THE PAPER | Russia & EU : Asymmetric Inter-dependence?

THE PAPER | Russia & EU : Asymmetric Inter-dependence?


Image Attribute:  Bilfinger SE, Creative commons (CC-BY ND2.0)

Image Attribute:  Bilfinger SE, Creative commons (CC-BY ND2.0)


Apart from the issue of human rights and rule of law, energy relations with Russia give EU’s leaders the biggest headaches. This state of fact is rooted in the importance of the ”mighty energy sector” for Russian internal and external policy. For Moscow the revenues from oil and gas industry ensures the stability of political regime and represents the main instrument of its geopolitical influence. The "energy diplomacy" emerged since the first Putin’s presidential term and dominates the EU-Russia relations.

As a basic feature, the EU-Russian energy relations are characterized by a strong mutual dependence. Russia is the EU’s biggest energy supplier and the EU is Russia’s biggest trading partner. However, even the Kremlin has been trying to increase Europe’s dependence on its energy, Russia needs the EU more than Brussels needs Moscow. While some member states are unduly dependent on Russian energy, and a few alarmingly so (ex. Finland, the Baltic states, Bulgaria), the EU as a whole does not suffer from excessive dependency upon Russia. The Russian fuels exported to the EU represent over three quarters of all its exports, for the EU, though, these constitute a bit less than one third of its total energy imports needs. In these conditions, the EU would be able to withstand any interruption in imports of crude oil or natural gas from Russia because the EU’s energy consumption can be replaced by other energy sources (nuclear, renewable, liquefied gas) and suppliers (increased imports of Norwegian, Middle East, Nigerian gas or increased imports of Saudi oil). Russia’s position would be more vulnerable if the EU reduced its purchases of Russian oil and gas. In this scenario, Russia would be threatened with financial collapse due to its inability to replace lost revenue . This mutual dependence between Russia and Europe has meant that Russia’s energy weapon has, in actuality, turned out to be less potent that some in the Kremlin may have hoped and that many Europeans feared.

There is no doubt that the January 2009 Ukrainian gas crisis, Russia’s withdrawal from the Energy Treaty, the Arab revolts in North Africa, and the Japanese earthquake, tsunami and nuclear accident, which called into question the reliability of nuclear energy, put pressure on the security of European energy, however, the EU is trying to overcome these challenges. Thus, in order to reduce its import vulnerability, in November 2010, the European Commission adopted the ten-year Energy plan entitled, Energy 2020: A strategy for competitive, sustainable and secure energy. The Commission’s objectives for 2020 are to increase the share of renewable energy to 20% and to make a 20% improvement in energy efficiency. As the large EU members of Western Europe are less dependent on Russian imports, while the countries of Eastern and Central Europe have fewer alternatives and are from 70 to 99% dependent on gas and oil imports from Russia, the strategy involves the obligation of solidarity among member states, internal infrastructure and interconnections across external borders and maritime areas. This way, the gas could circulate in case of crisis, in order to be able to be transferred from one country to another. The EU will put an important accent on the modernization of the existing infrastructure, with specific emphasis on the Southern corridor, in particular Nabucco and ITGI. Europe has also found different sources of energy in Qatar and even in the USA, countries which could export liquefied gas. In January 2011, the EU and Azerbaijan signed an agreement on natural gas supplies, which commits Azerbaijan to selling ”substantial volumes of gas over the long term” to the EU. The agreement represents the first firm commitment from a Caspian Basin country to provide gas for the EU’s Southern Corridor.

Moscow perceives this EU policy as a threat to its energy security and has reacted defensively. The termination of Russia’s provisional application of the Energy Charter Treaty came two weeks after the signing of the Nabucco Intergovernmental Agreement. (Moscow is afraid of losing its gas transportation monopoly and the ratification would have undercut Gazprom’s position on the European market by forcing Russia to open up its network to cheaper gas from Central Asia.) A week after the signing of the EU-Azerbaijan agreement on the Southern Corridor, Gazprom announced that it would increase the amount of gas it purchases from Azerbaijan, in order to make the European project nonviable because of lack of sufficient hydrocarbons reserves. Russia has been also trying to diversify its energy exports and reduce its dependence on the European Union by opening an Asian route to Chinese, Korean and Japanese markets. Gazprom is trying to sell gas to China, but the negotiations on exports have been taking place for several years without success so far. Thus, Russia remains dependent on the EU. On one hand, the gas is usually transported through pipelines and Russian transport infrastructure is oriented towards Europe, exporting to new markets requiring expensive new pipelines and advance planning, and on the other hand, the EU is the most lucrative market for Russia (Gazprom gets nearly 70% of its profits from sales to the EU)3 . Moreover, Russia encounters further problems with regard to the Chinese market. The communist neighbors are not willing to pay as much as are paying the Europeans for Russian gas and oil, and the demographic discrepancies between ratified Siberia and crowded China are not at all comfortable for Russian leaders. ”Vladivostok is already a Chinese city, both economically and culturally. The Chinese make up more than half the population of Khabarovsk”4 . Russia now seems understandably to be more preoccupied with the exposure of the thinly populated Far East to the rising power of China. Beijing’s growing involvement in Central Asia (including the launch of a gas pipeline from Turkmenistan to China via Uzbekistan and Kazakhstan) and Turkmenistan’s thriving cooperation with Iran, have seriously limited Gazprom’s ability to have Central Asian gas at its disposal. Furthermore, Moscow fears being marginalized in a world where power and wealth oscillate between Asia and the Pacific and needs powerful allies as a counter-balance to Chinese power. Thus, at least in the medium term, Russia is ”condemned” to be EU’s partner in the energy field.

The asymmetric inter-dependency is more obvious in trade area. The EU is the most important Russian commercial partner, while Russia is ranked third among the EU’s trading partners, after the USA and China. More than half of Russia’s trade is conducted with EU states, and 75% of foreign direct investments in Russia come from the EU. On the other side, the EU’s exports to Russia represent up to 6% of its total value exports, while its imports from Russia are around 10%. It is obvious that Russia is dependent on the EU and not vice versa. And this dependency on trade, especially energy trade with the EU will increase, given the new and future projects (Nord Stream – to Germany and South Stream to the Balkans). Russia has sought to enhance its leverage over Europe through the construction of new pipelines and to direct the asymmetric interdependence to its advantage, that is to make Europe more dependent on Russia than Russia is on the EU, however, these pipelines not only increase the sheer quantity of oil and gas Russia can export to Europe, but also increase Russia’s dependency on European market.

The Russian economy is considerably dependent on the EU economy for its export, of which 60% goes to the EU. In the hypothetical case where trade between the EU and Russia would come to a complete standstill, Russian economy would simply collapse. On the other side, the European Union is the largest single market in the world, which gives the EU and especially to the European Commission some leverage on Russia. Brussels should not be intimidated by Russia’s ”energy diplomacy” when negotiating, in fact the Kremlin recognized its need to be part of the market economies club by becoming member of the World Trade Organization, and now has to comply with the international rules.

Cite this Article:

Empfohlene Zitierung / Suggested Citation: Rotaru, Vasile: Between interdependence and strategic interests: EU-Russia relations after the Georgian war. In: Studia Politica : Romanian Political Science Review 12 (2012), 3, pp. 472-474. URN: http://nbn-resolving.de/ urn:nbn:de:0168-ssoar-445994

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