Table of Contents
4.1.1. European Union
4.2.1. European Union
Energy security is a topic with growing importance on the global political agendas. Within the European Union (EU) the consideration of supply security is of particular significance as the member states depend on outside sources, meaning principally oil and gas, to satisfy their need of energy. The EU-27 was dependent on oil imports on 82.6 % and on gas imports on 60.3 % in 2007 (European Commission, Directorate-General for Energy and Transport [DG TREN], 2010, p. 13). Own resources are not sufficient and in the present days the EU merely covers 46.9 % of the energy consumption by its own means (p. 13). When the current trends proceed the EU will be dependent on 90 % for oil, 70 % for gas and 100 % for coal in years 2030-40 (Umbach, 2010, p. 1236).
Therefore, the role of producer countries becomes increasingly important, especially regarding Russia as it is the biggest importer to the EU in crude oil, gas and hard coal. The supply dependence on Russia could have severe consequences for the EU as gas disruptions leading to supply crises in several member states like in 2006 and 2009 had already shown.
But also the Russian Federation is dependent because the EU is one of the most important consumers of its gas and oil exports (Feklyunina, 2008, p. 135). Russia’s economy is reliant on oil and gas production; in 2007 the energy sector generated about 64 % of its exports revenues (p. 134). Accordingly, Russia also has to deal with the problem of energy security, but in the perspective that it aims at securing demand and the purchase of its gas and oil resources, especially by the EU.
As both parties depend on each other in their energy security there is a case of interdependence in the EU-Russian energy relationship. When examining this relation of interdependence it is interesting not just to regard the present state of affairs but also the trends and future development and how the EU and Russia deal with that. For the analysis the notions of sensitivity and vulnerability are used. The guiding research question of this paper is therefore: What is the degree of sensitivity and vulnerability for the EU and Russia regarding their relation of interdependence in energy security? It is hypothesized that the Russian Federation is more vulnerable, especially on the subject of its political strategy.
The concept of interdependence by Robert Keohane and Joseph Nye provides the theoretical basis for this paper, in particular for the notions of sensitivity and vulnerability. In the methodology it is explained how these two indicators are measured and in the analysis, the different actors and their degree of sensitivity and vulnerability are examined. In order to conclude this paper, the degrees of sensitivity and vulnerability of the actors are evaluated and the hypothesis is proven right or wrong.
This paper is based on the concept of ‘complex interdependence’ in international relations which has initially been developed by Robert Keohane and Joseph Nye in the late 1970s. This concept adheres to liberal theory and supports the idea that economics and social affairs - according to realism the ‘low politics’ - are not inferior to the ‘high politics’ of security and survival regarding relations between industrialized countries (Jackson, Sørensen, 2007, p. 106). Interdependence liberalism relates in particular to cooperative relationships (p. 106). In the aftermath of the Second World War, increased interdependence was favoured by trading states such as Germany and Japan. On the contrary, the United States and the Soviet Union pursued the traditional military-political option related to realist theory. Only after the end of the Cold War this has changed in favour of interdependence (p. 104).
Although Keohane and Nye are interdependence liberals they admit that the realist approach to international relations cannot be completely rejected. In conflict situations when it comes to a matter of life and death realism might be more relevant and military force can trump economic issues (p. 107). However, interdependence liberals do not agree with realists that “any issue can become a matter of life and death in an anarchic world” (p. 107). Interdependence liberalists hold a balanced position (compared to other liberals): In order to react to changes in world politics, they take into account the limitations of the military balance of power (realism) and combine it with “insights from the liberal approach” (p. 107).
In a simple way, Keohane’s and Nye’s concept of ‘complex interdependence’ means that there is a mutual dependence and reciprocal effects among countries or actors in different countries (Keohane, Nye, 1977, p. 8). It is assumed that transactions between countries produce costly effects which are not necessarily symmetrical for the involved parties meaning that mutual benefit is not always the case (p. 9). The party at advantage in an asymmetrical interdependence can therefore gain power. There are several ways of how this power can be expressed. For example, it can be the control over resources or outcomes (p. 11).
Another essential part of Keohane’s and Nye’s concept is the two dimensions of ‘sensitivity’ and ‘vulnerability’. Sensitivity interdependence signifies how costly immediate effects of altered external circumstances are for a country. It is about the degree of responsiveness within a policy framework which is not yet adjusted to the changes (p. 12). Concerning vulnerability, it denotes an “actor’s liability to suffer costs imposed by external events even after policies have been altered” (p. 13). Regarding the political seriousness, vulnerability plays a more important role because sensitivity is only related to the short-term reaction whereas a country that is very vulnerable to an outside change has to face severe long-term consequences as adjustment is either not successful or not possible.
Therefore, the implication of sensitivity and vulnerability is of special importance in this paper because the respective degree of these notions designates whether the reaction or strategy of the concerned parties will probably be more successful in the long-term and therefore will be less dependent in the future.
The actors analysed in this paper are Russia and the EU. But as the member states of the EU have very diversified energy relations to Russia, it is not sufficient just to analyse the EU as a whole. In order to provide a comprehensive analysis, cases of individual member states are consulted. For choosing examples of the member states it is important to consider that only an examination of member states being affected by Russia in their energy security is useful. Two thirds of the member states consume Russian oil and gas. Denmark, Ireland, Portugal, Malta and Cyprus belong to the other third (Sweden and Luxemburg merely do not import Russian natural gas) (Schmidt-Felzmann, 2010, p. 7). An important factor is whether the country belongs to the old member states or to the new ones because they usually differ significantly: the latter are in general more reliant on Russia, especially on gas imports (Umbach, 2010, p. 1236). Firstly due to geographical conditions and secondly due to their former belonging to the USSR which implies a closer connection to the Russian supply network. Therefore, the analysis will deal with one old and one new member states regarding their way of coping with the situation of energy security.
Germany has been chosen as an example because on the one hand, it is the biggest national market in energy consumption of the EU and is therefore of decisive significance when examining single member states. Additionally, it has a special relationship in bilateral agreements with Russia. For the new member states, Lithuania is serving as an example because due to special circumstances of its accession conditions to the EU, it had to shut down all of its nuclear power stations by the end of 2009 and therefore represents an extreme case of reliance on outside sources. The two are contrasting examples emphasizing the internal differences of the EU.
In general, this paper focuses on the crude oil and natural gas imports by Russia and less on the coal imports. Although the latter is not to neglect, it is of minor importance compared to the first two.
In order to be able to determine the degree of sensitivity and vulnerability and thereby defining which actor is more dependent than the other it is necessary to measure these two indicators. There are diverse factors that can be considered to examine the cases of Russia, the EU and the examples of the member states. Due to the limitations of this paper it is not possible to take into account all factors which are worthy of consideration and to analyse them in an appropriate way. Therefore this choice is not exhaustive but it seemed best measurable and paints a comprehensive picture.
In the first place, the present state of affairs of the actors’ domestic markets is studied in order to determine their degree of sensitivity.
The domestic consumption and the current energy mix of the EU as a whole and the examples of the member state are looked at. Furthermore, the following questions are considered: Regarding the energy mix, how big are the shares of renewable energies and nuclear power, how much of the consumption is covered by own sources and how much dependence on imports exists. It is also interesting to analyse the trends, for instance whether consumption is increasing or decreasing. These trends do not take into account any policy adjustments, but merely the sensitivity of the concerned actors, e.g. in a supply crisis. In order to access this information quantitative methods are interpreted. The principal source is the latest report from 2010 by the Directorate-General for Energy and Transport of the European Commission called the ‘EU Energy in figures’ about the state of affairs of 2007.
Concerning Russia, the share of domestic consumption of its energy sources is significant and its trend over the last years. Additionally, its proven oil and natural gas reserves and the production are taken into account. The degree of sensitivity can be measured by examining whether Russia is at present capable of satisfying domestic and external demands when a sudden increase occurs. As a source for data the ‘BP Statistical Review of World Energy June 2009’ as well as the report ‘EU Energy in figures’ are used providing figures from 2007 and 2008.
The factor of diversification is of importance because it means to reduce the dependence on a single producer country or consumer market. This paper refers to diversification in order to determine the degree of vulnerability. When diversification is aimed at and related policy adjustments are under progress, the less vulnerable the actor is. Diversification means less dependence on external events and actors in the long-term - signifying fewer costs suffered from these events/actors.
There are different ways how to analyse the diversification in energy supply:
For the EU, in order to have access to alternative producer countries of oil and gas it is necessary to build additional pipelines that exclude Russia and connect the EU with other countries. This is mainly considering the transportation of gas because oil can also be delivered via rail, shipping or road transport. Countries possessing the technology to use liquefied natural gas (LNG) are in an advantageous position because they do not depend completely on the pipeline supply of gas. LNG can be transported by using tanker trucks, railway tankers and LNG carriers (ships). Vulnerability can be measured by the likeliness of success of the pipeline plans and the availability of the money to realise such plans. Therefore, the GDP can be examined to define whether the possibility to spend money to search for such alternatives is given. Moreover, it can be analysed how considerable the expenses for such undertakings are. The smaller the GDP or the spent amount the more vulnerable the actor is.
A second aspect is to diversify the share of different energy sources in the domestic market. Therefore, it is necessary to analyse how much is invested in research and development for renewable energies and whether nuclear energy is regarded as a future option. The bigger the share of nuclear energy in the energy mix is the less the actor depends on Russian imports. On the other hand, in order to keep a reactor running, plutonium or uranium is required which might have to be imported as well. Therefore, renewable energies could be considered as the better option. Accordingly, the less diversification of the energy mix is possible, the more the actor is vulnerable. Concerning the examples of the member states, the particularities are examined in order to underline their varying possibilities to cope with dependence on Russia.
For Russia, it is necessary to construct pipelines to other consumer countries; the same criteria as for the EU can be applied. But it is equally important to analyse what Russia is undertaking to develop new sources of gas and oil and to fully exhaust them with the required technology. For measurement, the Russian spending on the development in new oil and gas sources can be regarded and the benefits of new pipeline projects.
Considering the fact that it is most important for Russia to secure demand in this relationship of interdependence the factor diversification is less central to measure Russia’s vulnerability. However, the actor’s political strategy is more significant. Basically, there are the options of economic nationalism and market liberalism. It is to examine in which way these options influence the political strategy of the actor. How is being dealt with outside dependence, e.g. in the geopolitical approach, and is it a sustainable strategy for the future? It is looked at whether the actors jeopardize relations on the political level.
Mainly, evaluations by academic articles are taken into account as data and background information to measure vulnerability.