GETTING ENERGY TO EU · “Getting energy from Russia to Europe : Domestic political conditions in the energy-poor transit states of the former USSR and risks to energy transit to the European Union""""

Final Report Summary - GETTING ENERGY TO EU (Getting energy from Russia to Europe: domestic political conditions in the energy-poor transit states of the former USSR and risks to energy transit to the

The main objective of this project was to analyse the domestic determinants of energy and transit policies in four energy-poor post-Soviet states, each playing a role in the direct or indirect transit of Russian energy to the European Union (EU): Ukraine, Belarus, Lithuania and Moldova. Work carried out to achieve the research objective To achieve this objective, a structured comparison of the way each of these states have managed their energy dependency on Russia, and the domestic factors affecting it, was carried out. Main conclusions and their potential impact and use (1) Traditional understandings of the power of transit states vis-à-vis their suppliers need to be reassessed. Rather, the actual value of transit infrastructure is largely conditioned by domestic factors - often corrupt - rent-seeking games the more difficult it becomes to use them as a real and effective element of counter-power vis-a-vis the main suppliers. (2) Contrary to the views propagated by most politicians in the energy-poor states, an overconcentration on low energy prices as an absolute goal was one of the biggest determinants of energy insecurity. (3) Important aspects of post-Soviet energy supply crises involving Russia and the transit states (2006, 2009 supply interruptions) were not (or at least, not only) the result of inexorable contradictions in the energy interests of both sides, but of intentional actions such as the creation of 'artificial scarcities' by various participants in the energy process. In some cases, this took place through the manipulation of existing institutions or the creation of new, often corrupt ones, with the specific purpose of creating rent-seeking opportunities (most often at the expense of the state and tax-payers) in benefit of well-situated groups. In other cases, it took the form of an artificial heightening of the stakes in the energy discussions, as a way of politicising the issue for public relations and preemptive pressure purposes. (4) Gazprom's monopoly role in Russia itself fostered the creation of 'artificial scarcities' in energy relations with the post-Soviet states, and for corrupt ways of 'solving' them. It was exactly this monopoly role which gave Gazprom (or, more likely, influential players within it) the ability to sway actors in the energy-dependent states into accepting intermediary companies presenting themselves as sources of diversification away from Gazprom's monopoly. (5) As seen in the case of Moldova and Transnistria, conflicts started as purely ethnic or separatist ones can become further entrenched once they provide elites the possibilities for control of important energy-related rents, making support of transparency and anti-corruption measures important not only from a political but also a conflict-prevention perspective. Potential impact and use of conclusions, and further scientific impacts expected These conclusions are of obvious relevance for policy-makers involved in the post-Soviet region. In order to answer the further research questions that have emerged as a result of this project, the fellow has established contacts with four research centres in the EU that could be appropriate partners for follow-up projects. One follow up project application has been submitted, in collaboration with project host institution Aleksanteri Institute, to the Academy of Finland; a further project to the European Research Council is likely to be submitted by 2015. Contact details: Prof. Margarita M. Balmaceda, PhD Associate, Harvard Ukrainian Research Institute 34 Kirkland St. Cambridge, MA, USA

Data: CORDIS, © European Union