RUSSIAN FOREIGN POLICY IN THE CONTEXT OF ENERGY RELATIONS

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After the collapse of the Soviet Union Russian Federation wanted to get rid of from the economic trouble and emerge as an global actor. One of the most important tools of the Russian Federation uses to achieve this goal is the energy sector.  Natural gas and oil resources are at the top of these energy sources. These two have a very significant position in the formation of Russian foreign policy. RF’s rich natural resources play an active role in relations with the European Union, the USA, China and some others countries. In parallel, the increasing energy demand in recent years has made especially European countries dependent on Russia. Increasing oil prices after 2000 years have also made RF which is the oil producer an advantageous position. RF was able to use increasing oil prices in line with its economic and political interests. RF wants to use its rich energy resources and pipelines as foreign policy instruments. This work aims to analyze Russian natural resources effects on Russian foreign policy making in the context of Political Economy. In the first part of the work, the amount of energy that RF possesses, the actors involved in carrying out the Russian energy making will be examined. In the second part, the relations with the former Soviet region, China, USA and EU will be evaluated in the energy context.

Energy Sources of Russian Federation

Russia is a major producer and exporter of oil and natural gas. Russia’s economic growth is driven by energy exports, given its high oil and natural gas production. Oil and natural gas revenues accounted for 43% of Russia’s federal budget revenues in 2015.[1] Russia was the world’s largest producer of crude oil and the third-largest producer of petroleum and other liquids after Saudi Arabia and the United States in 2015.[2] Russia was the second-largest producer of dry natural gas in 2015 after the United States, producing 22.4 trillion cubic feet, according to Russian Energy Ministry data.[3] Russia is the third-largest generator of nuclear power in the world and has the fifth-largest installed nuclear capacity.[4]Actors of Russian Energy Policy

RF uses many actors in implementing energy policies. Vladimir Putin is one of the most important factors in Russian energy policies. President Putin thought that the money coming from the sale of oil and gas would play a key role in strengthening the Russian industry and infrastructure, and for this purpose he increased the strict control of the state in the energy field. The Ministry of Industry and Energy, the Ministry of Natural Resources and the Ministry of Foreign Affairs are also effective factors in the implementation of energy policies both domestically and abroad. Gazprom is another factor that has significant place in the Russian economy and politics. The state-run Gazprom dominates Russia’s upstream natural gas sector, producing almost 70% of Russia’s total natural gas output in 2014.[5] Also other energy companies have important influences in RF’s economy and politics.

Table 4. Russia’s natural gas production by company, 2014

Company Bcf/d
Gazprom 42.9
Novatek 6.0
Rosneft 5.5
Lukoil 1.8
Others 5.7
Total 62.0
Source: Eastern Bloc Research, CIS and East European Energy Databook 2015, Table 34, p. 14.

 

The Energy Relations of RF with the Former Soviet Regions, China, USA and EU

Russian- Post-soviet Relations

Firstly, the relation established by RF in post-Soviet space will be evaluated in energy frame. With the Minsk Declaration signed between Belarus, Ukraine and RF on 8 December 1991, the establishment of the Commonwealth of Independent States (CIS) has become official. CIS is a union formed by states that have won their sovereignty following the collapse of the Soviets. Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan are members of the CIS.[6] In general, the dependence of post-Soviet geography on Russian energy is effective in carrying out the economic and political objectives of RF. Due to the low level of energy prices in the region countries RF in the 1990s could not use the energy as a tool of pressure. However, policy options such as raising prices or cutting the flow of sources were implemented as a result of the buyers’ disagreement on the price and debt issues.[7] These developments in the post-Soviet demonstrate that Russia uses energy as a repressive foreign policy instrument on a regional and global basis.

Russian – China Relations

China is another important country which has relations with RF in energy and economy fields. In last years, China achieved an important growth rate in economy and to provide stability in growth developing it needed import of energy. China surpassed the United States at the end of 2013 as the world’s largest net importer of petroleum and other liquids because of China’s rising oil consumption with imports 6.1 million barrels per day. According to 2014 data, Russia is the third largest oil exporter of China after Saudi Arabia and Angola with 11 percent oil export.[8] China is aiming to increase its effectiveness in countries that produce energy through policy instruments such as diplomacy, economic aid and military relations in line with growing energy needs. The instability in the Middle East, American presence on major sea routes and other problems cause China to tend towards to countries like Russia and Kazakhstan. In addition, the two countries share the same views on issues such as separatism, radicalism, terrorism, democratization and stability, create “strategic rapprochement” between the two countries. The mutual needs of the two countries and energy need of China lead to the formation of a sustainable alliance.[9]RF- USA Energy Relations

Energy issues have an important influence in growing bilateral relations between Russia and the United States. While the Russia searches for the new markets for its energy resources and trys to attract investments in areas such as Sakhalin which has high-risk, US wants to diversity its energy provision and reduce its dependence to Persian which is not stabile region. Liquefied natural gas (LNG) is another pillar of the convergence in energy between Russia and the United States. With LNG Russian gas reach the Atlantic coast of America in a shorter and safer way. On the other side, being energy partner of Russia and America is important for Gazprom’s $ 20 billion LNG project in Stockman. Thus, it is being easier for Russia to enter the American gas market, while the required investment is provided. Aimed at reducing East Asia’s dependence on Persian Gulf is important with US-Russian cooperation to diversification the petroleum supply in the Asia-Pacific region.

EU- Russian Relations

The EU imports a significant amount of oil, natural gas, uranium, and coal from Russia. At the same time, the EU also serves as an important energy market for Russia. On the basis of this interdependent relationship, the EU and Russia work together on energy issues such as security of supply and energy efficiency.[10]  The EU is Russia’s largest trading partner. Almost half of Russia’s exports — $292 billion worth — end up in EU countries. Russia, in turn, is the third biggest trading partner for the EU, with $169 billion in imports.[11] EU and RF are dependent each other especially in the field of energy.  The majority of Russian crude oil exports (70%) went to European countries, particularly Germany, the Netherlands, Belarus, and Poland.[12]In 2015, about 90% of Russia’s 7.3 Tcf natural gas exports were delivered to customers in Europe via pipeline; Germany, Turkey, Italy and Belarus took up most of these volumes. Russia is heavily dependent on Europe as a market for natural gas. Similarly Europe is dependent on Russia for its natural gas supply. In addition, some countries in Europe, particularly in Finland, the Baltic States and much of Southeast Europe, take almost all of their natural gas from Russia.[13]Russian foreign policy, which is activated by energy, prevents the EU from forming an energy policy in unity level. Because of the stoppage of supply for transit countries and the development of rival projects, Europe is increasingly connected with pipelines and Russia, differentiation of energy routes and Russian influence in the formation of internal energy market. In the presidency of Vladimir Putin, energy is used as a means of pressure in Russian foreign policy and leading to a more active monitoring of foreign policy.

Conclusion

Energy has begun to be used as an economic and political pressure on foreign policy. It is evidence that energy is used as a means to cut energy supply, to cut off supplies, to implement pricing policy, to use existing energy debts, to create new energy debts, and to take over companies and infrastructures. The activation of energy in foreign politics has begun with the Putin era. RF is aware of its energy potential and uses energy as a tool of foreign policy making. RF is aiming to revitalize its economy through its oil and natural gas exports and strengthen the “energy superpower” status by supplying energy to the key regions such as Europe. RF is aiming to make the global economy dependent on itself with the goal of becoming “energy superpower”.[14] RF is trying to make itself the main force of the system with economic means after the decline in military and political effectiveness. [15]

Muhammed Hüseyin Ergören

[1] U.S. Energy Information Administration. October 25, 2016. https://www.eia.gov/beta/international/analysis.cfm?iso=RUS (accessed May 07, 2017).

[2] Perovic, Jeronim. “Russian energy power, domestic and.” Russian Energy Power and Foreign Relations Implications for conflict and cooperation, February 20, 2009: 1-20. P.3-4

[3] Soldatkin, Vladimir. Reuters. January 2, 2016. http://www.reuters.com/article/us-russia-energy-production-idUSKBN0UG02S20160102 (accessed May 7, 2017).

[4] U.S. Energy Information Administration. op. cit.

[5] U.S. Energy Information Administration. op.cit

[6] Özsoy, Emre. “Rusya, AB, ABD İlişkileri Bağlamında Enerjinin Ekonomi Politiği ve Küreşelleşmenin Jeopolitiği.” Güvenlik Stratejileri Dergisi, 2009: 59-81. p,66

[7] Ünal, Mustafa Cem. “RUS DIŞ POLİTİKASINDA ENERJİNİN ROLÜ VE AB ENERJİ.” Ankara: PhD Thesis, June 26, 2011.

[8] Cunningham, Nick. OilPrice.com. Jule 15, 2015. http://oilprice.com/Energy/Crude-Oil/The-Battle-For-Chinas-Oil-Market.html (accessed May 9, 2017).

[9] Indra Overland and Kyrre Elvenes Brakhus, “Chinese Perspectives on Russian Oil and Gas”, edit.

Jeronim Rerovic, Robert W. Ortung and Andreas Wenger, Russian Energy Power and Foreign

Relations, 2009, Routledge Press, page 201-221, p. 204.

[10] European Comission. European Comission. n.d. https://ec.europa.eu/energy/en/topics/international-cooperation/russia (accessed May 10, 2017).

[11] Chapple , Irene , and Ivana Kottasov. CNN. May 7, 2014. http://edition.cnn.com/2014/03/07/business/russia-sanctions-why-the-u-s-and-europe-are-not-quite-in-step/ (accessed May 10, 2017).

[12] U.S. Energy Information Administration. op.cit.

[13] U.S. Energy Information Administration. op. cit.

[14] Perovic, op.cit. p.9

[15] Ünal, op. cit. p.65

References

Chapple , Irene , and Ivana Kottasov. CNN. May 7, 2014. http://edition.cnn.com/2014/03/07/business/russia-sanctions-why-the-u-s-and-europe-are-not-quite-in-step/ (accessed May 10, 2017).

Cunningham, Nick. OilPrice.com. Jule 15, 2015. http://oilprice.com/Energy/Crude-Oil/The-Battle-For-Chinas-Oil-Market.html (accessed May 9, 2017).

European Comission. European Comission. n.d. https://ec.europa.eu/energy/en/topics/international-cooperation/russia (accessed May 10, 2017).

Ministry of Energy of the Russian Federation. “ENERGY STRATEGY of RUSSIA.” ENERGY STRATEGY. November 13, 2009. http://www.energystrategy.ru/projects/docs/ES-2030_(Eng).pdf (accessed May 7, 2017).

Özsoy, Emre. “Rusya, AB, ABD İlişkileri Bağlamında Enerjinin Ekonomi Politiği ve Küreşelleşmenin Jeopolitiği.” Güvenlik Stratejileri Dergisi, 2009: 59-81.

Perovic, Jeronim. “Russian energy power, domestic and.” Russian Energy Power and Foreign Relations Implications for conflict and cooperation, February 20, 2009: 1-20.

Soldatkin, Vladimir. Reuters. January 2, 2016. http://www.reuters.com/article/us-russia-energy-production-idUSKBN0UG02S20160102 (accessed May 7, 2017).

U.S. Energy Information Administration. October 25, 2016. https://www.eia.gov/beta/international/analysis.cfm?iso=RUS (accessed May 07, 2017).

Ünal, Mustafa Cem. “RUS DIŞ POLİTİKASINDA ENERJİNİN ROLÜ VE AB ENERJİ.” Ankara: PhD Thesis, June 26, 2011.

Indra Overland and Kyrre Elvenes Brakhus, “Chinese Perspectives on Russian Oil and Gas”, edit.

Jeronim Rerovic, Robert W. Ortung and Andreas Wenger, Russian Energy Power and Foreign

Relations, 2009, Routledge Press, page 201-221

 

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