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Running Head: LITERATURE REVIEW

Literature Review

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Literature Review 2

Introduction

The European-Russian Relationship is based on the historical past that encompasses

different dimensions: political, economic, social, cultural among many others. The major

foundation of the relationship was based on the trade between EU-Russia; where EU received

energy resources from Russia that in turn collected revenue from the exportation of the energy.

However, after the Ukrainian crisis, different sanctions placed by the EU and USA on Russia led

to Russia countersanctions; restrictions of the oil and gas that reduced the availability and

affordability of the resources by the importing nations. European powers and Russia have

reached their lowest point of cooperation since the end of the Cold War (Aaltoa ,Dusseault

Kennedy & Kivinend, 2014) Despite this fact, relations in the energy sphere have become of

particular importance and a connection point for both sides as all the partners depend on one

another in one way or the other; as Russia remains the biggest oil and gas supplier to the EU, and

European states are the major revenue provider to the Russian economy and they are still a safe

and stable partner for Moscow that does not guarantee long-term production (Eurostat, 2016).

Without a sufficient number of energy resources, the EU will not be able to ensure the

stability of economic development and national security thus is imperative for development of

stable Trade partnership with Russia. That is why the issue of energy security is given a

prominent place on the agenda of the European Union. In turn, for Russia, the EU is a major

consumer of natural gas, and the revenues derived from the export of energy resources remain an

important source of revenue for the Russian Federation, on which the internal development of

the country largely depends. Thus, both Russia and the European Union are aware of close

interdependence, which does not please European partners but rather gives rise to concern. I

believe that this is an important area to focus on as the energy dialogue between Russia and the

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EU has recently flared up and has become more tense and adversarial since each party is

committed to protecting their own interests. According to most experts, the energy sector is

currently the core of Russia-EU relations, and there is a need to provide a more research in this

area.

Politicization of relations between Moscow and the Brussels in the gas sector has a

damaging impact on their future development. There are mutual mistrust and suspicion, which

has forced both partners to act in a protective way, which benefits neither party (Böhme, 2007). I

believe that there are several reasons for this: differences in the socio-political system, ongoing

conflicts, previous gas disputes, etc. In fact, during the last two decades, the old system of

relations in the energy sector has been destroyed, but a new relationship has not been established

yet. In this context, this energy sector is a relevant, contemporary character and has great

significance for the future of both European and Russian actors. This paper makes a significant

contribution to the endless debate around Russia and the EU in terms of the energy sector and is

based on an interdependence model of international relations theory as it can analyze cooperative

and conflicting features.

My choice on the natural gas is based under numerous reasons: Natural gas differs

structurally as well as economical from other forms of energy. There are several specific features

of the gas sector and the gas market that not only differs from other energy sources but is

permitting factors that gas is used as a means of political power. Gas has significantly replaced

oil as a source of energy in the EU and some scholars have suggested that gas is the fuel of the

21st century. In the production and supply chain of natural gas, transmission cost accounts for

about 60 percent to 80 percent of the total costs of the natural gas. Gas is primarily transported

through different kind of pipelines but also in the form of LNG (liquefied natural gas).The

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literature review will be based on ten different articles that entail different topic and themes, that

will be reviewed based on the importance of energy in the global sector with emphasis on the EU

and Russia, the energy relationship between EU-Russia, the theoretical explanation of the

international energy relationships between EU-Russia to curb to ensure the secure energy supply.

Paillard, Harsem and Claes, and Godzimirski denotes that energy as a source of

numerous economic developments in many countries, thus reliance upon the energy resources

are directly linked to energy security. Oil still remains the major source of global energy by

supplying about above 30 % of the energy consumption, although there is tremendous growth of

the growth of the renewable energy between 6.7% and 8.2% annually. The renewable energy is

perceived to be unable to sustain is estimated that the global energy demand can rise by 55% by

the end of 2030 at an annual average rate of 1.8% if the current energy demand trend is

maintained.

Interdependence

According to Proedrou’s work, interdependence is a situation where one partner’s ability

to fulfill its objectives majorly depend on the choices and decisions made by the other partners;

thus this forms the basis of the EU-Russia energy relations. Proedrou (2007) classified Russia as

a geo-economic actor full of substantial oil and gas resources thus becomes the number one

global supplier of natural gas and second for oil reserves after Saudi Arabia. Russia thus

becomes the only single supplier of the EU with oil that amounts to about 30% of the EU total

imports and 27% of EU total consumption.

The Russian natural gas is estimated to comprise about 55% of the total European gas

consumption by the end of 2020 as compared to the current 25% consumption rate. Thus projects

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European nations at possible risk in the next 20 years ;thus according to the Proedrou, the

European nation's relationship with Russia is shaped by four major realities: energy which is the

major source of security in the region and economic driver of Russia that does not export any

other manufactured product apart from natural gas and oil .the natural oil from Russia dictates

one quarter of the total GDP and one third of the industrial production contributing to

approximate about half of the annual income in Russia.

Europe is an unavoidable partner to Russian energy companies and, in the 70% of the

produced Russian crude oil, over 90 % is consumed by the European nations and meets about 15

% of the oil needs while on the same note. Russia imports commercial goods that are about to$

120 billion, thus making the European Union members and Russia important trading partners in

the world since as much as the Europeans union needs energy, Russia to needs money. The

natural gas supplied through pipeline thus is an important physical aspect in the relationship

between the producer and consumers.

On the same concept, Godzimiriski agrees with Prodresou on the aspect that both Russia

and EU are strong interdependence as EU majorly rely on Russia to meet the energy needs while

Russia depends on the revenue from the energy exports to EU to facilitate the economic

development. Harsem and Claes also on their work identified the natural resource as the vital

aspect for the international relationship, especially between EU and Russia. They denoted that

the lack of natural resources determine the amount of power and some states tend to compensate

the inadequacy with other capabilities such as technologies, human capital among many others,

thus Russia tends to receive a lot of manufactured goods from the EU countries as the export

energy to them. This is the basis of the interdependence between the partners. Godzimiriski

argues that the interdepended between the two partners is facilitated by materiality, ideas,

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institutions and perceptions. In regard to materiality, Godzimirski argues that Russia was able to

export about 153.9 million tons of crude oil and 60.5 million tons of coal. In 2000 when Putin

came into power, Russia energy revenue generation was about USD55.5 billion and in 2008 the

revenue increased to USD 147.

The relationships are strengthened by the inability of the EU to find Energy source

alternatives and the declining inability of renewable energy to effectively supply the energy

demand. In regard to goals and ideas, both Russia and EU have different approaches to energy

after realizing the importance of energy and the complexity of the energy situations. The

approaches differ since both exist in different categories of energy actors: Russia is the largest

energy producer while EU is the largest consumer thus Russia is concerned with energy demand

security whereas EU is concerned with supply security of energy. The mutual interdependent

between EU-Russia should, therefore, be good a smooth so as to reduce the conflict between the

partners; however, this is not the case leading to the formation of the institutional bodies that was

to oversee the close cooperation between the two partners back in 2000. Godzimirski observes

that this was not fruitful.

However, Harlem and Claes, argues that the EU-Russia energy relationships are either

symmetric or asymmetric interdependence since it is a matter of alternative options. Harsem and

Claes define asymmetry as a party that is more dependent on another and vice versa thus EU and

Russia are either identically dependent on each other. Harsem and Claes finds out that

asymmetric interdependence is a better way of describing the EU-Russia energy relationship;

since as EU imports more than 50% of the energy from Russia, there is no opportunity to

diversify their sources thus makes the European nations more dependent on Russia’s energy than

Russia depending on the revenue collected from these nations. This attribute is explained by the

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inability to substitute the gas energy that is a vital thing in the life of most of the citizens, unlike

Russia that is capable of making other relations with other non-EU countries. Thus a shutdown

of energy and gas supply from Russia to EU is more costly to the later and this was evidential

when Russia suspended the gas supply to Ukraine in 2009; that made Ukraine and other EU

nations very vulnerable. Harsem and Claes further base the EU-Russia relations on the physical

aspect that binds the producer and consumer; pipeline that supplies the natural gas builds

stronger relations than other commodities. This makes Germany have a stronger relation with

Russia than any other EU members as a result of the Nord Stream gas pipeline that runs from

Vyborg, therefore it the reason why more than 12.76 % of Russian imports coming from

Germany.

EU-Russia Energy conflicts

Russia sensitivity

According to Godzimirski, the EU-Russia energy relationship moved from

complementarity to distrust. The strong relation that initially existed between EU and Russia

deteriorated majorly because of the actor's motives in regard to the energy market. According to

Godzimirski, Russians energy governance depends on the relationship between the national and

the international energy market; thus the Russian state dictates a lot and that’s why the states

were unable to comply with other international energy policy resulting into misunderstanding.

The Russian intervention in Ukraine by sending a troop to Crimea changed the relationship

rationales as well as the Russian attitudes towards the energy relation. Godzimirski further

denotes that when Putin became the president in 2000, there was the rise of nationalism in Russia

that set as a political stage to conflict the EU-Russian energy relations. From the relation, it can

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be deduced that both EU and Russia trying to exercise their power in different ways. As the EU

prefers to use diplomatic approaches to secure energy security that depend on the demand and

supply forces of the energy in the market. Russia opts for coercion approach that actually forces

different unions and countries such as Moscow to move into action to save countries such as

Ukraine from the economic fallout through the supply of gas.

The sensitivity of EU and Russia

Proedrou identifies that the sensitivity of both EU and Russia as the major cause of the

energy conflict since each partner offers to one another through the interdependence relationship

leads them to consider the defence option. The move by the western countries to diversify the

energy sources away from Russia activated Russia attempts to strengthen their economic

dominance by strengthening their restrictions. During the 1960s and 1970s, European Union

members were undergoing economic developments as a result of oil that was imported from

Russia that was at the same time going through severe economic crisis (Proedrou, 2007). Second

was the rise of the other powers such as China that challenged the dominance of the western lobe

; the economic status that made Russia to fluctuate the export prices of the commodities such as

oil and gas to provide an investment foundation in the Russia military an aspect that was

perceived to create power against the economic dominants and ; the entry of new authorities in

Russia that were eager to challenge the Western economic dominance .these factors made it

difficult to determine the relationship of Russian and the European Union s members who were

the major consumers of the Russian energy.

On the other side, EU is identified as oversensitive due to the high degree of dependence

of the Russian natural resources that has made the former to delegate numerous approaches to

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reduce the sensitivity. After the end of the Soviet Union, EU initiated legal institutional

framework that saw most of the European states entering into the energy charter with hopes of

raising the energy sector across the European continent, however, the treaty failed because

Russia failed to enter into the treaty, thus increasing the sensitivity(Proedrou, 2007). Secondly,

the move by EU to promote a competitive gas sector such as endorsement of the Turkey and

Italy via Greece pipeline, constriction of Baku-Tbilisi- Ceyhan and support of the US in

diversifying energy sources rather than the Russians’ energy was perceived by Russia as a over

to derail the energy production in the country, since Russian energy demand was perceived to

decrease. When all these were not successfully working for the EU, the sensitivity of

overdependence increased thus resulted in the energy conflict between the two regions.

Energy security

Several events that have surrounded the production distribution and selling of energy

have placed some countries into vulnerable positions that pushed the international bodies to

come up with laws and policies to govern energy. The most important event that captured the

global attention was when Russia submarines injected a Russian flag at the bottom of the Arctic

ocean as an indication of the ownership of the world’s largest continental shelf economic zone as

well as the shutdown of the Russian-Ukraine gas supply in 2009; these events thus contributed to

the development of global energy security.

According to Aalto, Dusseault, Kennedy and Kivinen (2013) define energy security

refers to the condition in which a state, entire population and the business organization s have

sufficient access to energy resources at a reasonable price and are free from foreseeable future

supply disruption. According to the European Commission, energy security refers to the status

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whereby all the significant energy needs are successfully fulfilled through the use of domestic

and external energy sources. Over the past decades, several questions relating to energy security

have dominated both the developed and developing countries with a focus of ensuring sufficient

supply of energy across the world and at the same time maintaining and conserving the

environment or the sources.

The energy security was introduced by the Copenhagen School of international relations

in the 1990s to curb the political, societal, economic and environmental threats that were posed

by the global energy demand and supply as speculated by Aalto, Dusseault, Kennedy and

Kivinen (2013). Energy security refers to the condition in which a state, entire population and the

business organization s have sufficient access to energy resources at a reasonable price and are

free from foreseeable future supply disruption. According to the European Commission, energy

security refers to the status whereby all the significant energy needs are successfully fulfilled

through the use of domestic and external energy sources. Over the past decades, several

questions relating to energy security have dominated both the developed and developing

countries with a focus of ensuring sufficient supply of energy across the world and at the same

time maintaining and conserving the environment or the sources. The energy security was

introduced by the Copenhagen School of international relations in the 1990s to curb the political,

societal, economic and environmental threats that were posed by the global energy demand and

supply as speculated by Aalto, Dusseault, Kennedy and Kivinen (2013).

Umbach relates the energy security with the increasing demand that is projected to

increase by 55% by the end of 2030 thus make the energy supply to be unstable putting so many

developed countries that depend on energy into a vulnerability state. Umbach identifies

nationalism of the resources are the core threatens of the global energy sustainability since many

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of the state-owned energy companies such in Russia, tend to control more oil and gas reserves

than the traditional private energy companies. These make it difficult to conduct a business with

such companies since the state-owned companies fail to follow the market forces policies such as

the oil consumption projection until 2030 produced by the global organizations.

According to Umbach, climate change is another contributor to global energy security.

The continuous climatic change such as hurricanes results into energy supply disruptions.

Umbach identifies greenhouse gases as the contributor to the climatic change, and this GHG are

majorly produced during the fossil fuels extractions process, thus needs policies to address the

energy security alongside the climatic change(Umbach, 2010). Umbach further identifies that the

increasing dependence on cheap oil is also a major contributor to global energy security.

To address the energy security between EU-Russia, Proedrou denotes that the

cooperation between the partners has to increase. Proedrou says that since the two partners are

highly vulnerable to one another, cooperation is quite unavoidable since no partner is capable to

endure the high cost of the relationship termination thus would stick together to achieve their

objective(Proedrou, 2007). Thus Proedrou says that the relationship between the EU-Russia is

more cooperative rather than conflictive and this is evidential by the increasing EU-Russia

energy trade; for example, Proedrou says that in 2005 Gazprom managed to deliver about 126

billion cubic meters to the EU market. Additionally, Germany only tends to receive 40 million

cubic meter of energy annually from Russia and this is projected to increase in the next few years

due to the development of the North pipeline and the commitment of Gazprom to redirect the gas

production to Shtokman field; a long-term plan that will expand the German market.

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Proedrou also says the cooperation is growing with the commitment of Gazprom to

establish its presence in the British market that will see the deliverance of about 3 to 4 billion

cubic meters of oil in the next decade (Ziegler, 2013). The construction of the infrastructure such

as the natural gas pipeline under the Baltic Sea will ensure the deliverance of the Russian gas to

Germany, and will also link other European countries such as Sweden, Britain, Denmark and

Netherlands.

On the other hand, Hadfield identifies that the cooperation between EU-Russia energy

relation to be based on the Partnership and Cooperation Agreement of 1997-2007. The ten-year

bilateral treaty came into existence to formulate mutual relations between the interdepended

states and addressed various issues such as trade and economic matters; justice and home affairs;

political dialogue; bilateral cooperation. The Act facilitated energy dialogues thus ensured the

elimination of the EU-Russian energy security issues, for example, the transportation of the gas

through the pipeline that was always under damages. The three major pipeline suppliers between

the EU-Russia such as Russia, Norway, and Algeria that facilitated about 36.5% of the EU gas

from Russia (Hadfield, 2008). Other important streams include the Nord Stream that passes

through the Baltic Sea to Germany delivering the Russian gas; the Finland and the Baltic that

directly import gas from Russia, and the route that conjoins the Ukraine and Belarus.

Paillard (2010) identifies that the commercial and technological change as the major

driver of the cooperation between EU-Russia. Paillard denotes that with the development of the

liquefied natural gas (LNG), the cost of gas transportation from the offshore sources will be

reduced thus positively impacting the market relations between the two partners(Paillard, 2010).

However, the idea might be barred by the Russian infrastructure inadequacy, thus might not

supply US with sufficient the natural gas but the Ukraine; former Russia critic is an important

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facilitator since they have strategic roles in controlling the new pipelines as well as the objective

of keeping the southern corridor open for Iranian, Turkmen and Azeri gas to European countries

in the next 20 years.

Unlike other authors on the cooperation, Paillard finds it the role of the European nations

to establish the energy security through identification of other alternatives and diversify the

energy supply sources on the European market; limit all the energy consumptions, and reinforce

the security of supplies however much it is difficult to implement. Paillard believes that through

the utilization of European gas agencies that will focus on determining long-lasting European gas

security will enable in stabilizing the EU energy demand and thus eliminate the EU-Russia

energy security. Additionally, Europe should be able to assist the Russian dependent countries to

constitute standing and producing natural gas that will be a way out to the energy security. For

example, Lithuania that recently closed the nuclear power plant over financial resources should

be supported to develop its liquefied gas thus will end the asymmetric dependence on Russia

energy.

Energy security models and theories

Realism and Liberalism

Proedrou denotes that both the first global oil shock of 1973 and 1979 prompted the

energy-importing countries such as the EU member of their vulnerability as the OPEC countries

realized their power promoting to the creation of the international relations there to explain the

energy security. The international relations theory consists of two possible sub-theories; Realism

and Liberalism (Proedrou, 2007). As liberalism Theory focus on free-market capitalism and

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market approach to energy security, Realism, on the other hand, focus on the market forces to

settle the security.

The Liberalism theory ensures that the national interest predominantly takes the backseat

to transnational economic cooperation, thus the industrialized countries tend to run out of energy

forcing them to depend on the energy resource importation. The production, transportation, and

distribution of energy are regulated by the international energy market that creates a stable

platform for the interaction between the producer and the consumer, only if the economic order

is preserved; however the without the economic order, conflict is more like to occur.

According to the Realism Theory, resource wars are considered over energy fields

control as the most real possibility thus with great power, one is able to compete and engage in

conflict to control the energy resources in the region. The traditional Realism: geopolitics is

important in understanding the energy struggle and conflict between EU and Russia, as it studies

the relationship between geography and politic with a focus on the interaction among the

stakeholders (Proedrou, 2007). The geopolitics attributes to tactical to value to sea, land, and air;

placing them in power and territory struggle. According to the Realist, energy being not an

economic issue should be left to the market forces to regulate rather than the government

controls that result in international energy insecurity. Realism identifies numerous issues that

might bring international cooperation to end leading to the return of the geopolitical struggle and

conflict.

Social structuration’s approach

According to Aalto, Dusseault, Kennedy and Kivinen (2013), the major energy actors

formulate their energy policy based on the policy environments that have both the social and

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material qualities to enable and constrain the supply and accessibility of energy. The qualities are

further categorized under resource economic, financial, institutional and ecological factors that

are analytical thus help the analyst to map empirical matter. The resource-economic dimension

entails all the energy policy assessment such as fitness of the fossil fuel and distribution and the

accessibility level. The dimension privileges actors such as Russia that has extensive distribution

and accessibility of the energy resources.

The financial dimension entails all the incentives and financial constraints pertain to

energy supply and demand. During the fiscal crisis across the world, the prices of oil and gases

tend to fluctuate widely, thus forcing the Russian government to take steps in defending the

Russian Central Bank (Aalto, Dusseault, Kennedy & Kivinen, 2013). The major actor thus

includes big-energy companies that possess own financial and insurance arms. The institutional

dimension entails both the domestic and international level of production regulation, distribution,

and consumption of the energy resources. On the other hand, the ecological dimension entails all

the material nature of energy in a more quite different manner from the resource economics.

Energy Action Plan

However, according to Umbach, the most common model of addressing energy security

is the use of ‘Energy Action Plan’. Umbach denotes that most of the European Union members

are viewing energy supply security beyond 2030 under the facilitation of the renewable energy

being innovated across the world. The adoption of energy sources such as biomass, electricity

will end the energy disagreements existing between the EU and Russia. The European Energy

Action Plan was propelled by the conflict between Russia and the Ukraine gas conflict in 2007,

as the European Council integrated climate and energy enhancement measures to ensure security

Literature Review 16

to all stakeholders (Umbach, 2010). Most of the European energy experts perceive the European

energy action plan as a security that will go beyond 20130 with the realization of more

renewable energy sources. through the EU Energy Action Plan, energy is perceived to be

increased by 20% across all the EU members; more renewable energy should be enhanced to

20% as an additional energy mix; carbon emission should be maintained and not exceed 20% by

2020.

Noticeable Literature gaps

It is notable that most of the literatures provide adequate information in understanding the

energy interdependence between EU and Russia such as the roles and importance of energy, the

vulnerability and the importance of cooperation for energy security. However, little articles

provide enough policies and implantation procedure to see the success of energy security, thus

requires more search upon the same.

Conclusion

In summary, the articles offered for the literature review offer good information for the

understanding of the EU-Russian energy relations. For example the works are done by Proedrou;

Godzimirski; and Harsem and Claes, all find that the EU-Russia energy relationship is

interdependence since one partner is unable to survive without the other: EU majorly depends on

the energy from Russia to facilitate its activities and solely depend on it because the available

renewable energy cannot sustain the energy demand. However, Harlem and Claes point out that

EU is more vulnerable than Russia in the energy relationship.

Literature Review 17

References

Aaltoa, P., Dusseaultb, D., Kennedy D.M., & Kivinend, M.(2014) .Russia’s energy relations in

Europe and the Far East: towards a social structurationist approach to energy policy

formation. Journal of International Relations and Development, 1(17), 1–29.

https://doi:10.1057/jird.2012.29

Böhme, D. (2010). EU-Russia Energy Relations: What Chance for Solutions? A Focus on the

Natural Gas Sector,1(2), 1-332. http://info.ub.uni-potsdam.de/verlag.htm

Godzimirski, J.M.(2015).Russia–EU Energy Relations: From Complementarity to Distrust?.

Journal of EU Leadership in Energy and Environmental Governance, 90-113.

http://ebookcentral.proquest.com

Hadfield, A.(2008).EU–Russia Energy Relations: Aggregation and Aggravation.Journal of

Contemporary European Studies, 16(2) 231-248.

https://doi.org/10.1080/14782800802309953

Harsem, Ø., & Claes, D.H. (2013).The interdependence of European–Russian energy relations.

Journal on Energy Policy, 1 (59) 784–791. http://dx.doi.org/10.1016/j.enpol.2013.04.035

Konoplyanik, A. (2009).A Common Russia–EU Energy Space: The New EU–Russia Partnership

Agreement, Acquis Communautaire and the Energy Charter. Journal of Energy & Natural

Resources Law, 2(27), 258-291. https://doi.org/10.1080/02646811.2009.11435215

Literature Review 18

Paillard,C.A.(2010).Russia and Europe’s mutual Energy Dependence. Journal of International

Affairs,2(63), 65-85.

Proedrou, F. (2007).The EU-Russia Energy Approach under the Prism of Interdependence.

Journal of European security. 3(16), 329-355. https://www.tandfonline.com/loi/feus20

Umbach, F. (2010). Global energy security and the implications for the EU. Journal on Energy

Policy, 3(38), 1229-1240. http://doi:10.1016/j.enpol.2009.01.010

Ziegler, C. E. (2013). Energy Pipeline Networks and Trust: The European Union and Russia in

Comparative Perspective. International Relations, 27(1), 3–29.

https://doi.org/10.1177/0047117812460879

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