Energizing Cooperation: An Alternative View on EU-Russian RelationsElliott Morrow

Evolution of Relations Europe (the West) and Russia (USSR)

fought a 40 year war, with Russia being defeated economically

Europe is now dependent on Russia’s huge energy reserves (Van Der Meulen, 2009)

Yet, they are closer than ever (Padget, 2011)

Purpose With all of the potential

struggles, how can Europe and Russia be so close?

I will argue this is because of the business of energy and energy security

Factors

Development of a large web of international institutions

A large amount of foreign direct investment

Overview Introduction

The current state of energy security The opposing view

Literature International Institutions-Neoliberalism International Institutions-Constructivism

Methodology Case 1- Partnership and Cooperation

Agreements Case 2- The Energy Dialogue Case 3- Foreign Direct Investment Analysis Conclusion References

Eu-Russia Energy Security Europe needs Russia’s energy(Van Der Meulen, 2009)

Russia has the largest reserves of natural gas (Ndefo & Geng, 2007).

Russia has the second largest coal reserves has the eighth largest oil reserves Is the largest exporter and producer of oil in

the world (Shiryaevskaya, 2010).

Eu-Russia Energy Security Russia needs Europe to buy Russian

energy

Europe is the destination of 70% of Russian exported gas 80% of exported oil 50% of exported coal (European Commission,

2009)

Russia needs European investment for technology and to replace its rapidly aging energy infrastructure (Orttung & Overland, 2011)

The Two Sides Russia is using its abundance of energy,

and Europe’s dependency as a weapon against the EU (Stegen, 2011)

The EU and Russia are becoming more cooperative due to mutual benefits fostered by international institutions and shared norms (Splidsboel-Hansen, 2002)

VS

Literature Review

Constructivism

International Institution

Neoliberalism

Neoliberalism International Institutions-Keohane, Nye

Interdependence Cooperation Mutual Interests Information Sharing Maximum Integration Expertise Network in order to persuade powerful states

Constructivism International Institutions- Checkel ,Finnemore, Sikkink,

Haas “When normative suasion takes place, agents actively and reflectively

internalize new under-standings of appropriateness” (Checkel, 2005)

Agents of change (Sikkink, Finnemore)

“…the location in which reflexive new practices and policies develop.” (Haas & Haas, 2002)

“Institutions provide the receptive and supportive milieu for the conduct of appropriate discourse to a much greater extent than would be the case if individuals worked in isolation.” (Haas & Haas, 2002)

Methodology Cooperation

To have cooperation there must be incentive to change, through a process, to bring both sides into conformity (Keohane, 1984)

Case Study: Partnership and Cooperation Agreements evidence of integrating Russian and European markets and

economy on all levels

Case Study: Energy Dialogue evidence of facilitating greater energy interdependence, and

preventing past conflict

Case Study: Foreign Direct Investment evidence of increased FDI flow in the energy sector creating

an institution

Case 1: Partnership and Cooperation Agreements Began in 1994 Put into force in 1997 Series of meetings and agreements to set

up a legally binding framework for relations In part created to simulate WTO conditions Primary concern is to promote trade,

investment and harmonious economic sectors

Partnership and Cooperation Agreements Created the Four Common Spaces

(2005) Freedom, Security, Justice Space External Security Space Research, Education, Culture SpaceEconomic Space

Economic Space (PCA) Economic Space

Enforce WTO “Technical Barriers to Trade”

Regulatory Dialogue

Transportation

Economic Space (PCA) Investment

Germany needs Russian labor Russia needs European investment Predictability and Transparency by

standardization Combining financial sectors

Interdependence and independence

Economic Space (PCA) Trade

Standardize and Automate Universal use of security checks and risk

assessment Use of international institutions Technical assistance to Russia

russia-and-eu/

Economic Space (PCA) Information and Communication

The Information Society Approximate legislation Increase interoperability of Russian and European

business through E-Businesses Research and Development

Theory Application (PCA) International institutions were created to incorporate

and combine Europe and Russian economies on every level

Information is shared at a faster rate and more accurately, which takes out guess work and reduces risk

Transparency and Standardization creates the platform for increased trade and investment

Cooperation instead of antagonism is seen as the appropriate action

Case 2: Energy Dialogue Created on October 30, 2000

More than 60% of Russia’s export revenue comes from the energy sector.

45% of Russian imports originate in Europe

88% of Russian oil and 70% of Russia’s gas exports are sent to Europe

75% of Russian FDI originates from Europe

Energy Dialogue

Energy Dialogue Europe’s only real option for energy is

Russia Russia’s only real option for energy

sales is in Europe European demand is growing since the

expansions of 2004 and 2007

Energy Dialogue “Bilateral Cooperation Mechanism”

Included: Governments Corporations Individual Experts

Permanent Partnership Council

Energy Dialogue Thematic Groups

Russian Energy Strategy until 2030 New technology and tap new resources

Web based platform to quickly share scenarios and solve problems

Fair use of pipelines

Energy Dialogue

Create a dialogue from raw material providers to end users

Synchronizing the electricity system and unbundling

Tacis program

Energy Dialogue Early Warning System

Solves the problems of the 2006 and 2009 gas crises

Direct line between Moscow and the European Commission

Obligates each side to inform of looming problems

Allows 3rd party experts to contribute to solutions and forecasting

Theory Application Improves security of supply to

Europe(predictability)

Allows Russia to extract more resources (increased mutual benefits)

Creates mechanisms to prevent past conflicts (mitigating conflict through institutions before the fact)

Creates arena for change towards a mutual free market

Case 3: Foreign Direct Investment

Siemens AG announced that it will invest €1 Billion into Russia over the next 3 years

"Our far-reaching investments underscore Russia's great importance as a strategic core market for Siemens. By entering into a technology partnership, we're supporting the country's ambitious modernization plans and placing our close cooperation with our Russian partners on a new, even broader basis," said Peter Löscher (Siemens AG CEO)

Siemen’s repowering project (March 2012) increased productivity almost 3 times and reduced emissions and amount of

gas used Demonstrated the value of European investment

Foreign Direct Investment The Russian South Stream Project (2008-

2015) 15% -German Wintershall 15% -French Electricite de France (EDF) 20% -Italian Eni 50% -Russian Gazprom

Bypasses transit countries to directly connect Russia with Europe

Attracting European Investment Bank interest

Foreign Direct Investment Russia investing into Eurozone

"We are ready to invest all financial means to back the European economy and the eurozone”-Medvedev

15 billion euros to International Monetary Fund resources intended for use in stabilizing the eurozone

41% of Russian currency is invested in the Euro

Theory Application Increased investment creates a situation

where it is in each side’s interest for the other to succeed

European investment in Russian energy combines both business sectors

Creates an institution of confident investments with precedents

Analysis International Institutions have integrated

European and Russian Economies at almost every level

This has spurred efforts to prevent conflict in the future and invest in each other’s futures

The identities of Russia and Europe have been changing from all perspectives into a more cohesive and cooperative image

Analysis Shortcoming

This paper looks at Europe as a whole, when individual state’s politics play a role

Conclusion Russia and Europe need each other for capital

and the energy necessary to exist

Institutions have been setup to facilitate this fact

Mechanisms have been set into place to minimize conflict and maximize mutual gain

Russia and Europe are slowly but surely becoming closer and more cooperative through institutions on all levels

I can has diploma

now?

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References

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References Edf, wintershall to each get 15% in south stream - gazprom

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