Poland, Senate

28 May 2007

Poland, Senate

28 May 2007

Robert L. Larsson

Security Analyst

Swedish Defence Research Agency (FOI)

Robert L. Larsson

Security Analyst

Swedish Defence Research Agency (FOI)

Nord Stream And the Security Political Implications

for the Baltic Sea Region

Nord Stream And the Security Political Implications

for the Baltic Sea Region

Point of DeparturePoint of Departure

What is Energy

Security?

What is Energy

Security?

Difference notion of RF and the EU

Not only security of supplies…

Difference notion of RF and the EU

Not only security of supplies…

Security Political IssuesSecurity Political Issues

Political frictions

Military-political issues

Intelligence aspects

Militarisation

Common EU policy

Integration

Trust and confidence

Transparency

Rationale and legitimacy

Political frictions

Military-political issues

Intelligence aspects

Militarisation

Common EU policy

Integration

Trust and confidence

Transparency

Rationale and legitimacy

Point of DeparturePoint of Departure

Russia’s energy policy must be understood in the light of its overall development.

Foreign policy

View on security

Market management

Russia’s energy policy must be understood in the light of its overall development.

Foreign policy

View on security

Market management

RF securitises energy issues.

This legitimises the use of extraordinary and coercive means to tackle perceived problems…

RF securitises energy issues.

This legitimises the use of extraordinary and coercive means to tackle perceived problems…

Coercive Energy PolicyCoercive Energy Policy

Claimed LegitimacyClaimed Legitimacy

Not a Russo-German project but instead…

…a common European project that…

…connects Russia and Europe and…

…serves integration and interdependence

Not a Russo-German project but instead…

…a common European project that…

…connects Russia and Europe and…

…serves integration and interdependence

Russia’s Energy Perceptions Russia’s Energy Perceptions

Russia’s energy strategy -> urge to control

Aims to be strong and independent

Energy will create growth and extend influence

One sided dependence is sougth after

RF will use its energy policy as a security tool but aims to be reliable…

Russia’s energy strategy -> urge to control

Aims to be strong and independent

Energy will create growth and extend influence

One sided dependence is sougth after

RF will use its energy policy as a security tool but aims to be reliable…

Dividing – not connecting EUDividing – not connecting EU

NONO

NONO

NONO

NONO

NO?NO?

NO?NO?YesYes

YesYes

Yes?Yes?

No Common EU Energy Policy?No Common EU Energy Policy?

NS is evidence of bilateralism prevailing over common priorities

More difficult to form a common EU energy strategy

Undermining the foundation of the EU

NS is evidence of bilateralism prevailing over common priorities

More difficult to form a common EU energy strategy

Undermining the foundation of the EU

Sweden’s standSweden’s stand

No official policy line of the government

Spokesmen from all political parties have indicated that they see problems

The majority of the public is against it:

51% against

24% for

25% N/A

No official policy line of the government

Spokesmen from all political parties have indicated that they see problems

The majority of the public is against it:

51% against

24% for

25% N/ASource: Synovate TEMO

Non-alternative RoutesNon-alternative Routes

Forgotten alternatives?

Service Riser LocationsService Riser Locations

Responsibility for ProtectionResponsibility for Protection

Swedish responsibility since it is in the Swedish EEZ

Staffed by Russian citizens?

Russian rethoric on protection of its citizens is worrying.

Potential source of friction if a threat against the riser emerges

Swedish responsibility since it is in the Swedish EEZ

Staffed by Russian citizens?

Russian rethoric on protection of its citizens is worrying.

Potential source of friction if a threat against the riser emerges

Militarisation of the Baltic SeaMilitarisation of the Baltic Sea

Anti-terrorism could be used for cooperation, but can also be a source of friction.

Putin has promised that the pipeline will be protected by the Russian navy

Securing supplies by military means can cause a re-militarisation of the Baltic Sea

No legal problem with increased military activities

Nord Stream gives Russia a reason to show flag

Increased tension could be experienced

Anti-terrorism could be used for cooperation, but can also be a source of friction.

Putin has promised that the pipeline will be protected by the Russian navy

Securing supplies by military means can cause a re-militarisation of the Baltic Sea

No legal problem with increased military activities

Nord Stream gives Russia a reason to show flag

Increased tension could be experienced

Lack of confidence in the projectLack of confidence in the project

Official and underlying aspects

Shareholders Committee

Managing Director

Role: board of directors functions

SUPERVISORY LEVEL

MANAGEMENT LEVEL

Technical Directors Commercial Director Financial Director

24,5%51,0 % 24,5%

Nord Stream AG

Responsibility and StructureResponsibility and Structure

Will there be any usage of

subcontractors?

Startegic Energy PolicyStartegic Energy PolicyRussia’s energy strategy is not decided by the market or by foreigners

Increased Russian Leverage Increased Russian Leverage

Leverage on transit states

Leverage on connected states

Leverage on ImportersLeverage on Importers

Several possible levers:

Control of infrastructure

Control of companies

Usage/creation of debts

Coercive price policy

“Marketisation”

Overt/covert threats

Supply interruptions

What are the threats to supplies?What are the threats to supplies?

Mother Nature is the greatest threat!Mother Nature is the greatest threat!Reliability can be seen in

terms of:

Volumes?

Incidents?

Cut-offs?

Politics?

Politics may cause greater problems than mother nature and therefore it is essential to look at Russia’s reliability.

Russian usage of the energy levers against FSU

29 30

12

23

59

0

10

20

30

40

50

60

70

Incidents underPutin

Incidents underJeltsin

Cut-offs underPutin

Cut-offs underJeltsin

TOTALLY since1991

Robert L. Larsson, FOI 2006

Coercive Energy PolicyCoercive Energy Policy

Objects of Russia's coercive energy policy

5

9

20

9

65

0

5

10

15

20

25

Ukraine Belarus Lithuania Georgia Moldova Others

Objects of Russia's coercive energy policy

5

9

20

9

65

0

5

10

15

20

25

Ukraine Belarus Lithuania Georgia Moldova Others

Robert L. Larsson, FOI 2006

Coercive Energy PolicyCoercive Energy Policy

Robert L. Larsson, FOI 2006

Coercive Energy PolicyCoercive Energy Policy

Explicit Political UnderpinningExplicit Political Underpinning

”Russia may agree to lower natural gas prices for Ukraine if the country scales down its pro-Western foreign policy”

Viktor Chernomyrdin

Kiev 30 May 2006

”Russia may agree to lower natural gas prices for Ukraine if the country scales down its pro-Western foreign policy”

Viktor Chernomyrdin

Kiev 30 May 2006

Russia is dependent on access to markets

Russia is dependent on Western money

Russia would never do anything against NATO or the EU

Russia needs to be reliable – otherwise it gets badwill

Russia is dependent on access to markets

Russia is dependent on Western money

Russia would never do anything against NATO or the EU

Russia needs to be reliable – otherwise it gets badwill

Is there a true interdependence?Is there a true interdependence?

Are These Barriers High Enough to prevent cut-offs or coercive policy?

Are the Barriers High Enough?Are the Barriers High Enough?Barrier Short-duration cut-offs Long-duration cut-offs

Wish to be reliable High barrier High barrier

Prepardness to infringe on its reputation and reliability

Low barrier High barrier

Political barriers/democracy Low barrier Low barrier

Risk of losing money Low barrier High barrier

Need for revenues Low barrier High barrier

Risk for badwill Low barrier Low barrier

Dependence on Europe Low barrier High barrier

Prepardness to endure negative consequences

Low barrier Low barrier

EU/NATO-membership as protection

Low barrier Low barrier

IN TOTAL: Low barriers High barriers

Robert L. Larsson, FOI 2006

International LawInternational Law

If security political implications are evident…

Why is only HELCOM and the Esboo convention the only legal frameworks utilised?

Why not UN charter etc?

If security political implications are evident…

Why is only HELCOM and the Esboo convention the only legal frameworks utilised?

Why not UN charter etc?

Looking East, Heading West?Looking East, Heading West?

European criticism makes Russia look eastward where more “greateful” importers are.

Will this lead to European appeasement?

European criticism makes Russia look eastward where more “greateful” importers are.

Will this lead to European appeasement?

Unknown futureUnknown future

We have no idea who will be in charge, his agenda and Russia’s situation – not in even

the near future...

We have no idea who will be in charge, his agenda and Russia’s situation – not in even

the near future...

During 50 years, the life-span of Nord Stream, Russia will be led by 7-13 presidents…

Thank you for your attention!Thank you for your attention!Robert Larsson

FOI

194 90 Stockholm

E-mail: robert.larsson@foi.se

Phone: +46 (0)8-55 50 37 60

See further:NEW! Nord Stream, Sweden and Baltic Sea Security (Larsson).

Russia’s Energy Policy: Security Dimensions of Russia’s Reliability as an Energy Supplier (Larsson)

N.B. Views and conclusions do not necessarely reflect those of the Swedish government or FOI. Disclaimers and details of the statistics will be

published in a forthcoming report by FOI. Figures should not be taken at face value. Refer to the

reports above for full analysis.