Russia’s Energy Policy: Security Dimensions and Russia’s Reliability as an Energy Supplier Russia’s Energy Policy: The confl ict between Russia and Ukraine over natural gas prices and transit reached its peak during the winter of 2005-2006, which subsequently led to Russia cutting gas supplies – an action that affected most of Security Dimensions and Russia’s Western Europe. In the midst of the confl ict, Russia took over the Chairmanship of the G8. Ironically, energy security was declared as the top priority for the G8. Reliability as an Energy Supplier When Russia’s military capability fell after 1991, it moved its attention to non-military security tools. In the ROBERT L. LARSSON process, Russia came to realise the strategic potential of its hydrocarbon resources. It is therefore of utmost importance to grasp Russia’s role as a strategic player in the international energy sphere, to identify potential risks and opportunities and to assess the issue of energy security. A key question is whether Russia, from a security political point of view, can be seen as a reliable energy supplier. Russia’s Energy Policy: Security Dimensions and Russia’s Reliability as an Energy Supplier an Energy as Reliability and Russia’s Dimensions Security Policy: Energy Russia’s L. Larsson Robert The objective of this study is hence to elucidate Russia’s role as a strategic energy supplier by analysing its energy policy from a security political perspective while the aim is to assess the question of whether Russia is a reliable supplier of energy. This is done by focusing on Russia’s resource base, its perceptions, its domestic market management, the state’s control of the energy sector, Russia’s foreign energy relations and its energy levers. The conc lusion is that Russia’s political reliability as an energy supplier depends on the time perspective, the receiver and the context. Further usage of the energy levers will likely be aimed at the former Soviet states, but Europe may well be affected. Beyond doubts, Russia’s coercive energy policy should be understood in a long-term geopolitical and strategic context under which political, economic and market drivers coexist. Russia has strategic priorities to keep its infl uence over the CIS and its energy policy is one of the means used for this reason. The international competition for Russia’s resources is a future key factor. As a result, frictions may arise both between Russia and consumers, and between various consumers. The negative trends in combination with Russia’s structural instability and unpredictability in policy underscore that the magnitude of uncertainties concerning Russia’s development are much higher than it fi rst seems. Robert L. Larsson works at the Division for Defence Analysis at the Swedish Defence Research Agency (FOI) and specialises in Eurasian energy and security policy. FOI is an assignment-based authority under the Ministry of Defence. The core activities are research, method and technology develop- ment, as well as studies for the use of defence and security. The organization employs around 1350 people of whom around 950 are researchers. This makes FOI the largest research institute in Sweden. FOI provides its customers with leading expertise in a large number of fi elds such as security-policy studies and analyses in defence and security, assessment of different types of threats, systems for control and management of crises, protection against and management of hazardous substances, IT-security an the potential of new sensors. FOI Swedish Defence Research Agency Phone: +46 8 555 030 00 www.foi.se FOI-R--1934--SE Scientifi c Report Defence Analysis Defence Analysis Fax: + 46 8 555 031 00 ISSN 1650-1942 March 2006 SE-164 90 Stockholm Robert L. Larsson Russia's Energy Policy: Security Dimensions and Russia's Reliability as an Energy Supplier Issuing organization Report number, ISRN Report type FOI – Swedish Defence Research Agency FOI-R--1934--SE Scientific report Defence Analysis Research area code SE-164 90 Stockholm 1. Security, safety and vulnerability analyses Month year Project no. March 2006 A1104 Sub area code 11 Policy Support to the Government (Defence) Sub area code 2 Author/s (editor/s) Project manager Robert L. Larsson John Rydqvist [email protected] Approved by +46 (8) - 55 50 7 60 Jan-Erik Rendahl Sponsoring agency The Ministry of Defence Scientifically and technically responsible Report title Russia's Energy Policy: Security Dimensions and Russia's Realibility as an Energy Supplier Abstract The objective of this study is to elucidate Russia’s role as a strategic energy supplier by analysing its energy policy from a security political perspective while the aim is to assess the question of whether Russia is a reliable supplier of energy. This is done by focusing on Russia’s resource base, its perceptions, domestic market management, the state’s control of the energy sector, Russia’s foreign energy relations and its energy levers. The conclusions are that Russia’s political reliability as an energy supplier depends on the time perspective, the receiver and the context. Further usage of the energy levers will likely be aimed at the former Soviet states, but Europe may well be affected. Beyond doubts, Russia’s coercive energy policy should be understood in a long-term geopolitical and strategic context under which political, economic and market drivers coexist. Russia has strategic priorities to keep its influence over the CIS and its energy policy is one of the means used for this reason. The international competition for Russia’s resources is a future key factor. As a result, frictions may arise both between Russia and consumers, and between various consumers. The negative democratic trends in combination with Russia’s structural instability and unpredictability in policy underscore that the magnitude of uncertainties concerning Russia’s development are much higher than it first seems. Keywords Russia, Putin, security, security policy, energy security, energy, pressure, commodities, oil, gas, pipelines, CIS, EU, Ukraine, Belarus, Moldova, Georgia, Baltic states, Caspian region, China Further bibliographic information Language English The report can be downloaded from www.foi.se. ISSN 1650-1942 Pages 365 p. Price acc. to pricelist Utgivare Rapportnummer, ISRNKlassificering FOI - Totalförsvarets forskningsinstitut FOI-R--1934--SE Vetenskaplig rapport Försvarsanalys Forskningsområde 164 90 Stockholm 1. Analys av säkerhet och sårbarhet Månad, år Projektnummer Mars 2006 A1104 Delområde 11 Forskning för regeringens behov Delområde 2 Författare/redaktör Projektledare Robert L. Larsson John Rydqvist [email protected] Godkänd av 08 - 55 50 7 60 Jan-Erik Rendahl Uppdragsgivare/kundbeteckning Försvarsdepartementet Tekniskt och/eller vetenskapligt ansvarig Rapportens titel Rysslands energipolitik: säkerhetspolitiska dimensioner och pålitlighet som energileverantör Sammanfattning Målet med föreliggande studie är att belysa Rysslands roll som strategisk energileverantör genom att analysera dess energipolitik i ett säkerhetspolitiskt perspektiv. Syftet är att att utröna huruvida Ryssland är en pålitlig energileverantör. Detta har gjorts genom att fokusera på Rysslands resursbas, dess perceptioner, inhemska marknadsstyrning, statens kontroll över energisektorn samt Rysslands utrikes energirelationer och energipolitiska hävstänger. Slutsatsen är att Rysslands pålitlighet som energileverantör beror på tidsperspektivet, avnämaren och kontexten. Ytterligare användning av energi som påtryckningsmedel kommer troligen att drabba de forna sovjetstaterna, men Europa kan även påverkas. Rysslands hårdföra politik skall utom tvivel förstås i ett långsiktigt geopolitiskt och strategiskt perspektiv under vilket politiska-, ekonomiska- och marknadsaspekter ryms. Ryssland har strategiska prioriteringar att behålla inflytandet över OSS och energipolitiken är ett medel för detta ändamål. Den internationella konkurrensen kring Rysslands resurser är en framtida nyckelfråga. En konsekvens är att friktioner kan uppstå såväl mellan Ryssland och konsumenter som konsumenterna sinsemellan. Dagens negativa demokratiska trender i kombination med Rysslands strukturella instabilitet och oförutsägbarhet understryker att nivån på osäkerheten kring rysk utveckling är större än den först verkar. Nyckelord Ryssland, Putin, säkerhet, säkerhetspolitik, energi, energisäkerhet, påtryckningsmedel, råvaror, rörledningar, olja, gas, OSS, EU, Ukraina, Vitryssland, Georgien, Moldavien, Baltikum, Kaspiska regionen, Kina Övriga bibliografiska uppgifter Språk Engelska Rapporten kan laddas ner från www.foi.se ISSN 1650-1942 Antal sidor: 365 s. Distribution enligt missiv Pris: Enligt prislista Foreword This study has been conducted at the Division for Defence Analysis at the Swedish Defence Research Agency (FOI) and has been carried out within the project for study of Energy as a Global Security Issue, headed by Ambassador Ingolf Kiesow and since 2005 by John Rydqvist. The project has during several years covered security dimensions of Eurasian affairs, in particular energy.1 The great powers of Asia has naturally been in focus and China’s energy needs and related security implications have for example been assessed both from a demand perspective2 and from the Chinese national security perspective.3 Research for the study has also been carried out with support from the project on Russia’s Foreign, Defence, and Security Policy (RUFS) under the auspices of Jan Leijonhielm, Head of Bureau. One of the core tasks for