Russian-European Energy Interdependence

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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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  • WTO- take away arbitrary creation of trade law, level playing fieldRegdiag-consult mechanism between legislators to approximateTransport-interoperability, remove tech differences, investment, corridors of trade, carried out by many IOs
  • Germn-christian culture,modernization
  • Consultation dialogueIndependent national regulatory authority
  • Russian-European Energy Interdependence

    1. 1. Energizing Cooperation: An Alternative View on EURussian Relations Elliott Morrow
    2. 2. 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)
    3. 3. 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
    4. 4. Factors  Development of a large web of international institutions A large amount of foreign direct investment
    5. 5. 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
    6. 6. Eu-Russia Energy Security  Europe needs (Van Der Meulen, 2009) Russia‟s energy  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).
    7. 7. 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)
    8. 8. 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)
    9. 9. Literature Review Constructivism International Institution Neoliberalism
    10. 10. Neoliberalism  International        Institutions-Keohane, Nye Interdependence Cooperation Mutual Interests Information Sharing Maximum Integration Expertise Network in order to persuade powerful states
    11. 11. 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)
    12. 12. 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   Case Study: Energy Dialogue   evidence of integrating Russian and European markets and economy on all levels 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
    13. 13. 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
    14. 14. Partnership and Cooperation Agreements  Created    the Four Common Spaces (2005) Freedom, Security, Justice Space External Security Space Research, Education, Culture Space  Economic Space
    15. 15. Economic Space (PCA)  Economic Space  Enforce WTO “Technical Barriers to Trade”  Regulatory Dialogue  Transportation
    16. 16. Economic Space (PCA)  Investment    Germany needs Russian labor Russia needs European investment Predictability and Transparency by standardization  Combining  financial sectors Interdependence and independence
    17. 17. Economic Space (PCA)  Trade     Standardize and Automate Universal use of security checks and risk assessment Use of international institutions Technical assistance to Russia
    18. 18.  russia-and-eu/
    19. 19. Economic Space (PCA)  Information and Communication  The    Information Society Approximate legislation Increase interoperability of Russian and European business through E-Businesses Research and Development
    20. 20. 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
    21. 21. 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
    22. 22. Energy Dialogue
    23. 23. 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
    24. 24. Energy Dialogue  “Bilateral Cooperation Mechanism”  Included:    Governments Corporations Individual Experts  Permanent Partnership Council
    25. 25. Energy Dialogue  Thematic  Russian Energy Strategy until 2030  New   Groups technology and tap new resources Web based platform to quickly share scenarios and solve problems Fair use of pipelines
    26. 26. Energy Dialogue  Create a dialogue from raw material providers to end users  Synchronizing the electricity system and unbundling  Tacis program
    27. 27. 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
    28. 28. 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
    29. 29. 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
    30. 30. 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
    31. 31. 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
    32. 32. 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
    33. 33. 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
    34. 34. Analysis  Shortcoming  This paper looks at Europe as a whole, when individual state‟s politics play a role
    35. 35. 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
    36. 36. 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.
    37. 37. 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: Directorate General for Energy, 61-85. Finnemore, M. (1993). International organizations as teachers of norms: The united nations educational, scientific, and cutural organization and science policy. International Organization,47(4), 565-597. 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.
    38. 38. 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 "earlywarning" mechanism for gas issues, The Moscow Times
    39. 39. 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‟sthreattoeur opeascasestudy.Elsevier: Energy Policy, 39, 6505-6513. Van Der Meulen, E. (2009). Gas supply and eu-russia relations. Europe-Asia Studies, 61(5), 833-856.   

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