Timofei Bordachev’s call for a strategic agreement between the EU and Russia is timely and well-founded. Moscow and Brussels are undeniably in need of a binding settlement on the ‘rules of the game’ in the energy sector. Nevertheless, his proposal for a fully-fledged EU-Russia energy community appears to be both simultaneously overambitious and yet not far-reaching enough. Instead of drawing up supranational designs, Moscow and Brussels should aim for a pragmatic and workable agreement on their energy relations.
Mr Bordachev’s analysis of the problems in EU-Russia relations testifies to the pressing need for an agreement. The quarrels over European participation in Russian energy projects like Sakhalin II and over Gazprom’s acquisition of European downstream assets reveal the limits of the current approach. Without a binding agreement on the ‘rules of the game’, any hopes that increasing economic interdependence between the EU and Russia will inevitably foster a gradual rapprochement and growing trust are misplaced.
Nevertheless, while Mr Bordachev makes the correct diagnosis, an EU-Russia energy community is the wrong prescription. The idea itself is certainly attractive for some EU governments. Supranational control over Russia’s energy resources would make the dreaded scenario of politically-motivated supply cuts impossible.
But it is doubtful whether the potential benefits would prove sufficient for Moscow to relinquish its control over the strategic energy sector. Russia does not have sufficient export capacities to be the EU’s sole energy supplier. Therefore, an EU-Russia energy community would neither shut out possible competitors to Gazprom nor preclude economically-driven diversification projects. Without an elaborate system of production quotas and guaranteed prices, an energy community operating on market principles would not increase Russia’s security of demand.
The fate of the Energy Charter Treaty exemplifies Moscow’s reservations. This international agreement would have offered Russia essentially the same benefits as the proposed energy community. Besides access to international dispute settlement mechanisms, the implementation of the treaty’s principles for the open and transparent management of the energy sector would have triggered much-needed inflows of investment and technology from European companies.
Nevertheless, these benefits proved insufficient for Moscow to accept the entirety of the treaty’s legally-binding provisions. Without dramatic changes under President Medvedev, it is difficult to see how the Kremlin could be persuaded to go even further and cede control over the energy sector to truly independent, supranational institutions.
On the EU side, the member states could so far not even agree among themselves on granting the Commission a powerful role in the energy sector. Notwithstanding the European Coal and Steel Community and EURATOM, it is only with the Lisbon treaty that the Community will acquire a shared competence in this area. As long as the internal energy market remains incomplete, those member states that do not currently import energy carriers from Russia have few incentives to agree to a supranational EU-Russia energy community.
Instead of drawing up supranational designs, Moscow and Brussels should make a fresh attempt to conclude a pragmatic, yet legally-binding agreement based on the principles of the Energy Charter Treaty. This would require a fine balance and a certain amount of creative thinking to make EU-Russia energy relations compatible with the EU’s internal energy market while accommodating some of Moscow’s concerns. But even the conclusion of an imperfect, pragmatic agreement on the ‘rules of the game’ would be better than the questionable prospect of a ‘big deal’ or no agreement at all. Once the actors on both sides start to play by the rules rather than with the rules, the grounds for a great deal of mistrust will be removed. The shift from the logic of zero-sum games to the logic of positive-sum games does not necessarily require a qualitative leap into a supranational community. But it certainly requires the security and predictability created by legally-binding, mutual obligations.
It is here where Moscow and Brussels have to go beyond Mr Bordachev’s designs. Mr Bordachev tends to see the creation of new governance mechanisms for the energy sector as a gradual process fostered by independent common institutions. But in order to provide the required security, the detailed provisions of the new EU-Russia energy regime must be part and parcel of a binding agreement here and now. On this basis, maybe the time will be ripe in the future for deeper EU-Russia integration in the strategic energy sector.