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A presentation on how the energy industry affects the relationship between Russia and Europe. It uses constructivism and neoliberalism as international relations theories and three case studies to explain the situation. The conclusion, it seems, is that the interdependence is making peace between the two groups more attractive.
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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?
References Barysch, K., & et al, The House of Lords, European Union Committee.
(2008). The european union and russia. London, England: Authority of the House of Lords.
Buzan, B. (1983). People, states, and fear: The national security problem in international relations. (pp. 12-126). New Chapel : University of North Carolina Press.
Blake, J. & Kostomarova, A. (2011, October 18). Siemens commits €1 billion to russian modernization. Russia Today
Checkel, J. (2005). International institutions and socialization in europe: Introduction and framework. International Organization, 59(4), 565-597.
Daly, J. (2011, November 23). France and russia deepen nuclear cooperation. Oil Price.com
Egmont. (2006). Assessment of the cooperation between the eu and russia. Egmont Institute Papers, 1.
Energy Information Administration. (2008, April). Energy engineering blog. European Investment Bank. (2010, March 26). Eib supports russia’s power
generation sector with eur 250 million to contribute to energy efficiency and emission reduction.
EU-Russia Centre. (2012). The four common spaces. EU-Russiacentre.org European Trade Commission (2008, November 13).Securing your energy
future: Commission presents energy security, solidarity and efficiency proposals.
References European Trade Commission (2009). Eu-russia energy relations. European
Trade Commission. (2010, May). Russia-trade European Commission. (2011, December 2). Information society: Thematic
portal. European Commission. (2011). Euratom nuclear research - international
cooperation. European Union. (2011). Eu russia energy dialogue. European Commission:
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Finnemore, M., & Sikkink, K. (1998). International norm dynamics and political change. International Organization, 52(4), 887-917.
Haas, E., & Haas, P. (2002). Pragmatic constructivism and the study of international institutions.Millenium- Journal of International Studies, 31, 573-600.
Hughes, J. (2006). eu relations with russia: partnership or asymmetric interdependency?. (pp. 13-29, 56-72). London, England: London School of Economics.
References
Keohane, R. (1984). After hegemony: cooperation and discord in the world political economy. (pp. 18-30, 217-230). Princeton, New Jersey: Princeton University Press.
Keohane. R. & Nye. J. (1973): Power and interdependence, Survival: Global Politics and Strategy, 15:4, 158-16 Ndefo, E. & Geng, P. (2007, February 13). Russia: A critical
evaluation of its natural gas resources russia. Energy Tribune Orttung, R., & Overland, (2011). A limited toolbox: Explaining the
constraints on russia’s foreign energy policy.Journal of Eurasian Studies, 74-85.
Padget, S. (2011). Energy co-operation in the wider europe: Institutionalizing interdependence. Journal of Common Market Studies, 49(5), 1065-1087.
Portela. (2001, May). Eu-russia co-operation in the security domain: Problems and opportunities.
Reuters. (2009, November 16). Eu, russia agree to "early-warning" mechanism for gas issues, The Moscow Times
References Edf, wintershall to each get 15% in south stream - gazprom
head. (2011, September 06). RIA Novosti
Shiryaevskaya, A. (2010, January 2). Russian oil output climbed 1.2 percent in 2009 (update1). Bloomberg News
Splidsboel-Hansen, F. (2002). Russia’s relations with the european union: A constructivist cut. International Politics, 399-421.
Stegen, K. (2011). Deconstructingthe‘‘energyweapon’’:russia’sthreattoeuropeascasestudy.Elsevier: Energy Policy, 39, 6505-6513.
Van Der Meulen, E. (2009). Gas supply and eu-russia relations. Europe-Asia Studies, 61(5), 833-856.