Dissertation by Anesiadis Theodoros, ID Number:2201140022 TOPIC: «Gas pipeline diplomacy in EU-Russia relations» International Hellenic University/School of Humanities MA Black Sea Cultural Studies, 2014-2015 Supervisor: Spyridon Sfetas, Professor Abstract The EU-Russia relations are taking place in a complicated and systemically unstable international environment. In this context, energy is a field of a coexisting conflict and cooperation between those two regional actors. The purpose of this paper is to examine the gas pipeline diplomacy in EU-Russia relations. In particular the paper seeks to examine the mechanisms and tools that Russia has devised to implement its gas pipeline diplomacy toward EU, given that its vast energy resources are a crucial source of its political power projection. The paper reviews the EU energy policy and security towards Russia and places special emphasis on the degree of the EU-Russia mutual dependency on energy and the energy security dilemmas as well. Moreover, it examines the Russia’s gas pipeline diplomacy and underlines the strategic dimension of russian energy policy, while it presents the gas pipeline projects that refer to the EU-Russia energy relations. The main argument of the paper is that there is mutual energy interdependence between EU and Russia; Europe is highly dependent on Russian gas, while Russia depends on gas revenues stemming from energy trade with Europe. However, this interdependence is highly complicated and it is hard to argue the degree to which the two actors depend to each other. However, it appears that currently this energy interdependence is asymmetrical favoring Russia. In any case, this certain degree of interdependence shapes among others the base on which both conflict and cooperation are built between the EU and Russia. Key words: Russia, EU, energy, gas, pipelines, security -2- Table of contents Introduction ................................................................................................................................. 4 1. EU Energy Policy and Security towards Russia ..................................................................... 7 1.1 Mutual Dependency on energy ............................................................................................. 9 1.2 Energy and security dilemma in the EU-Russia relations .................................................. 13 1.3 The US factor in the EU-Russia energy relations ............................................................... 16 2. Russia’s Gas Pipeline Diplomacy and Policy ....................................................................... 18 2.1 Russia’s grand strategy ....................................................................................................... 18 2.2 The Strategic Dimension of Russian Energy Policy ........................................................... 21 2.3 Gas pipeline diplomacy: the case of Ukraine gas crisis ...................................................... 28 2.4 Energy policy: the case of Balkans ..................................................................................... 30 3. EU and Russian Gas Pipeline projects .................................................................................. 33 3.1 The South Stream gas pipeline ........................................................................................... 35 3.2 The Southern Gas Corridor (SGC) ..................................................................................... 37 3.3 The Nabucco Gas pipeline .................................................................................................. 39 3.4 The Nord Stream gas pipeline............................................................................................. 40 3.5 The Bourgas–Alexandroupolis pipeline ............................................................................. 41 3.6 The AMBO pipeline project ............................................................................................... 41 3.7 The Turkish Stream............................................................................................................. 42 Conclusions ............................................................................................................................... 42 References ................................................................................................................................. 46 Appendix ................................................................................................................................... 51 -3- Introduction Russia is one of the most important partners for the EU and hence a key priority of the European foreign policy is to build a strong strategic partnership with Russia on the solid basis of mutual respect. Russia, especially after the 2004 and 2007 EU enlargements, is the largest country neighboring with the EU. Moreover, Russia is a crucial regional and global actor in geopolitical and security terms and it participates in the UN Security Council. Beyond the historical, geographical and cultural ties with Europe, Russia is also a key supplier of energy to the EU. In addition, Russia represents a dynamic market for European goods and services, while the European market is a highly important destination for Russian exports. Given all the above mentioned links the EU has a forceful interest in working together with Russia. The legal basis of the EU-Russia bilateral relationship is the Partnership and Cooperation Agreement which represents an effort for political, social and economic cooperation and stability. More in particular, the Partnership and Cooperation Agreement (PCA) came into force in 1997. The PCA determines the bilateral objectives and establishes a framework for dialogue in numerous areas. The PCA rests on the idea of a mutual partnership that fosters political, commercial, economic, and cultural bonds between the EU and Russia. Furthermore, in 2003 the EU and Russia agreed to enhance their partnership and cooperation by establishing within the PCA framework “four common spaces”. In particular those common spaces encompasses the common economic space, the common space of freedom, security and justice, the common space of external security and common space of research and education. In the context of EU-Russia relationship energy plays a key role. Energy relation can be described as a mutual interdependence of supply and demand. So, there is strong interest in closer energy relations for both sides; the stable flow of reasonably priced energy contributes to Europe’s energy security, while Russian sales to Europe contribute to its economic growth. To safeguard energy trade the EU established a comprehensive Energy Charter Treaty (ECT), which has been not ratified though by Russia, despite the fact that it assures that it will respect its key principles. Despite some positive trends in the institutional development of EU-Russian energy relations several issues remain unaddressed (European commission, 2007, 3-12). The EU–Russia relations have been described as a dichotomy between conflict and cooperation. It is interesting that conflict and cooperation coexist and hence this makes the EU–Russia -4- relations a very complex issue which impedes two actors’ foreign policies. Indeed, the overlapping of periods of cooperation and periods of conflict has worsened the multifaceted character of the relations between EU and Russia. Given that both actors struggle for more influence in the area of Central and Eastern Europe (CEE) and that Europe is dependent on Russian gas the nature of EU-Russia relations is further complicating. Moreover, various misunderstandings emerge owing to a divergence of identities and interpretations of sovereignty and hence the EU-Russia conflict deepens. Indeed, the EU is a postmodern actor that has overcome the constraints of sovereignty and nationalism and relies on soft power in its international relations, whereas Russia is considered to be a pre-modern actor that rests on hard power. Obviously those different types of governance create a degree of conflict. So it is not surprising that cooperation has been achieved only to insignificant issues of international agenda that do not influence the vital interests of the EU and Russia. An interesting feature of the EU- Russia relations is that, given the lack of a coherent and consistent EU foreign policy, many member countries, and especially Germany and France, tried to develop bilateral relations with Russia without taking into consideration other EU member states, in order to promote their national agenda. So, in practice the EU institutions are bypassed in the favor of enhanced bilateral relations that undermine cooperation within the EU (Nitoiu, 2015). After the collapse of the Soviet Union there were hopes that Russia would integrate into Western institutions. These hopes though have been disconfirmed as Russia resorted to an authoritarian way of policy making. While Gorbachev had tried to establish a so called common European home Russia drifted to backwards and moved away from a strategic agenda of integration into Western institutions. Russia has only special partnerships with the Western institutions which often are turbulent. The Russian crucial geopolitical position, its boosted high economic growth, and Russian vast energy resources allow the Russian government to reject the benefits of integrating into Western institutions and lead to a situation of conflict rather than cooperation. In particular, the bargaining