Eurasian Energy Politics and Security - Research Paper Example

Eurasian Energy Politics and Security Europe and Asian’s energy source has always been closely linked with each other, especially in Eastern Europe and Central Asia where some borders are shared and where the territories are in close proximity to each other. Russia straddles both the European and Central regions and is considered one of the major sources of energy for both regions. For which reason, much political tension has emerged in relation to energy and energy sources within the Eurasian region. This paper shall discuss Eurasian energy politics and security, mostly the relations between Russia and the European Union. The existing projects and pipelines between Russia and the EU, including the issues in these projects shall be discussed. Alternatives to Russia, especially South Caucasus and Central Asia will also be considered. The proposed pipelines, Nabucco, Transcaspian pipeline, and BP’s new project for natural gas shall be included in this discussion. Finally, China’s entrance to Eurasian energy politics shall also be considered under this discussion. This paper is being discussed in order to conceptualize a clear understanding of energy politics, including its significant points of interest which now impact on the current relations between Eurasian nations. States in the Caspian and Central Asian region have proven oil reserves numbering about 38 billion barrels and this does not include possibly undiscovered barrels of crude oil in the region (Cohen and DeCorla-Souza, p. 5). Kazakhstan is considered to be the largest oil producer in the region with onshore fields in the northern Caspian Sea and other regions. Turkmenistan is the largest natural gas producer in the Caspian region and is serving the energy needs of the region well. Since the Caspian oil reserves were discovered, most energy exports from the Caspian and Central Asia came from the Caspian and Central Asia came from the Russian Empire, supplying consumers in Europe and Soviet Union (Cohen and DeCorla-Souza, p. 5). Significant exports from the Caspian started with the establishment of the 1997 100,000 Baku-Novorossiysk pipeline transporting oil to Georgia’s Black Sea Coast (Cohen and DeCorla-Souza, p. 5). In 2001, Kazakhstan started pumping oil from its Tengiz oil field into Novorossiysk via the Caspian Pipeline Consortium or the CPC. The CPC is shared by various oil companies from different countries. Russia lost its control of the Caspian oil exports in 2005 when the Baku-Tbilisi-Ceyhan (BTC) pipeline was opened (Cohen and DeCorla-Souza, p. 5). This pipeline ensured that oil could bypass Russia and Turkey from Azeri’s oil fields. As a result, Kazakhstan started transporting barrels of oil across the Caspian into the BTC pipeline (Cohen and DeCorla-Souza, p. 5). The EU and the US supported the Nabucco pipeline which was meant to link oil sources from the Caspian region and on to Europe through the Southern lines passing Azerbaijan, Georgia, and Turkey (Norling, p. 8). A main concern with the Nabucco pipeline is that it is often not clear which countries are the suppliers, aside from Azerbaijan. The section between Ankara and Baumgarten opened in 2011 and is scheduled to reach operating capacity in 2014 (Norling, p. 8). The next construction phases are scheduled to follow in the next few years. This project will likely support the Trans-Caspial natural gas pipeline thereby allowing oil transport from western Turkmenistan and from Kazakhstan to reach the West without having to pass Russian territories (Norling, p. 8). This pipeline has been considered for many years but had difficulties moving forward due to opposition to Russia and Iran as well as legal territorial issues. Russia’s Gazprom has also suggested a pipeline crossing to Europe which is considered a rival to the Nabucco pipeline (Socor). This pipeline will come from the Russian Black Sea coast cross beneath Turkey controlled waters, traversing Bulgaria before separating and crossing to other demand centers into Europe (Socor). A Caspian Coastal pipeline has also been planned to support the South Stream project however this project was halted with the global economic crisis. These elements caused major issues in the establishment of clear workable pipelines in the Eurasian region. Energy has been a major source of political conflict in the Eurasian region. In January 2009, for two weeks, many homes and business establishments in Europe suffered from lack of heating mostly because of the dispute in gas prices between Russia and Ukraine (Buzan and Waver, p. 23). When the countries did not agree on the formula in oil price computation and transport fees, gas flow was halted. As a result, Europe whose gas supply comes from the pipelines transiting Russia and Ukraine, was the one who suffered the brunt of the disagreement (Buzan and Waver, p. 23). With significant deposits of oil and natural gas in the Eurasian region, Europe has become reliant on this region for its oil supply, and securing sufficient access to such energy source at reasonable prices is one of the crucial strategic initiatives for Europe and also for Europe’s allies in the US (Buzan and Waver, p. 25). As Russia surfaced as a major player in Eurasia, the European Union’s dependence on the former Soviet territories for its energy sources became problematic (Belkovsky, p. 46). Russia’s power mostly based on its foreign sale of oil and gas caused major complications on Europe’s desire to gain direct access to the oil resources of the Caspian. Russia’s domination on the transit corridor in transporting Caspian energy sources to the West increased Europe’s dependence on Russia (Belkovsky, 78). This dependence impacted of Europe and on its transatlantic relations, which basically implied higher Russian political power. This left Europe confronted with the threats of shortfalls from technical and political problems. As a result, European energy security now became dependent on Russian foreign policy goals and the issues of government-run corporations like Gazprom which often resort to distortion of markets (Belkovsky, p. 89). The issue of energy supplies is also made more complicated by the fact that European nations do not equally depend on Russia for their energy sources. Resolving the causes of Europe’s problems will likely need coordination among the members of the EU (Ellman, p. 51). Their strategies must also be based on establishing coordinated European gas market with member nations agreeing on the management of Russian participation (Ellman, p. 52). In the end, the EU has to diversify its sources of energy, eliminating the overall role of Russian oil, especially gas in its market. Russia’s energy strategy is based on the precept that energy security is the most important factor in their national security and that the state needs to consider the active roles in the energy sector in order to protect Russia from domestic and international threats (Finon, p. 423). Since energy is a major element in Russia’s foreign policy, the means by with the EU and its allies would manage their foreign policies will likely impact on the West’s strategy in dealing with Russia. How the American allies manage their priorities in their energy concerns will likely shape the West strategy in dealing with Russia (Finon, p. 444). Handling Eurasia properly will also assist the US foreign policy goals in other ways. Aside from Russia, the next best source for oil in Europe is Iran. Shifting to Iran would likely compromise US attempts to isolate and sanction Iran (Belkovsky, p. 18). If Europe would be able to consider its needs in the Commonwealth of Independent States, it will likely not have any purpose to weaken the isolation of Tehran. Moreover, energy security cannot be distinguished from other elements of energy policy, including sustainability and innovation (Belkovsky, p. 19). Part of the solution for Europe’s energy insecurity is on establishing new and alternative fuel and energy sources. Making the best of Eurasia’s impact on European energy security also calls for the need to cover various specific, yet related challenges. Since Europe has become dependent on Russia for its energy, Russia’s oil and gas resources have also leveled off; this has apparently been caused by the state’s impact in the energy market which has increased taxes and has discouraged the investments in new productions (Baev, p. 67). This has created the problem of supply shortfalls which would likely increase if Russian production would not ensure contracted demand (Baev, p. 77). The economic crisis which started in 2008 has made the problem worse because Moscow has less capital to invest in new productions. Russia’s role as the biggest supplier for Europe, along with Kremlin’s control of the pipelines has led to issues on how Moscow could manage contracted deliveries (Bradshaw, p. 724). These deliveries may not be met by Russia and would create shortfalls in supplies for Europe. Moreover, Russia may control upstream countries in Europe by securing its monopoly of pipelines between Caspian and Europe. Moreover, Europe may not be able to access oil and gas from Caspian countries except on Russian-supported agreements (Bradshaw, p. 725). Finally, the corruption in the Russian energy market also seems to impact on Russia’s ability to implement planned projects; furthermore, Russia can also introduce corruption into European politics thereby impacting on the latter’s capacity to seek common energy policies (Bradshaw, p. 726). Even as the global economic crisis and the decrease of energy prices soon after have made the energy crisis less of an impending issue, the structural issues of Europe’s weakness are still apparent (Goldman, p. 46). By reducing Russia’s ability to use its control of energy, the economic crisis has also created an opportunity for Western powers to gain the initiative and consider the causes of their vulnerability (Goldman, p. 48). As Europe fell victim to the gas transit dispute between Moscow and Kiev, Europe was also prompted to reconsider its status quo in the Eurasian region (Goldman, p. 46). In these instances, Europe has understood that it needs to get the policy right and to consider the opportunity to do so while conditions are favorable. Managing the impact of Russia’s resurgence is considered one of the major priorities for European leaders. The US has also understood that it has a role in ensuring European unity and in ensuring that the EU still has leverage over Russia (Kanet, p. 34). The EU needs to consider ways in which to limit Russia’s ability to gain political advantage from its oil and gas resources; to gain access to energy for all its members; support reciprocity between Russia and its neighboring countries; and to secure adequate investment in the Russian energy sector as a means of securing production (Kanet, p. 34). Although the start of convivial relations between the West and Eurasia was based on energy, oil and gas resources really became a major part of Russia’s politics, also ensuring the win of Putin as president (Gaddy and Kuchins, p. 117). This development is based on the changes within Russia’s energy sector, mostly with Russia’s resurgence as a large oil exporter. As energy prices stayed high, Russia’s resurgence ensured that it would secure its impact more significantly in Eurasia, controlling oil and gas from the east and west and controlling attempts by other powers to build pipelines it cannot control (Gaddy and Kuchins, p. 117). Russia was also able to display much power in its attack on Georgia and it also reinforced its control in the energy sector, increasing the stakes for Eurasian countries seeking to escape Russian control and dominance (Roderic, et.al., p. 17). Europe’s response to Russia’s actions, including the collapse of energy process and the damage to Russia’s reputation after it cut off supplies to Ukraine also reduced Russia’s ability to increase its geopolitical power (Roderic, et.al., p. 17). The Western powers therefore had the opportunity to consider some of the major issues in the energy relations in Moscow. The resurgence of Russia had various consequences for the different groups of states which are dependent on Eurasia’s riches. For the EU, increased dependence on energy by a single company which cannot often be distinguished from a foreign government increases government issues on supply security, transparency, and political manipulation (Roderic, et.al., p. 18). For the US, Russia energy policies are major concerns, mostly because it impacts on crucial states in Central Asia and its European allies. Europe’s dependence on Russia for its energy has caused major security concerns, mostly because of the major issues on Russia’s long-term capability in supplying enough oil and gas to meet their domestic and foreign demands (Mankoff, p. 23). Russia’s energy production is also at risk because of inefficiency, as well as politicization, and falling oil prices. The persistent call towards adopting less carbon-based economic activities is also reducing the demand for Russian energy production. Nevertheless, as far as the Eurasian region is concerned, Russia is considered an energy superpower and its policy is founded on the protection of its citizens as well as its economy from threats to its energy supply, including those which pertain to geopolitical considerations (Mankoff, p. 2). Russia claims to support a non-discriminative region for companies in accessing foreign markets and advancing the participation in major international oil and gas activities. Energy considerations are in the core of Russian diplomacy. As reiterated by Putin, the avenue where Russia is taking global energy cooperation significantly impacts in its general well-being (Goldman, p. 4). Russia’s energy strategy in 2030 which they established in 2009 eventually established increases in their oil and gas production, even with issues in property rights and issues on obsolete infrastructure. Even with sufficient energy resources and a strong position in the European market, Russia’s hydrocarbon power will likely be dominant in the years to come (Molchanov). Russian authorities note that consumers and companies who seek to gain access to barrels of oil do not want to challenge Russia’s assertiveness in its foreign policy. After 2020, Russia shall seek to maximize its economic advantages as a major energy producer of oil. This role will likely become even more significant as Middle East supplies are now suffering from drying up wells; moreover, the prospect of nuclear power has become uncertain due to the nuclear disaster caused by the tsunami in Japan (Cohen, p. 5). Russia has declared its energy strategy through a side range of security and economic policies, and all of these policies aim to achieve a common goal. The overall effect is to establish customer country dependency by linking demand with energy importers and coordinating oil and gas supplies by establishing long-term contracts with Russian and Central state owned and state-controlled energy producers and Russian state-owned pipeline monopolists (Cohen, p. 5). Europe is significantly concerned with potential supply impact coming from government actions and policies which affect gas supply sources and transit. Recently, the issue of establishing gas corridor diversification has become more important for Europe as the EU has tried to decrease its dependence on Russian oil (Cohen, p. 5). China’s economic growth has also increased its dependence on Russia for a steady supply of energy. Russia, as a significant oil exporter, has a major role to play in China’s continued growth. The partnership between Russia and China has various angles (Molchanov). Based on a foreign policy focus, the challenge to US hegemony seems to be exacerbated by the Sino-Russo military cooperation, especially with Russia selling arms to China. Collaboration with Russia has become more significant in recent years (Molchanov). Currently, Russia does not have a role in US energy supply. However, Russia’s share in China’s energy imports has become more significant in the last three years. In placing itself as a major supplier of energy in the Chinese market, Russia has relied on energy resources in Central Asian states (Molchanov). Based on this background, it is important to understand the Russian and Chinese relations and how they impact on the Eurasian regionalism. It is important to argue that the nature of Eurasian regionalism based on firm configuration and strategic positioning will be based on the Russian and Chinese bilateral agreements on energy and security (Molchanov). The expanded energy trading between Russia and China impacts on the creation of a powerful regional cooperation which can reduce US influence in Eurasia. Moreover, the Shanghai Cooperation Organization and the Russo-Chinese partnership which supports it is a possible test of the new responses to the challenges of the market-driven globalization (Molchanov). The challenge of forecasting developments in the Eurasian region has become difficult because of more unstable political structures. Political and economic instability has become common and energy is one of the sectors often affected by such instability (Garnet7, p. 16). Sound markets are now considered the most important source of secure energy supply and the energy relations have been transformed from long-term and exclusive contracts to more flexible arrangements where market participants in a position to benefit from changing costs, price changes, and shifts in supply and demand (Garnet7, p. 18). After the Cold War, there seems to have been a resurgence of regionalism. However, even with the appearance of cooperation, various conflicts among the Central Asian states have been seen, including problems on trade wars, border disputes as well as disagreements on the use of energy and water resources (Molchanov). Based on a neo-realist approach in relation to regional cooperation in Central Asia, regional cooperation is often utilized by states to secure power. Central Asian nations are involved in different government structures as a means of accommodating Russia (Naim, p. 96). Being accommodating can also explain the policies which Central Asian states have toward China because China is proximate to three Central Asian nations which have the potential of becoming the future power (Lukin, p. 31). However, there seems to be evidence that regional powers avoid significant commitments to institutions which control their freedom of action; and this suggests a critical weakness in various frameworks. Russia, like the US on a larger scale does not want to abandon its unilateralism and this makes it more difficult to take its multilateral initiatives seriously (Allison, p. 468). Oil politics is the primary mover of Russian foreign policy in the Eurasian region. However, oil politics are transactions by nature and they call for constant engagement with oil buyers, sellers, as well as owners of pipeline infrastructures (Molchanov). Due to the weakness of its Central Asian politics, Russia has tried to adjust through its active engagement with China and Kazakhstan. China and Russian cooperation is based on long-term foreign policy goals of each country and has the power to impact on the international security in Asia and the Asia-Pacific region (Rutland). Such a partnership can potentially change the political and economic situation in the continent. It has various political and economic considerations. Oil politics and the desire for energy security, including the regional economic and security cooperation clearly impacts on decisions to regionalize from above. Chinese and Russian cooperation is motivated by mutual needs which would likely increase in the years which would follow. At the very top of this discussion is China’s dependency on continental oil and gas flow from Russia and the Caspian and Russia’s interest in being China’s main provider (Xiang, p. 109). Therefore strategic partnership between Beijing and Russia goes beyond short-term demands of foreign policy. The idea of multipolarity does not have much to do with US unilateralism but has more to do with tangible losses which Russia and China suffer in Central Asia due to US activism (Molchanov). The losses which impact the most are those which have something to with exploration of oil and development rights, as well as oil and gas transport. Based on the above discussion, Eurasian energy supply is based on Russian energy foreign policy. This policy is founded on Russia’s dominance of the oil pipelines from the strong oil suppliers from Central Asia. Any conflict which often involves Russia’s dominance also impacts on Europe. Hence, Europe’s vulnerability is often dominated by Russia’s dominance and power. The need for Europe to establish alternative sources of fuel is paramount in order for it to be free of Russian dominance and hegemony. Works Cited Allison, Roy. 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