East Mediterranean and Caspian Sea Natural Gas and Regional Conflicts

Does Energy Cause Ethnic War? East Mediterranean and Caspian Sea Natural Gas and Regional Conflicts

By Andreas Stergiou and Marika Karagianni

Does Energy Cause Ethnic War? East Mediterranean and Caspian Sea Natural Gas and Regional Conflicts

By Andreas Stergiou and Marika Karagianni

This book first published 2019

Cambridge Scholars Publishing

Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

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ISBN (10): 1-5275-4033-2 ISBN (13): 978-1-5275-4033-0 CONTENTS

Acknowledgements ...... vii

Abbreviations ...... viii

List of Maps ...... x

Introduction ...... 1

1) Energy and conflict: theoretical...... considerations ...... 5

2) The challenge of diversification EU and the rivalry between the and Russia in South-Eastern...... Europe ...... 15 The general context of EU-Russia...... energy relations 15 ...... The EU “common energy policy”...... 17 The EU Southern Gas Corridor...... (SGC) ...... 25 SGC and Prespes agreement ...... 38 The Turkish Stream pipeline...... project ...... 42 LNG: the new diversification...... scheme ...... 48

3) The East Med energy and conflict...... architecture ...... 52 The current stateast Med of playoffshore in E exploration and development of gas...... 52 East Med conflict potential...... and the role of gas ...... 77 The Cyprus Issue ...... 107

4) The energy and conflict architecture...... of the 115Caspian Sea .... The legalthe status Caspian of Sea...... 126 The Caucasuseline pip complex ...... 151 The Caucasus conflicts...... 160

Concluding remarks ...... 173

Sources and Literature...... 181

Interviews ...... 181 vi Contents

Literature ...... 183

Internet Sources ...... 215

ACKNOWLEDGEMENTS

The task of compiling this book and has highly been a meticulous, solitary explorative voyage that lastedthis many years. Reaching the end of voyage, we wish to thank all thosets for who the have supported our effor realisation of this book. This possible analytical energy study was made thanks to the generous help ofhe severalAzerbaijan institutes and people: t Development Agency, the Azerbaijan Diplomatic Academy, the Diplomatic Academy of the MFA the of Truman the Russian Federation, Institute for Advancementof the Hebrew of Peace University and Professor Menahem Blondheim inlso particular. due Special thanks are a to the experts who consented to to give us an interview as well as Apostolis Kordass technical for hi assistance.

ABBREVIATIONS

ACG: Azeri Chirag Guneshli AIOC: Azerbaijan International Operating Company BTU: British Thermal Units bbl/d: billion barrels per day bcm: billion cubic1 meters bcm/y: billion cubic meters per year BTC: Baku-Tbilisi-Ceyhan CCC: Consolidatedtractors Con Company CEO: Chief Executive Officer CPC: Caspian Pipeline Consortium CSTO: Collective Treaty Security Organization DCFTA: Deep and Comprehensive Free Trade Area DEPA: The state natural gas company of Greece DESFA: The naturalrid gas company state g of Greece EEZ: Exclusive Economic Zone EU: European Union FID: Final Investment Decision FPSO: Floating Production Storage and Offloading FSRU: Floating Storage and Regasification Unit FSU: Former Soviet Union HGA: Host Government Agreement JV: joint venture IAP: Ionian Adriatic Pipeline ICJ: International Court of Justice IEA: International Energy Agency IGB: Interconnector Greece Bulgaria INOGATE: Interstate Oil and Gas Transport to Europe KEPCO: Khazar exploration & production Co. KMG: Kazmunaigaz LNG: liquefied natural gas MoU: memorandum of understanding NATO: North Atlantic Treaty Organization NIOC: National Iranian Oil Co. OPEC: Organization of Petroleum Exporting Countries

1 One cubic meterls 35.3 equa cubic feet Does Energy Cause Ethnic War?ix

PIF: Palestinian Investment Fund PSA: production sharing agreement PfP: Partnership for Peace RAE: The energy Authority Regulator of Greece SCP: South Caucasus Pipeline SGC: Southern Gas Corridor Tcf: trillion cubic feet TAP: Trans Adriatic Pipeline TCGP: Trans Caspian Gas Pipeline tcm: trillion cubic meters TAG: Trans Austria Gas TANAP: Trans Anatolian Pipeline TPAO: Turkish Petroleum TRNC: Turkish Republic of Northern Cyprus UNCLOS: United Nations Convention on the Law of the Sea UNEP: United Nations Environment Program USSR: Union of Soviet Socialist Republics

LIST OFMAPS

1. TAP-TANAP 2. The proposed Trans Caspian Gas pipeline 3. Turkish Stream 4. Poseidon 5. Offshore fields in the Eastern Mediterranean 6. Eastern Mediterranean gas fields 7. Potentialr export Eastern routes Mediterranean fo Gas 8. The triangle gas exploitation strategy 9. The Israel-Lebanon disputed area 10. The Cyprus Problem 11. The Caspian Sea. Political map 12. The Caspian Sea. Geophysical map 13. Kashagan Experimental Program 14. Absheron and Shah Deniz fields in Azerbaijan 15. Scheme presenting the delineation of the of the respective sectors Russian Federation and the Republicn Sea of Azerbaijan in the Caspia 16. Caspian Pipelines 17. BTC and SCP pipelines 18. Nagorno Karabakh

INTRODUCTION

In the energy business there ise 90% a popular saying: “Pipelines ar politics and 10% steel”. Thoughweight this to phrase clearly gives more politics and undervalues business’t is more drive or for economic profit, i less common knowledge that in the contemporary world, energy is political by its very nature.em Energy, to be business, and politics se inseparable, as political factorsness in many cases impact the busi strategies of major energy companies,lear to what though it is not always c extent. The exploitation of energy a resources also appears to be significant element in the powertes, struggle as between competing sta energy trade crosses national limited borders to and its importance is not state economyopment and devel butlated is also toecurity. nationalre s Since trade for natural resourceses are is not necessary as these resourc uniformly2 distributed, the energy business has been closely intertwined with intergovernmental relationsronically, and interregional the conflicts. I largest energy reserves are usually energy far away from the developed markets that need them most, andrld tendlacking to lie in parts of the wo economic and political stability.modities Thus, to any effort to bring com energy-poor markets the typical goes beyond investment is risk and associated with country/regionand risktransit assessment of the producer countries as well as the countriesexport that or might compete with the transit countries.orical From point a hist of to view, move the ability energy acrosseed borders been a has source indecurity of savings and and s a basis for foreign commercial and diplomatic relations. As Daniel Yergin has pointed out,n the energy as a commodity is ofte vector around which mutual interestsendly states of friendly and not-so-fri meet and is thereforeed with multi-faceted associatl rivalries geopolitica and geo-economic calculations.t countering Energy security is not just abou a wide variety of threats; it nations, is also about how the relations among

2 Karen Mingst, Essentials of internationaland London: relations (New York W.W. Norton &2008) Company, 4th edition, 257-258. 2 Introduction they interact with how each energy other, impacts rall and their ove national3 security. Today, many countries use theiral meansenergy resources as the princip for projecting economic and politicalre looking influence, while others a for “exclusive backyards” andies, build in order up their military capabilit to secure for themselves thend control to protect of transportation routes a critical energy4 infrastructure. With the definitions of securitye, energy undergoing a fundamental chang security is seen as an integrall security part of the foreign and nationa policy of each state. Energy securitythat is viewed as a mechanism measures the degree of securitizationd military in bilateral political an relationships. From this perspective,ecurity of it is worth noting that s critical economic and energy ementinfrastructure in has become a key el the agenda of both the EU and NATOifested in recent years, clearly man in official textsns. For and this declaratio reason,itics of the energy, geopol especially oil and gas, are playingl political heavily in the internationa agenda. Energy commodities arenner presented as in a cross-sectoral ma part of the broada, security rather than agend ast issue. an independen However, energy security literatureexamine has failed to sufficiently energy sources’ conflicts. impact on ethnic Inat the have few been cases th made, scholars provided mainlyusions. simplistic or manichaistic concl In this book we seek to advance issue our understanding in of a specific the concept of energy security ergy and geopolitics: how do major en projects affect regional ethniclity conflicts of a and the overall stabi region? The mainstream literature on ches:this issue The follows two main approa neo-liberal one views energy tradeg as a conduit for constrainin opportunism, strengthening interdependenceal and transforming riv interests through regional cooperation,-existing thereby alleviating pre ethnic and political conflicts. mainly The the second approach, reflecting theoretical assumptions ofthe political thesis thatneo- realism, is based on political and security considerationsives. outweigh economic imperat Thus, energy projectsed as a are variable regardhe exacerbating t relationshipshindering among states conflict and resolution.

3 Daniel Yergin, The Quest. Energythe security Modern and the remaking of World (New York, The Penguin Press, 2011), 507. 4 Robert Ebel and Rajan Menon (eds),ral Asia Energy and andthe conflict in Cent Caucasus (Lanham,an and MD: Littlefield, Rowm 2000). Does Energy Cause Ethnic War?3

Our thesis, however, and contrarytudies,5 is to other well-substantiated s that energy trade, in whatever a minimal form it is conducted, has either impact or no impacteep-rooted at all on ethnic dpolitical conflicts and disputes. We acknowledge, of course,e energy that the completion of som related projects, like the constructionce, does not of pipelines for instan conform to the basic commercial economic aspects orhe required. T widespread assumption that decisionsects are on natural gas export proj likely to be affected by politicaltrue. considerations is certainly However, it has its limits. Thes behind gravity oil of the political factor and natural gas investment decisionsr conditions, is related to several othe such as energy market dynamics, commercial interests of energy companies, theural nature gas of supply the natpipelines and economy of that ultimately shape the valuethe of such projects and determine decision-making process. In our understanding, conflictrequiring resolution a is a complex process certain political and socialment context of some and, mainly, the establish sense of mutual trust between peoplesul and nations. The successf exploitation and monetizationon, of can energy resources, in our opini hardly incentivise or disincentiviseit is associated this process, except that with other political and socialesolution factors that dictate conflict r procedure. The Caspian SeaMediterranean and the Easternies are of the this case stud book. These are two regions withith well-known gas energy resources, w routes to Europe and actors, exporters,rators, pipeline owners and ope transit states and downstreamne customers another that are connected to o in a web of political and economiced by interdependencies, complicat multiple ethnicities and nationalities.se regions More significantly, the have been haunted by deep-seated the ethnic two conflicts and disputes: oldest registered with the Unitedrab-Israeli Nations (the Cyprus and the A conflicts), the Nagorno-Karabakhmerous problem, the Syrian War and nu tensions in the Mediterranean, In the terms Caspian Sea and the Balkans. of political geography, thesehe two most regions constitute probably t representative demonstrate examples that ther argument. can validity of ou

5 In their excellent study Tang“Does ShipTng, Oil CauseYihan Xiong and Hui Li Ethnic War? Comparingfrom process-tracing evidencetative results,”with quanti Security Studies, 26, no. 3 (2017):nogeographical 359-390, argue that the eth location of oil rather than oilncentration income, rent, is production, or co connected etwith of theethnic ons war. 4 Introduction

In the next pages, this study attempts energy to explore the impact of megaprojects on the evolutionerranean of the Caucasus and Eastern Medit ethnic conflictss well and as disputes, to examineey a have whether th incentivised peacen among and the cooperatio states or solely in conflict compounded their strained relationsir by further complicating the settlement. Against this background, the bookics focusesof on the changing dynam pipeline politics around and withinthe new the Southern Gas Corridor, discoveries in the Eastern Mediterranean search for Sea, as well as on the safe and economically viable naturaluropean gas supply routes to the E markets. The energy relationshiplso between Russia and the EU is a discussed from this perspective.igate Our purpose was also to invest whether the development of the gasthe resources in the Caspian and Eastern Mediterranean basins has prompted a new geopolitical competition between the EU and energy Russia, in the context of the EU diversification policy. For the very first conducted time, we an also energy-relatedalysis of the an “Prespes Agreement” between Greeceblic and the Former Yugoslav Repu of Macedonia that resulted in thethern renaming of the latter as Nor Macedonia. We undertook repeated effortshe to basis substantiate of our argument on t empirical material. Therefore, field our analysis relies on extensive research conducted over the pasttries five years in the various coun involved: Russia,baijan, Georgia, Kazakhstan, Azer, Turkmenistan Cyprus, Turkey, Israel, Greece,he LebanonEU and Egypt, as well as t institutions inensitive Brussels. and Some confidentialmation s infor comes from persons serving in highisted diplomatic on positions who ins remaining anonymous.

1) ENERGY AND CONFLICT: THEORETICAL CONSIDERATIONS

Affordable access to energy resourceshallenges has been one of the key c for European states’ domestic andnd foreign policy since the Seco Industrial Revolution in the 19thenergy century. The competition for reserves has since then been tightly, linked with power politics geopolitical rivalries and deepng the historical animosities concerni development of in the the oil first industry place.rs have Some schola argued thatrity energy began secu to be a questionstrategy ofon national the eve of World War I, when Winston the Churchill decided to shift power source of the British Navy’sthe aim ships of from coal to oil with making the fleet faster than itsitch German also counterpart. But the sw meant that the Royal Navy would relyon not on coal from Wales but insecure oil supplies6 from what was then Persia. During the Cold War, Western strategists resources considered the natural strategy to be a linchpin of thence “Free and World’s coordinated defe preparedness strategy”. Fornational the sake legal of this strategy the inter agreements should be modified accordingly. wrote As William Middedorf in 1981 “…The Law of the Sea Conferenceoduce an so far has failed to pr agreement adequate to our interests.to establish Although it would be best an internationally agreed upontation set ofof theguidelines for the exploi seabed, we cannots to allow be denied ourselve accessabed by to a the se coalition of nations that lackit it. the If technical we fail expertise to explo to win an agreemento our acceptable interest, to wet exploit should begin the seabed of theelf Continental where several nSh mining forms of ocea appear to be economically feasible.op a It may be possible to devel satisfactory internationalin climate the future for full-scale exploitation when significanting has seabed been 7min initiated…”. The current energy security system970s, beganas to take shape in the 1 industrialized countries, inrgo, response sought to the 1973 Arab oil emba

6 Daniel Yergin, security,”“Ensuring energy Foreign(2006): Affairs 69. 85 7 William Middedorf,or the “A coming strategy resourcen Towardsf war”, a i grand strategy for global freedom, (London: ed. A Geoffrey Steward-Smith Foreign Affairs Publishing, 1981), 38-39. 6 1) Energy andoretical conflict: considerations the to ensure coordination, in orderthe disruption to limit the repercussions of in energy supply that threatenedonomy. the The stability of the global ec oil shock of 1973 not only demonstratedgnificance across the world the si of crude oil for the economy,at but access at the to same time it proved th energy sourcesore seemed effective to be a mweaponry units. than milita The year 1991 marks a significant date in the formation of the international energy securityies system. signed The industrialized countr the Energy Charter Treaty foundingl Energy the Paris-based Internationa Agency (IEA) with the aim of promotinge more open and competitiv international energy markets,arency based and on the principles of transp non-discrimination. The roleion of amongthe IEA is to achieve coordinat its members and it therefore doesf national not determine the structure o energy markets, nor does it dictate oblige national energy policies or member countries to open up theirstors. energy Each sector to foreign inve state has the right to decide whichts geographical areas within i jurisdiction should be made availableevelopment for the exploration and d of energy resources, and to determineergy the rate at which such en resources may8 be exploited. The 1973 energy crisis also laidcal the foundations for a theoreti contextualisation of the termwider “energy security” as part of the discipline of security studies.y security Since has then, the notion of energ inspired a multifacetedcal discussion. theoretithe Definitions concept of of energy security range fromdisruption narrow issues of physical supply to wider ones engaging the economy, environment and political consequences ofnergy changes market. in the gyAs e securitya result, ener means differentnt things places. in In differe countries dependent highly on imported oil and gas, for example,concern the main energy security lies with supply.ith Ineconomies countries basedg oilw andon exportin gas, the larger concern is securitys tend ofto demand. Energy economist approach “energy security” onffordability, the basis of indicators such as a environmental acceptability,bility of and supply diversification dura of energy sources. The IEA’s definitioncurity of as energy the ailabilityuninterrupted se of av energy sources at9 an is affordable used by many price scholars as the official and moreition. accurate Othersoach definthe apprby term drawing

8 International Energy Agency, Energy Charter: http://www.energycharter.org/what-we-do/investment/overview/ 9 International Energy Agency Homepage: http://www.iea.org/topics/energysecurity/ Does Energy Cause Ethnic War?7 on popular understandings ofng energy force as in an essential and animati the “metabolism” linking of social personal life,ial worlds of soc reproduction with those10 According of community to a and well- nation. known energy expert, “energy securitying the is not just about counter wide variety of threats; it isations, also about how the relations among n they interact with how each energy other, impacts rall and their ove national11 security”. The economic and political utilisationbeen an of energy resources has additional field of contentionhought between still the various schools of t dominating international politicallations. economy and international re The liberals tend to see energyan be as utilised a non-political issue that c to promote interstate cooperationis of the and mutual benefit on the bas liberal concept 12 of Therefore, interdependence. they usually argue in favour of interconnected, depoliticisedLiberal global energy markets. scholars also believe in the capacitygly of energy to solve seemin intractable problemslitical through action.e neo-liberal po Supporters of th institutionalism focus on internationaltitutional cooperation and new ins arrangements on energy and energy products (the European Energy Charter, the South Asian Associationnergy for Regional Cooperation E Centre, OPEC, IEA,ting etc.) the possibility accep d of change an improvement, in contrast to theous realist and emphasis on the continu unchanging nature of the realityhe of international anarchy and t omnipresentospect pr13 of war. On the contrary, the realistmework understanding of falls within the fra interest defineder. in Accordingly, terms of powly energy is simp perceived as a means to influencen the the balance of power. Based o realist interpretation, thisidence is the bears assumption that historic ev out. Energy is also understoodich as another a form of resources, wh nation has to allocate as rationallyromote all as possible, in order to p

10 Gavin Bridge, “Energy (in) security: scarcity”, world-making The in an age of Geographical Journal 181, No. 4 (December 2015): 329. 11 Yergin, The Quest, 13. 12 Ayla Gurel, Fiona Tzimitras, Mullen, Harry “Therbons Cyprus issue: hydroca Context, positions and future Center, scenarios” 2013); (Nicosia: PRIO Cyprus Stein Tønnesson and Åshild Kolås.a, India, Energy Oil security and in Asia: Chin Peace, Report to the Norwegiano Ministry International of Foreign Affairs (Osl Peace Research Institute, 2006), https://www.prio.org/Publications/Publication/?x=5694. 13 Arthur Stein, “Neoliberal Institutionalism,”dbook of International in The Oxford Han Relations, eds D.eus-Smit Snidal and (Oxford: C. rsity R Oxford Press, Unive 2008), 201–221. 8 1) Energy andoretical conflict: considerations the desirable objectiveswith other in relation nations.dowment Natural and en politics are intrinsically frominterlinked foreign and cannot be separated policy at all. Energy trendserconnected and international politics are int and hence energy security makesign up and an integral part of the fore national policies14 of states. Neo-realists,gue in particular,a case which, arome according to s observers15, seems to be verified in the case: of the Eastern Mediterranean where political relations aregh verylevel tense, of or at a relatively hi securitization16 as constructivists would have argued, energy agreements are less likelyd to act be as achieved a reinforcingsm an for the mechani perpetuation of normalized relations. By pursuing their own nationale energy interests, states quite often us supply to opposeaccordingly each other andadapt policies. their foreign Even a seeminglyon technical over energy decisiuding transport, incl project construction and managementtical is sometimes shaped by poli competition. Such struggles rangetal to from securing investment capi sharing profits, providing ticalphysical stability security, and ensuring poli in the countries involved. Energyole in pipelines play an important r diplomatic, economic, militarytion and to environmental terms. In addi offering immediate economic benefitses, to transit and end countri pipelines may act as the building cooperation blocks of alliances and boost among states. Political or geopolitical considerationsons on might influence decisi energy projectsc in logic, purely simply economirojects because are such p very risky in financial terms.ait Investors, a long in general, have to w time before receiving a returnnvestments on their investments, and such i involve immense sunk costs. Consequently,tability regime and economic s

14 Yergin, “Ensuring energy security”;itics (Philadelphia, Brenda Shaffer, Energy pol University of Pennsylvania Press, 2009). 15 Odysseas Christou, Constantinoson Adamides, and “Energy securitizati desecuritizationle East”, in the Securitynew Midd(2013): Dialogue 507-522. 44 16 The term securitization mainly to the refers processhich threats through are w addressed. It is supposed tor involve conditions the elevation to a level of particula above that of everyday politicsexceptional in order measuresto justify the use of in response.tion Securitiza consequently operatesrum of along a spect politicization: at one extreme-politicized, is the banal, and every at day, and non the other is that which presentsherefore existential be threats and must t securitized. See the classicalJaap work De of Wilde. Barry Buzan, Ole Wæver, Security: a new framework for analysisublishers, (London: Lynne Rienner P 1998). Does Energy Cause Ethnic War?9 are of paramount importance in determiningelop where and how to dev energy projects.17 Not accidentally, in the Caspian Sea, the energy giants investing in field exploitationthe and same development today are also companies that form undertake of consortia, in thend transit the export of a the hydrocarbonsaspian from to thethe CWest. This applies, in particular,ronmental to natural gas because of its envi credentials, its higher efficiency to oil and in power generation compared coal, lower greenhouse emissions gas relative (GHG)ssil fuels, to other fo and suitabilityith for renewables partneringl. as Naturalw a back-up fue gas greatly suffers from securityenched of in supply considerations entr geopolitics, in addition tote national change.18 policy approaches to clima All in all, the current debateretically on energy security could be theo structured arounde “storylines”, two alternativs andthat of “market institutions” and that of “regions between and a empires”, distinguishing market-based and a geopoliticalolitical approach. According to the geop storyline, energy good is and a strategic the stateactor is the key guaranteeing security througheals. the special In treatment of energy d other words, energy is perceivede economic as a strategic tool shaping th and political developments inling the the international system. Control energy resources and transmission being lines an has the same meaning as arbiter in worldond politics. storyline Thearket considers sec as a the m space with equalunities opport and the statevider; as specificjust a rule pro legal arrangements, disputeechnocratic resolution authorities as well as t solutions then become policy instrumentsfunction to ensure that markets properly.19 Moreover, in the geopoliticalurces context, is control over energy reso conceptualised as a means notprosperity only to fortify of the security and the holder but also to reduce energy, which dependence on other states

17 Frank Verrastro aw, and “Providing Sarah Ladisl energy in an security interdependenthington world”, Quarterly The Was04. 30 (2007): 95–1 18 Luca Franza, Dick de Jong & Coby Gas: van der The Linde, “The Future of Transition Fuel?” in The Futurepolitics, of Natural eds. Gas. Markets and Geo Silvia Colombo, Mohamed El Harrakrlands: and Nicolò Sartori (The Nethe Lenthe-Europeanview, Energy 2016), Re 25-26, (e-book: https://www.iai.it/en/pubblicazioni/future-natural-gas). 19 Edward Stoddard,ng the “Reconsideri ontological international foundations of energy affairs: realist geopolitics,litico-economic market liberalism and a po alternative,” European Securitychard 22, Youngs, no. 4 (2013): 437 - 463; Ri Energy security: Europe’s newand foreign New York: policy challenge (London Routledge, 2009). 10 1) Energy andoretical conflict: considerations the might be seen as a political threat.d ability Concerns to over the continue secure energy supplies from high-risk,an increasing or list of inaccessible, less reliable coincidesparts of the with worldgy the supply use of as ener a part of the policy arsenal alongitary with power other economic tools, mil and diplomatic20 tactics. In the context of political realismoretical especially there is the the assumption that the export of artenergy of the commodities is as much a p policy arsenal as other economicomatic tools, military power and dipl tactics. States can hardly refrain their policy from using energy to promote goals. This resembles the realitys have as increasingly more countrie recognized the importance of incorporating energy security more systematically into foreign policyfor by developing various tools promoting their21 strategic goals. Energy supply interruptions fored as example an have very often been us “energy weapon” by the producingt control state or by transit states tha pipelines or transportationnsumer corridors, state in order to force the co or group of consumer states toas change been their behaviour. Russia h accused in recentpting years supply of interru to purposes. serve22 similar The EU, on the contrary, perhapswer due and to a the lack of military po common foreign policy, seems to have taken a more multilateral, economy-orientede problem approachergy of security.en to th Empirical studies have indicatedes have that wars over natural resourc become a typical feature in theled international energy arena. The so-cal supply threats have often beenprincipal used by sovereign states as the means of projecting economicforce and political other influence aiming to states to make various politicalicts or economic concessions. Confl

20 Verrastro andProviding Ladislaw, energy “ security”. 21 Filippos Proedrou, “Re-conceptualising complex in the the energy and security Eastern Mediterranean”, The Cyprusullah Review 24 (2012): 15-28; Abd Tanrıverdi, “Eastern Mediterraneany’s Stance”, Natural Gas: Analyzing Turke European Journal Political of Economic Studies and013): 6, 83-99; no. 2, (2 Michael Emerson, “Fishing forInsight gas and Turkeymore in 15 Cypriot waters”, (2013): 165-181. 21 Brenda Shaffer,; “Energy Michael politics” Leigh,Geopolitical “Energy - A Game Changer?”, l The Spectator Internationa 49,-10; no. 2 Nina (2014): 1 Möllers, Karin Zachmann, Past and Energy Present Energy Societies. How Connects Politics,nd Cultures Technologies (Bielefeld:ript aVerlag, Transc 2012). 22 Tatiana Romanova,nergy “Is Policy Russian towards Ey about the EU onl geopolitics? The liberalization Case of the thirdpolitics package”, 21, no. Geo 4 (2016): 857-879. Does Energy Cause Ethnic War?11 resulting from e energy therefore threats frequentlytable ar unpredic because they do not rely on economicefits from rationale, as economic ben potential energy agreements arelitary sacrificed for political and mi considerations. According to conflicts these studies, the total number of between 1946 and 2008 was 285, whilel the total number of natura resources conflicts between23 1946 and 2008 was 117. Conversely, therey held is the perception commonlal energy- that benefici related economic collaborationy for has the potential to pave the wa improved political in constructivist relationso de-securitize or, discourse, t the economic sector but with nolitical effect on deeply securitized po sectors in ways that may leadelations. to a normalization In of political r this regard, energy acts as a tive,game changer as was and as a peace incen the case with the European Coals, and laying Steel Community in the 1950 the foundations for long-termmbers. cooperation among the founding me This example, however, has notstory repeated of itself in the modern hi international relations. Thereergy-related are no cases of international en collaborationeconciliatory indicating the or act r peace-making of imp energy resources. This appliese often to pipelines as well, which quit become a diplomacy tool, as their value significance and extra market increased withand the gas amount traded of oil via pipelines. Undoubtedly, cross border pipelinesnal are fraught with internatio challenges. As Stulbergut, troubles pointed ariserties o when decide the pa to exploit interdependence andnon- disrupt pipeline operations for commercial reasons. Pipelinend politics arbitrary refer to the unilateral a disruption or renegotiationftake of the and/or terms of supply, transit, of delivery.24 In our study, wethat tried a pipeline’s to prove is dependent effectiveness on many incalculableable factorsand unpredict andct as can an hardly a incentive for peacefor war. or as In a ourcausedecision opinion, to the construct a transnational oilily or the gas result onshore pipeline is primar of a mixture of commercial considerationsonally be that can only conditi combined with political relationsnd between producing, transit, a

23 Siri Aas Rustad, Helga Malmin Binningsbø,ing for? “A Price worth fight Natural Resources Recurrence”, and Conflict Journalsearch of 49, Peace no. 4 Re (2012): 531–546. 24 Adam Stulberg, “Strategic bargainingnfronting and the pipeline politics: Co credible commitment problem in of Eurasian International energy transit”, Review Political Economy 19, no 5 (2012): 808-836. 12 1) Energy andoretical conflict: considerations the consuming states. Therefore,imited energy in export pipelines are very l their ability to achieve political goals. As a consequence, we have not registered i.e. oil or any “peace pipelines”, gas pipelines routed betweeno countries achieve in conflict as a means t peace. On the otherts about hand, energy conflic that infrastructure escalate to tension or a symbolicne battlefield (the Russia-Ukrai confrontation for example) doerior not motiveseem to us to reflect the ult of the conflict and hence we tendot aggravate to believe that energy does n interstate relations either. strained In the same manner, Russian-German political relations in recentellent years energy have not affected their exc cooperation. The building of theline contentious is Nord Stream 2 pipe hallmark of this cooperation. For example, the hydrocarbons25 discovered have west of Gaza in 1999 not precipitated any improvementship or aggravation in the relation between Israel26 The and Turkey-Greece Hamas. natural gas pipeline completed in 2006, the first try,to deliver has also Azeri gas to an EU coun neither improved nor exacerbatedtionship.27 the complex Greek-Turkish rela The pipeline projects promotedmeans by Washington to in the 1990s as a bring peace to the South Caucasus the did not lead to any change in Azerbaijan-Armenia confrontation, gas nor has the Washington-backed pipeline from28 Qatar The bombing to Israel. of the pipelines in Sinai, supplying energy to Israel, ianhas relationsalso not affected Israeli-Egypt at all. In the case of gas, it is apparentultiple that objects there are potentially m of security at play (nations, ons, governments, economies, corporati

25 Royal Dutch Shell that had acquiredin the area, the rights has of exploration given up its stake in the field in March 2018. 26 The Institute for Palestine Studies, Mediterranean: “Gas finds in the Eastern Gaza, Israel, and other conflicts”,47. paper no. 42 (2012/13): 29- 27 The Turkey-Greece296 pipeline kilometres is onnecting a long pipeline c Turkish and Greek gas grids. Then Turkey pipeline and runsbegins in Karacabey i to Komotini in Greece. The length kilometres of the Turkish (130 section is 210 mi), of which 17 kilometres (11a. mi) The are length under of the Sea of Marmar Greek section is 86 kilometreseline (53 mi). is 36 The inches diameter of the pip (910 mm) and the capacity is 7 n billion cubic feet) cubic of metres (250 billio natural gas per year. 28 Emre İşeri & Panagiotis Andrikopoulos,the Eastern “Energy Geopolitics of Mediterranean:ure Will fuel Aphrodite’s peaceadoguAnaliz in Cyprus?, l Ort5, no. 51 (2013): 39. Does Energy Cause Ethnic War?13 individuals, populations, environments),ars to be and that security appe not just a restrictivetice, but a productive prac29 one. However, in our opinion, theis geopolitical overrated. value of natural gas For quite some time, it has beene lowest argued that natural gas has th carbon dioxide emissions amongh fromfossil fuels and hence the switc other fossil fuelsas could to naturalreduce carbonand g yield emissions significant CO2 savings. Moreknowledged recently, however, it has been ac that the energy system should by be 2050 approaching carbon-neutrality and continuing to burn significantll not quantitiesbe of natural gas wi sustainable.30 Furthermore, as experts in thistrade field of have argued, pricing and natural gas often appear to bevelopments at the centre of geopolitical de (the Russian-Azeri “energy antagonism”he East or the construction of t Med pipeline are very indicative is in this respect). However, gas predominantly priced using twoion, mechanisms: or oil 1) oil price indexat price escalation, where the value the price of gas is determined based on dynamics of oil products, and prices2) market-based are pricing where gas set through the interaction31 between gas supply and demand. Gas producers and infrastructure profitable operators will only generate a return when their assets areghput used at and a reasonableat rate of throu revenues that cover their costs security over the of longer term. They need demand. The consumers, by investingstructure, in specific gas-fired infra are committed to using gas and hencely.32 they need security of supp Accordingly, as far as consumptionerested is in concerned, states are int access to energy,uptions preventing and reducingatility. disr price As vol far as production is concerned,g enough states raw are interested in sellin materials to provide economic welfare. Therefore, despite appearances, mainly the issues of energy supply are connected with the general well-beingthe of the state rather than

29 Peter-James Forman, Securingurity Natural Research, Gas: Entity-Attentive Sec thesis, Durhamlable University. atE-Theses Durham Avai 52, (2017), http://etheses.dur.ac.uk/12139/. 30 Martin Lambert,inking Power-to-Gas: Electricity Decarbonising L and Gas in a World? (London: Oxford Institute for Energy Studies, 2018). 31 Chi-Kong Chyong,of “On Global the Future LNG Trade itics”, and Geopol in The Future of Natural Gas Marketsia Colombo, and Geopolitics 43, eds. Silv Mohamed El Harrak and (The Nicolò Netherlands: Sartori Lenthe/European Energy Review, 2016). 32 Correljé Aad, “The European Naturalble Renewable Gas Market”. Curr Sustaina Energy Report 3 (2016): 29. 14 1) Energy andoretical conflict: considerations the existential traditional security.r, which The security concerns, howeve characterise ethnic conflicts,promising are related to radical and uncom competition for power, drivenigion by ethnicity, and nationalism and rel less or not at all by energy.

2) THE CHALLENGEDIVERSIFICATION OF AND THE RIVALRY BETWEENEU THE ANDR USSIAS OUTHIN -EASTERNEUROPE

The general context of EU-Russia energy relations

After the collapse of the Sovietpe not Union, just there was widespread ho of bringing an end to the East-Westng a confrontation, but of forgi “strategic partnership”ssia on the basiswithd ofRu on shared the one han common interests and challenges,alues. and, on the other, of common v Over time, however, this mood hasrom evolved. First, it has gone f optimism about Russia’s voluntaryh return and desire to establis meaningful cooperationeased frustration to incrcism with, of, and criti perceived Russian intransigentnd opposition to Western policies a Moscow’s increasingly obviouslues departure but not just from shared va from a shared view of international33 developments. Accordingly, EU-Russia relationsrgy, on various levels, such as ene defence, and foreign policy, haveive gone through many transformat phases in the last two decades,rt ranginghostility. from cooperation to ove Following the collapse of the allySoviet after economic system and especi the successful recovery1998 financial from theia crisis, EU-Russ economic relations expanded rapidly,driver of with energy remaining the their overall EU-Russia relationship.ssia to Energy revenues enable Ru buy from and invest in the EU, resulting in complex patterns of interdependence, financialrconnections ties, and cross-border physical inte (mainly pipelines). On balance, economic however, the increased level of interdependence between the EU the and Russia has failed to produce Common Economic Spaceiscussed that in was 2001. dthe Furthermore, ambitious EU-Russia energy partnershipe terms never materialized in th sketched out inlargely the early because 2000s,illing Moscow to was unw

33 Andrew Monaghan, The new politicsge, Manchester of Russia (Interpreting chan University Press, 2016). 16 2) The challengeversification of di and EUthe rivalry between the and Russia in South-Eastern Europe play by the rules set in Brussels,s to compel while the EU lacked the mean Moscow to34 do so. So, nowadays there friction are points between ofloc the and EU as a b Russia. For instance, Russianrity and EUclash. perceptions of energy secu This applies mainly to gas. Coal basis and with oil are traded on a global the result that the price settingand mechanisms are highly liquid transparent, while security oficity supply of is ensured by the multipl potential sourcesver, of it imports. is unclearguments Howe whether ar about Russian gas are in realityy, strategy, about gas and not about histor and geopolitics.as seems In many to cases be35 just g the spark. Beyond that and though opinionsh gas are split on the extent to whic should be part ofbonisation the EU’s decar strategy,s is an natural ga intrinsic part ofommission’s the European “Clean Cll Energy for A Europeans” strategy. Specifically, be a bridge natural gas is considered to fuel that can aid in the transitione gas plants to renewable energy, becaus can be easily fired up and downnd unlike gas emits other types of plants, a 50% less carbon dioxide36 than coal when burnt. With 28 countries and a combinedon population of around 512 milli people, the EU is something of a prized market and a political battleground for the world’sarly largest when energyit exporters, particul comes to natural gas. Europe’ss overall still annual gas consumption i satisfied by Russia (over onendly third by of its gas supply) and seco Norway37 and Algeria, in the 38 While form European of LNG. gas consumption is set to remain almostomestic flat in the coming years, d production is set to fall at anprimarily average rate of 3.5% per year, driven by the Groningen phase-outing in the Netherlands and declin production in39 the North Sea.

34 Ronald Tiersky, n,JohnVan “Europe Oudenare andc Russia Partnership Strategi and Strategic Mistrust”,pean Foreign in Policies: Euroope Still Does Matter?, Eur ed. Ronald Tierskyowman (New & Littlefield York: R2010), Publishers, 69-92. 35 Nikos Tsafos, “Who’sRussian Afraid Gas? of Bridging atlantic the Trans Divide”, CSIS Paper (May 2018). 36 European Commission - Press release,16), “Clean (Brussels, 30 November 20 Energy for All Europeansking Europe’s - unloc growth, potential” http://europa.eu/rapid/press-release_IP-16-4009_en.htm 37 Gas productionway is, in however, Nor graduallyts fields declining mature. as i 38 Bud Coote, The CaspianSouthern Sea Gas and Corridor, rom Russia A view f (Washington: Theil Atlantic of the United Counc States, 2017). 39 International Energyas 2019. Agency, Analysis to “G 2024”. and forecasts Does Energy Cause Ethnic War?17

In the lowest of demand projections,htly lower import needs could be slig (by some 10 bcm) in 2020, but wouldthan then be some 20 bcm higher 2015 levels by 2025. As such, EUlay gas a imports will continue to p significant role in the futurethe EU EU gas gas market in the context of supplies diversification policy.he main For sure, Russia will remain t supplier through 2025 and itsbe share around of EU gas consumption will 40%.40 It is a simple fact that the Russianabilities gas forsector has immense cap sustainable production growth:fficient the resource to base is huge and su meet both domestic and export demands.rket Although the domestic ma absorbs two thirds of the totalifficult Russian to gas production, it is d expect its radical expansion, ch as is it is correlated with GDP, whi projected to grow slowly. As aussia’s result, gas the major influence on R output will come from abroad, emand.depending41 primarily on external d The very first source of external will demand for Russian gas is and remain Europe.

The EU “common energy policy”

Today, the EU imports more than and half of the energy it consumes several member states are heavilyfor key reliant on a single supplier energy sources. This is mainlyent true also for for gas and to a lesser ext oil and coal. As a result, thedisruptions, EU remains vulnerable to supply whether caused by geopoliticalal disputes, conflicts, political or commerci infrastructure failure or otheron so reasons. few This heavy dependence suppliers has beensince acknowledged the 1990s.e Since then, th European Commission has been pursuinguce this various strategies to red dependence and topt make of energy the conce supplytion a diversifica cornerstone of 42EU energy policy.

40 Iulia Pisca, “Outlook for EU gas 25”, demand and import needs to 20 Clingendael Internationalgy Programme - (CIEP) Eners on PerspectiveEU gas market fundamentals series, (2016). 41 Tatiana Mitrova, “Russian hydrocarbon2025”, in production scenarios to Shifting politicalan oil economy and gas, ofCSIS Russi Report, Energy ed. and National ogram,Security March Pr 2016, 37. 42 Jonas Grätz, “Commonhout Strategy: Rules wit EUand Energy Russia”, Policy in Toward a Common European Unioness, Energy and Policy Problems, Progr Prospects, eds. Vicki L. Birchfieldgstoke, and Hampshire: John S. Duffield (Basin Palgrave Macmillan, 2011), 61-86. 18 2) The challengeversification of di and EUthe rivalry between the and Russia in South-Eastern Europe Following the Russia-Ukraine gasthe disputes in 2006 and 2009 and disruptions of gas flows to Europe,as imports given that the bulk of EU g derived from few suppliers (mainly, the Russia, Algeria, and Norway) necessity of diversifying thes to routes the EU and sources of gas supplie moved to the top of the European The external 2014 relations priorities. annexation by Russia of Crimea 43 only reinforced this tendency. According to other views, however,ply the issue of Russian gas sup security to Europe Neither is overrated. Russia interested nor Ukraine are in interrupting supply to Europe., the As far as Russia is concerned country’s budgeto lose cannot European affordh gas are t sales, one whic of its main sources of44 hardRegarding currency Ukraine revenues. itself, the brutal reality for Kievthe is thatforeseeable it is and will remain, for future, utterly dependent on Russian needs, gas for most of its import regardless of the outcome of oscowthe trilateral and negotiations with M Brussels on the extension often the years.45 transit contract for the next As a matter of fact, in 2006, the2006/EC EU with the Decision No 1364/ officially establishedl Gas route the 3 (NG Natura natural 3), i.e. gas the pipeline network that would connectnd the the EU to the Caspian Sea a Middle East. In the context of theember 2007 Lisbon Treaty, the EU m states decided to incorporate ed “energy” into the so-called “shar competences” of hatthe bothEU, meaning the EU andstates t its member may adopt legally binding acts inis the area concerned. Though it stipulated thats canthe domember so only state whereas not the EU h exercised its competence explicitly or ceased has historical to do so, the experience has proved that themously, member as states tend to act autono if this sector were purely intergovernmental. Furthermore, it was decided toy (Articleintegrate the Title XXI on Energ 194) into the treaty. The titleenergy envisioned with a “Union policy” on the aim of ensuring the functioningcurity of of the energy market and se energy supply in the Union, promotingficiency on the one hand energy ef and energy saving and the developments of of new and renewable form energy, and on the other hand theworks. interconnection of energy net

43 David Koranyi, “European Naturalort Gas security in an era of imp dependence,” The RUSI Journal 159, 2 (2014): 66-72. 44 Tatiana Mitrova, “New Russian Shifting oil and gas political export strategy”, In economy of Russianeport, oil and CSIS gas, Energy Rl Security and Nationa Program ed., March 2016, 40. 45 Theodoros Tsakiris,parameters “The energy of theainian- Russian- EU Ukr impasse: dependencies, sanctions,” Southeast and the rise of Turkish Stream European and diesBlack 15, Sea no Stu 2 (2015): 206. Does Energy Cause Ethnic War?19

However, it also clearly states to achieve that all the measures necessary the objectives shall not affectmine a themember state’s right to deter conditions for exploiting itseen energy different resources, its choice betw energy sources and the general46 structure of its energy supply. In this respect, in 2008 the EUnergy adopted the “Second Strategic E Review” supposedly with the objective of enabling the EU to “speak with one voice” on the need for sufficienthe next step diversity of exporters. T was the EU Third Energy the legislative Package, fighting foundation for monopolies and promoting competitionket in the European energy mar and the launch of the EU’s Europeanuilds Energy Union in 2015 that b further on the 2030 Framework forropean Climate and Energy and the Eu Energy Security47 According Strategy. to EU official texts, the Energy Union48 is made up of five closely related and mutually reinforcing dimensions: - security, solidarity and trust:f diversifying Europe’s sources o energy and ensuring energy security through solidarity and cooperationU member between states; E - a fully integrated internalow energy of market: enabling the free fl energy through the EU through utadequate infrastructure and witho technical or regulatory barriers; - energy efficiency: improved energy efficiency will reduce dependence on energy imports, reduce emissions, and drive jobs and growth; - decarbonising the EU is economy: committed the to a quick ratification of the Paris Agreementship in and to retaining its leader the area of renewable energy; - research, innovation and competitiveness:ghs supporting breakthrou in low carbon and clean energy technologies by prioritising research and innovation the energy to transition driveove and impr competitiveness.

46 Communication from the Commissionnd the to the European Parliament a Council, “Energy strategy 2020,itive, for A compet sustainableand secure energy”, Brussels, November,, COM (2010) 10 2010 639 final. 47 European Parliament,tion from Communica the CommissionEuropean to the Parliament and opeanthe Council, Energy Security“Eur, Brussels, Strategy” May 28, 2014 COM (2014) 330 final, 15-21. 48 European Commission, Building the Energy Union, https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/building- energy-union. 20 2) The challengeversification of di and EUthe rivalry between the and Russia in South-Eastern Europe Since 2015, EU energy security policies have evolved to include overlapping objectives.d to the gas With sector,objectives regar current of all member statesving include: access to a) gasifferent ha from three d supply countries; LNG is only counteding from as one source despite com multiple countries having of access origin; toirectly b) LNG, either or d via other member states and c) t maintaining of a supply in the contex complete standstill of Russianption gas importsof to the EU or a disru Russian gas imports through theperiod Ukrainian of transit route, for a one to six49 months. But still, all these measuresique are EU not energy sufficient to create a un policy, binding and mandatory energyfor all the EU member states, as policy remains antal intergovernmen process. Sincer states the EU membe obviously regard energy supplyons, as which part of their external relati are still state controlled, , Brussels coherent can hardly design a single strategy on energy. Even withines the EU institutions, the messag sometimes appearwith contradictory, politicaliating declarations from dev the technical the statements European50 Commission. of Different Europeane multiple countries and divergentches hav to approa energy security, exactly as theyenergy have different relations with suppliers. As longtional as the regulatory institues not framework do change, the energy supply securityally challenge will be only parti addressed. The incapability oftly acting as one independently and coheren foreign policy actor and more importantlyr is as a security provide expected to undermine the EU potentiales aimed to push through strategi at securing access to alternative located energy in resources which may be highly explosive or 51high-risk security areas. Normally, energy a primary diversification, concernd energy of develope markets, does not become a cause supply of friction. Multiplying one’s sources reduces the impact of atives, disruption by providing alterna

49 Joseph Dutton, Lisa Fischer, forJonathan a changing Gaventa, “Infrastructure energy system the next generationUnion”, of policiesE3G report for the European (2017), 20-21. 50 Pasquale De Micco,lines, “Changing shifting as pipe in strategies: South- G Eastern Europe, and the implicationsliament, for Ukraine”. European Par Directorate-General policies for policy external15), department 1. (20 51 Thomas Panayotopoulos, “The Energyuropean Union –a solution for the E energy security?”uropäische Zentrum für Integrationsforschung E(Center for European Integration Studies) Rheinischeversität, Friedrich-Wilhelms Uni Discussionr (2015), Pape 26.