order to balance its annual budgets, a fact that

reinforces the continuation of this mutually beneficial relationship. However, according to the methodological model of Structural Realism, there is a number of significant indications that Moscow, maximizing its current advantage in energy, Source: Washington Post

intends to continue using it as political tool, inter alia, for the gradual homogenization of the Eurasian geopolitical complex[17] under its high influence in the best case scenario. Russia’s eastern gas strategy moves, among other targets, towards this strategic direction, part of which are the agreements for the transportation of Russian natural gas through the north-eastern corridor, right to the heart of hungry China via the “Power of Siberia” (the east route), as well as the construction of a new pipeline for the export of natural gas from Western Siberia to north-west China, via the “Altai” pipeline (the west route) completing the picture of the Russian intentions.

The Ukrainian issue

The Ukrainian issue is, of course, the current key to the upcoming amelioration efforts between Moscow and the Western Community. It is clear that at present there can be no improvement in the relations between Moscow-Europe and the US, unless there are essential steps in Ukraine.  On the other hand, despite the first encouraging signs in the Milan Summit, the realization of these positive steps cannot guarantee the full restoration of their relations, while it neither substantially affects the energy policy of none of the countries involved, despite the fact that approximately 50% of the Russian natural gas imports flow via Ukraine. In other words, even if the ethnic Russian/Russian speaking/pro-Russian Ukrainian citizens, autonomists of East Ukraine, achieve favourable arrangements in relation to its political autonomy and the flow of Russian gas towards Europe would be virtually secure, Moscow is not going to tone down the constant effort for the speedier construction of the South-Stream. The main reason behind this, as it happened in the case of Poland and its by-passing by the Nord-Stream, is that the political and cultural history of the geographic area of Ukraine diachronically, leaves no room for Kremlin to be complacent. 

Conclusion

Concluding, taking into account all the available technical data, as well as the inherent limitations of European coherence in its energy policy, namely the differing interpretations of the concept of energy security, the opportunistic energy policy of certain European states,  it seems that despite the European Commission’s long-term range options for energy security, unless something extremely unexpected takes place, the overall load of European imports and its heavy reliance on the Russian natural gas will continue to exist for the near future, at least in medium-term span.  It is clear that the limits of the EU-Russian energy relations can be controlled exclusively with political means; not with technocratic or energy means. The only possibility for the current relationship to be broken down is for an overall politico-military crisis to take place, between the Western Community and Russia, of such magnitude that the Russo-Ukrainian crisis would seem as new recruits’ summer training manoeuvres.


[1] Oliver, Christian, Foy Henry, “Can Europe Wean Itself Off Russian Gas?”, Financial  Times, 14 October, 2014.

[2] European Commission, “Sustainable growth-for a resource efficient, greener and more competitive economy, (2012 c)”, Brussels, 2012.

[3] Reuters, News Agency

[4] “Between Two Major Geopolitical Crises. The Impact on South East Europe. Part I: The Ukrainian Heritage”, South-East Europe Energy Brief-Monthly Analysis, Institute of Energy for South East Europe, (IENE), issue no 139, July-August 2014.

[5] Ibid.

[6] Ibid.

[7] Mandil, Claude., “Report to the Prime Minister: Energy Security and the European Union. Proposals for the French Presidency, 21 April 2008, p.18.

[8] Ibid., p.18.

[9] Ibid., p.18.

[10] According to the term that was also used in the conclusions of the Energy Council on 15 February 2007, which urged the Committee to suggest measures for the effective separation of the activities of procurement and production, from the entities of network management, equal access to transportation infrastructure and independence in decision making for investment in infrastructure.  (Refer to Communication from the Commission to the Council and the European Parliament of 10 January 2007, “Prospects for the internal gas and electricity market”, COM (2006) 841 final). Also, Directive 2009/73/EC of the European Parliament and the Council, of 13 July 2009, relating to the common rules for the internal natural gas market and the abolition of Directive 2003/55/EC, Official Journal of the European Union L 211/36 of 14.08.2009.  In addition Regulation (EC) no 715/2009 of the European Parliament and Council of 13 July 2009 in relation to the terms of access for the natural gas transport network and the abolition of Regulation (EC) no 1775/20 transportation systems, Official Journal of the European Union L 211/36 of 14.08.2009.  

[11] ‘Kathimerini’, 18-12-2014, also ‘Vima’, 17-12-2014.

[12] According to Ioannis P. Sotiropoulos, “… the implementation process of the so-called ‘Projects of Common Interests’ (PCIs), that are the backbone of the future Trans-European Energy Infrastructure (TEN-E), will bring together the majority of the most troublesome part of the Balkan geopolitical sub-region, the Western Balkans, motivating all party-states to enter a co-operative economic relationship. In the same way that the South Stream is emerging as a pillar for Western Balkan’s energy supply and of European energy security in general, that brings closer Serbia, Croatia, Bosnia-Herzegovina and Slovenia, correspondingly TAP will bring together Turkey, Greece and Albania. Through these two major strategic projects the provision of the European Commission’s Directive that “significant benefits for at least two Member States, must be achieved”, is being met.”, “Pursuing an energy security policy in the West Balkans runs counter to EU’s stated objectives”, South-East Europe Energy Brief-Monthly Analysis, Institute of Energy for South East Europe, (IENE), issue no 116, November-December 2013.

[13] Itar-Tass, News Agency

[14] Sotiropoulos, Ioannis P., “The Russo-Ukrainian crisis and the European parliamentary elections as fundamental landmarks for the reset of European political orbit”, Institute of Energy for South East Europe- (IENE), under publication.

[15] For the Pylon of Power of the Supra-system as well as the methodology of the Systemic Geopolitical Analysis, see Mazis, Ioannis Th., Geopolitics: Theory and Praxis, Papazisis-ELIAMEP, Athens, 2002. Also, Mazis, Ioannis Th. Post-theoretical Critique οf International Relations and Geopolitics. The Neo-positivism context, Papazisis, Athens, 2012, also http://goo.gl/VkuhcI.

[16] “Article 5”, The North Atlantic Treaty, Washington D.C., 4 April 1949.

[17] For the definition of the geopolitical complex and the analysis of the Systemic Geopolitical Theory, see Mazis, Ioannis Th., Geopolitics: Theory and Praxis, Papazisis-ELIAMEP, Athens, 2002. Also, Mazis, Ioannis Th. Post-theoretical Critique οf International Relations and Geopolitics. The Neo-positivism context, Papazisis, Athens, 2012, p. 398.

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