Yes, but that doesn’t mean Europe will be warm and secure

Andreas Goldthau’s article rightly describes European concerns about energy security as misguided and trapped in cold war-style rhetoric that has resulted in “geo-political tunnel vision.” The mutual dependence between Russia as an energy producer and its consumer markets in western Europe clearly blunts Moscow’s much-feared “energy weapon”. Instead, Goldthau cites the fundamental lack of investment in Russia’s up-stream sector, which could possibly lead to a shortage of supply, as the real threat to European energy security.

But in his discussion of a possible supply gap, Goldthau tells only half the story. Gas disputes between Russia and its transit countries have disrupted European gas supplies in the past, and have sparked doubts about Russia’s reliability as an energy supplier and anxious debates about European energy security. For Goldthau, however, “the crucial issue in Europe’s energy supply picture is not Russian power politics but dry economics”. He sees Russian-European gas relations as a “two-party game”.

Nevertheless, for most European customers, imports of Russian gas are a multi-party game involving at least one transit country as well as the producer. Goldthau’s exclusion of transit countries from the energy security equation does not therefore seem justified. Russia’s conflicts with transit countries do not have purely economic roots; disputes have been dictated by both geo-political power plays (from both sides) and Russia’s attempt to put its trade relations with countries of the former Soviet Union (FSU) on market-based foundations by eliminating subsidies.

Goldthau recommends bridging the investment gap by helping Russia to stabilise gas production and (even though not considered a real threat) by preventing future gas disputes. To this end, he believes that the modified European Energy Charter (EEC) must become the core of Russian-European gas relations.

This is a problematic proposition for several reasons. The first is rather symbolic: Russia will not ratify the EEC even if it is modified, and especially if third-party access to the pipeline grid is abolished. The EEC was signed by Russia at a time when the country was weak and dependent on Western aid and investment. The strong, self-confident Russia of today will not implement a treaty that it considers a humiliation because it was written to favour consumer countries that saw themselves as “winners” of the cold war. Any new energy agreement that is to include Russia – no matter how many stipulations of the EEC it might contain – has therefore to be renamed. Anything under the label of EEC is considered a non-starter by the Russian side and bluntly dismissed.

Secondly, the prevention of transit disputes also requires a better understanding of conflict structures. The very special relations that exist between Russia and its FSU transit countries mean that disputes escalate easily, and quickly become irrational because they involve the integrity and sovereignty of those countries. They cannot easily be resolved by an energy regime based on rational negotiations that focus on narrowly-defined trade issues. Although an arbitration court for international trade conflicts is already in place, consumer countries in the West should help Russia to establish market-oriented relations towards its transit countries, and at the same time to make it clear that geo-political power plays will not be tolerated.

Conflicts between Russia and its transit countries could all too easily interrupt Russian gas supplies to Europe, so they pose a very real threat to Europe’s energy security. A gap between Russian gas production and supply obligations caused by mismanagement and under-investment is an equally dangerous scenario, but is avoidable. Conflicts with transit countries, however, are already a reality, and are much harder to predict, prevent and remedy. They should never be trivialised.