Energy Security

Europe's New Foreign Policy Challenge

Richard Youngs

• Publisher: Routledge
• Year: 2009
• Topic: Politics & International Relations
• eBook ISBN:
  9781134021178
• Subtopic: International Relations
• Index: Politics & International Relations

The geopolitics of oil and gas have made a spectacular return to the international political agenda. The European Union (EU) has recognized the importance of incorporating energy security more systematically into foreign policy. It has committed itself to pursuing an energy security policy based on market interdependence, European unity and long-term governance improvements in producer states. In offering the first broad, global assessment of the foreign policy dimensions of EU energy security, this book considers how far these commitments have been implemented.

Examining how the EU's general approach to energy security has played out in the specific political contexts of different countries and regions, distinctive features of the book include:

• a thorough analysis of current EU strategies towards energy security, assessing the EU as an international actor
• a key focus on the governance structures of producer states including the Middle East; Russia, Central Asia and the Caspian, and Sub-Saharan Africa
• a major addition to debates surrounding markets and geopolitics, informing both international relations and international political economy

This book will be of interest to students, scholars and policy makers in the fields of European/EU Politics, energy politics, foreign policy and International Relations.

1 Introduction

After the attacks of 11 September 2001 (9/11) international relations were dominated by debates about terrorism and then by events in Iraq. However, while the West’s strategic glance was thus preoccupied, the issue of energy security stole its way onto the international agenda. By the mid-2000s, many analysts and diplomats concurred that new concerns over energy security represented the most pre-eminent of international issues. This was a remarkable change from the decade following the 1991 Gulf War, in which Western diplomats had sanguinely ‘paid very little attention to oil security issues’.¹ One respected analysis judged that ‘oil has made a spectacular return to the international political agenda’.² The Financial Times observed, ‘Energy security, a dead issue in the 1990s, has emerged as a pressing concern of governments and business’.³

The energy challenge

Concerns over energy security rose on the back of a number of events and trends. Oil and gas prices more than trebled between 2002 and 2007, peaking at over $140 a barrel during the summer of 2008, before dropping back to below $100 a barrel in the first week of September. The whittling down of spare production capacity made this the tightest oil market in three decades. Alarm bells sounded when California suffered a series of power blackouts. They intensified as the stand off between the West and Iran over the latter’s nuclear programme led Tehran to threaten a cut in energy supplies. Attacks became more frequent and damaging on oil facilities in Nigeria, while politically driven interruptions increased to Venezuelan oil production. Iraq’s slide into civil anarchy involved a failure to return the country’s oil production levels even back to their modest Saddam-era levels. In 2005 Hurricane Katrina rendered inoperable significant amounts of US production capacity. Signalling a linkage with post-9/11 concerns, terrorist attacks on energy facilities were regularly threatened or rumoured.

In perhaps the most sobering episode for European policy-makers, in early 2006 Russia cut gas supplies to Ukraine in the midst of a dispute over pricing, causing a temporary 30 per cent decline in gas flows to European Union (EU) states. Moscow then more than doubled gas prices to Georgia, and in January 2007 cut gas supplies through Belarus in relation to another pricing dispute, this time with President Lukashenko. In January 2008 a further dispute flared between Russia and Ukraine. Protests over high fuel prices took place in European cities in the early summer of 2008, before Russia’s invasion of South Ossetia further intensified concerns.

Underlying these events, warnings grew louder that a peak of oil and gas production was imminent. Predictions of when ‘peak oil’ would occur differed, but it was widely agreed that beyond 2015 maintaining energy-supply levels would constitute an increasingly acute challenge. Experts also predicted an increasing concentration of supplies from countries with a high risk of internal instability – Russia, the Persian Gulf, Algeria and increasingly West Africa.⁴ In 2005, of overall European Union gas supplies, 25 per cent came from Russia and 14 per cent from North Africa; of oil supplies, 31 per cent came from the Middle East and North Africa and 27 per cent from Russia. Variation existed between member states: France benefited from relatively low external dependency, for example, while 75 per cent of Spanish oil and gas supplies originated from unstable or undemocratic regimes.⁵ In general, however, while reserves were set to decrease, demand for oil and gas was predicted to rise exponentially. It was estimated that in 2035 global energy consumption would be double that of 2005, with fast-developing economies such as those of China and India hungry for ever-increasing supplies of oil and gas. And all this while the imperative of slowing climate change pointed to exactly the opposite conclusion, that hydrocarbon consumption should be dramatically reduced.

In short, a combination of high oil prices, demand and supply trends and the nature of political developments in a number of crucial energy providers rendered energy security an urgent concern within European foreign-policy deliberations. The EU was already the world’s largest importer of energy and there was widespread agreement that its external energy dependency would deepen. The EU’s import dependency for oil was set to increase from 52 per cent in 2003 to 95 per cent in 2030, and for gas from 36 to 84 per cent over the same period.⁶ In comparison, the US’s energy import was predicted to rise more modestly to 60 per cent in 2025.⁷ In absolute terms EU import requirements would double by 2030.⁸ With North Sea production dwindling, the UK found itself on the brink of losing a hundred years of energy self-sufficiency, while the Dutch government also fretted over the prospect of a new external vulnerability. By 2007 European citizens listed climate change and energy dependency as their top two security concerns, above international terrorism.⁹

The International Energy Agency (IEA) estimated that $200 billion worth of investment per year – equivalent to 2 per cent of global gross domestic product – would be needed in increases to production capacity to meet energy requirements by 2030. It was also calculated that by 2012 the EU would face a 30 per cent shortfall in its gas-import requirements. In its January 2007 Strategic Energy Review the European Commission asserted that urgent action was needed to diversify energy supplies, in particular away from Russia and the Middle East and towards Central Asia and West Africa.¹⁰

Implications for European foreign policy

In March 2006 the European Commission issued a new Green Paper on energy security. This concluded that, ‘Europe has entered into a new energy era’ and that the ‘increasing dependence on imports from unstable regions and suppliers presents a serious risk … [with] some major producers and consumers … using energy as a political lever’.¹¹ This paper asserted that growing concerns over international energy security required a rethink of some of the core aspects of European foreign policy in several areas of the world and lamented that hitherto European coordination on energy-related challenges had been negligible. Experts argued that incorporating the issue of future resource scarcity into a broader concept of security presented the EU with one of its most pressing foreign-policy challenges.¹² Energy policy required multi-faceted reforms within Europe itself – the development of renewable energy sources, reform of the internal EU energy market – but the need for a foreign-policy reassessment also occupied a prominent place in a series of new European strategy papers.

These commitments left open the question of exactly what form this foreign-policy reassessment would take. That is the issue addressed by this book, which charts the European Union’s response to the challenge of energy security during the mid-2000s. The book focuses very specifically on the foreign-policy dimensions of energy security, as opposed to internal energy-market issues or the development of alternative and renewable sources of energy. It examines how the EU’s general (proclaimed) approach to energy security played out in the specific political contexts of different producer countries and regions. It seeks to explain and illuminate such policy evolution through reference to both analytical explanations of the EU as a foreign-policy actor and broader international relations (and international political economy) frameworks.

In so doing, the book addresses six key questions:

• whether the energy security imperative in practice had a notable impact on European foreign policy, or in contrast drove the most notable changes in the internal aspects of energy policy;
• whether the pursuit of energy security strengthened or weakened cooperation between European governments;
• whether competition for energy security displaced quintessentially European ‘soft power’ approaches in favour of a drift back towards nineteenth-century style power politics;
• whether the EU exercised effective influence over international energy matters or conversely was increasingly sidelined by what some posited as a new energy-driven ‘Great Game’ involving the United States, Russia and China as principal players;
• whether the conventional wisdom that energy security encourages consumer governments to be less critical of autocratic regimes indeed captured the way in which European foreign policy changed; and
• whether the priority attached to energy security accorded European oil multinationals greater influence over EU foreign policies.

Summary of findings

The book’s analysis leads towards a number of main conclusions, related to these six main research concerns.

First, energy security did gain central importance to Common Foreign and Security Policy (CFSP) deliberations and many new initiatives took shape during the mid-2000s. At the same time many proposals for deepening cooperation were rejected by member states. Less attention was given to the foreign-policy dimensions of energy security than to the internal aspects of energy policy or climate change; indeed, tensions often arose between these different strands of energy strategy. The depth of commitment varied between regions; energy concerns had most impact on policy towards Russia, least on policy in Africa.

Second, energy engendered some high-profile divisions between member states. Some emergent dynamics of convergence were witnessed partly as a result of spill-over from internal European cooperation, partly in response to particularly acute external challenges linked to assertive producer state actions. However, the dynamics of socialization were more limited than in most other areas of CFSP coordination. The most conspicuous prioritization of national interests occurred in Russia, although undercutting and preferential bilateral deals were also a feature of policy in the Middle East, Central Asia and Africa.

Third, the EU stressed a strong commitment to market-based approaches to external energy security, and many of its policies did accord substance to this declared preference. At the same time, member-state behaviour became more geopolitical and cut across some of the basic principles enshrined within internal market rules. The EU eschewed a hard-power securitization of its energy policies, but neither was its strategy confined to a replication of ‘market-governance’ or soft-power norms and values.

Fourth, across the different producer regions the EU struggled to match the US’s direct security engagement, while it also risked losing out to rising powers such as China. In some places – especially in Sub-Saharan Africa – the EU remained slow to react to this increased strategic competition. In other areas, the EU’s weak influence owed more to competing powers such as China and Russia out-competing Europe by providing more direct political benefits to producer states.

Fifth, the EU proclaimed an approach to energy security predicated on support for governance reforms in producer states. In practice, it was highly inconsistent on this issue. There were clear cases where energy interests overrode support for democracy and human rights reforms. In other instances, the focus on governance transparency increased as a result of energy concerns. In general, however, the most striking feature was the extent to which energy- and democracy-related decisions were disconnected from each other.

Sixth, European energy companies were not highly engaged in the development of EU external energy-related policies and many remained ambivalent about what a Europeanized strategy could provide in terms of short-term concrete benefit. Energy companies most commonly espoused free-market solutions, which pushing in practice for their own preferential long-term deals and geopolitical backing from national governments. Oil companies came to support the export of EU governance standards to producer states as a means of facilitating their own exploration and production, but the quality of democratic process in these countries played no determinant role in investments decisions or in lobbying efforts at the EU level.

As debates on energy have raged, the issue of energy security has remained virtually absent from studies of EU foreign policy. Standard volumes on CFSP or EU security policy have offered little systematic coverage of energy security.¹³ There appears to be an increasing mismatch between intensifying concerns over energy at the policy level and the paucity of its coverage in academic studies of EU foreign and security policy. Energy security remains a subject studied by energy (political) economists, and not integrated into the normal purview of work on CFSP; and where it is addressed as a foreign-policy concern it increasingly tends to be through a Russia-specific lens. This book aims to correct these shortcomings, and better link the energy and CFSP debates. The following chapter introduces the main analytical debates relevant to this aim, before the details of EU energy policies are examined across the main producer countries and regions.

2 Concepts of energy security and EU foreign policy

This book’s focus on European approaches to energy security bridges three areas of debate. First, it relates to and draws from debates that juxtapose market-based and geopolitical strategies – debates that in turn have relevance for the broader analytical frameworks of international relations and international political economy. Second, a central focus is on the relationship between energy security and producer states’ structures of governance. And third, the book contributes to longstanding debates over the European Union’s (EU) characteristics as an international actor. A central aim of the book is to link together these three areas of analysis that have invariably been pursued as very separate areas of enquiry. This introductory chapter introduces these three areas of deliberation, in order to provide a framework for the subsequent detailed assessment of European energy policies in different producer states and regions. In outlining the ‘state of the art’ in debates over ‘markets versus geopolitics’, energy and governance, and EU foreign-policy coordination, the chapter suggests that a number of core questions remain undetermined – and thus guide this book’s analysis of EU energy security strategies.

Markets and geopolitics

As concerns over energy security intensified, it was suggested that debate amongst energy experts could be structured around two alternative ‘storylines’, that of ‘markets and institutions’ and that of ‘regions and empires’.¹ From the former perspective, many energy analysts argued that the key change since the oil crises of the 1970s had been the growing role of international markets. Some experts judged that the international energy economy had been fundamentally transformed by the expansion of commodity and financial markets, rendering oil more susceptible to market dynamics than to the hitherto politically influenced oligopolistic linkages between producer states, consumer governments and energy national champions.² In 2001, one much-cited study asserted that the gradual development of ‘a connected set of commodity markets where competition is the rule and economics works’ had made obsolete the geopolitics that dominated energy security thinking in the 1970s and 1980s. Bilateral deals between governments to guarantee supply were a thing of the past, and the imbalance of power was if anything now to the disfavour of exporting states. Consequently, these experts concluded, ‘energy security’ in a 1970s-geopolitical sense was now ‘a footnote … an empty phrase’, as archaic as ‘medieval mystery plays’.³

Mitigating some of the fear over energy insecur...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• List of illustrations
• Acknowledgements
• Abbreviations
• 1 Introduction
• 2 Concepts of energy security and EU foreign policy
• 3 The policy response: European energy initiatives
• 4 The Middle East
• 5 Russia
• 6 The Caucasus and Central Asia
• 7 Sub-Saharan Africa
• 8 European energy companies
• 9 Conclusions
• Notes
• Bibliography