Understanding Central and Eastern European Energy Security: Transition, Russia, and the EU

On July 12-14, the Council for European Studies hosted the 24th International Conference of Europeanists. Numerous panels and discussions, and even a film festival, were held across the University of Glasgow campus on all topics European. Themes ranged from EU constitutionalism to memory politics, sustainable developments, immigration, art sustainability, and interpreting the European financial crisis.

One of the discussion panels was on the theme of energy security in Central and Eastern Europe. Chaired by Wojciech Ostrowski (University of Westminster), the panel aimed to reconceptualize energy policy in the region through a roundtable discussion of a book on the issue, currently being written by Ostrowski and fellow discussants Eamonn Butler (University of Glasgow) and Anca Mihalache (University of Aberdeen). Luca Anceschi (University of Glasgow) and Andrew Judge (University of Glasgow) offered perspectives from outside the region, as well as points for the project to consider before going into print.

The discussion focused on Russia, Romania, and Hungary, and their relationships within the region regarding energy security and policy. Ostrowski provided context as to how the research project came about, introducing key themes that emerged from their research. Ostrowski discussed that the purpose of the research was to see if the “one size fits all approach” to energy security between Russia and the Central and Eastern European region really was the case; media reports on Russia’s relations with the post-socialist states since the early 2000’s would have us believe that it has a very aggressive, dominating presence in the region, and that Russia was/is using energy to consolidate and determine its geopolitical power. Following contextual remarks, the discussion was swiftly led into how Russia’s energy relationships could be fully understood–by analyzing the post-socialist political transition of Russia from the collapse of the Soviet Union through to today.

Over the last twenty-five years, clear patterns were emerging in the Central and Eastern European region, showing that unlike in the Baltics and in Ukraine, Russian involvement in private and state energy sectors had been relatively low. The reasons for this included that, for instance, in the Baltics they had little choice but to engage with Russian energy companies due to their lack of involvement in the EEA and due to their geography–this provided Russia with significant leverage in building up its presence in the area. But while gas seems to dominate the Russian energy narrative, many of the Central and Eastern European states relied heavily on coal production. Today, Russia has a complex energy relationship with the Central and Eastern European region, and all is not as we are told, as Butler and Mihalache would divulge.

In Hungary, the complex relationship is very apparent; as Butler pointed out, unlike many of the states in the region, Hungary was not a post-communist transit state in the same way as Poland or Slovakia. It’s approach to energy was more focused on what the state needed during much of the transitionary period, and how it could benefit from its own energy companies, so they could be seen as regional champions in pushing national energy company development. Butler determined that there were distinct periods of time where significant shifts in energy policy responded to government or to national events in Hungary: Throughout the 90s and early 2000s Hungary saw three administrations, all of whom approached energy policy in different ways, although still with an anti-Russian sentiment. It was still recognized, however—the need for some Russian involvement due to it being the main supplier of energy resources. Between 2002 and 2010, despite a consecutive re-election, the government was not without its problems and again, relations with Russia reflected the tumultuous environment of the Hungarian government at the time. From 2010 to present day, under another administration, the Hungarian government sees another shift in its relations with Russia regarding energy policy. Prime Minister Viktor Orbán (president of the Fidesz party in Hungary and previously prime minister during 1998-2002) was expected to continue to pursue an anti-Russian sentiment like in the first period, however as it transpired, he became more pro-Russian. Across all these periods, there seemed to be little continuity in energy relations with Russia, and as such, Russia and Russian companies have had little success in terms of ownership in the Hungarian energy market. Today’s situation shows Hungary always has, and probably always will, recognize that Russia has to play a role in its energy sector, and also that Russian companies taking the lead on contract negations and frameworks will be inevitable, and the Hungarian government must work with this if it continues to keep shifting its sentiments.

Following the Hungarian discussion, Mihalache talked us through the situation in Romania’s energy sector, and a very different picture was painted. After the Second World War, Romania’s relationship with the Soviet Union became complex—it was apparent under the joint venture for post-war reconstruction, the Soviet Union was essentially trying to siphon off Romania’s energy resources. This realization led to a policy of independence from any energy center being adopted —Romania was determined not to become reliant on any type of energy source or center, insuring a policy of control over strategic assets and a reduction in import dependency. The post-war domestic developments for energy independence were important in understanding why Romania today is now essentially in a state of energy isolation. In addition, to a shift in domestic policies and an anti-Russian sentiment, Mihalache also stated another factor in determining Romania’s energy status—Europe. Due to the chaotic nature of the 90’s for Romania, it generated little interest and capital from the West in all sectors. But, after its NATO ascension in 2001, greater investor interest was generated and gradually Romania started to introduce European legislation into energy market. This led to higher energy prices due to price regulation in Europe, however, and the public have made their dissatisfaction with the extent of energy legislation and impact on Romanian’s energy policies very clear. It was concluded that, despite the efforts for greater energy independence, the Soviet-era legacy of not wanting to “sell out their own country” to external investors has in fact led to isolationist policies

The concluding remarks from the main body of the discussion showed that Russian involvement and domination of the Central and Eastern European region has very much been overstated in reality, and yet it continues to dominate the narratives. Coming from a Russo-Central Asian energy background, Anceschi offered three propositions on the Central and Eastern European energy security question: Firstly, there is a range of countries that are defining essentially, if not always directly, the perception of energy security with Russia. It appears that whether or not they have energy resources, there is still the concern of how energy policy relates to what Russia wants to do, and a legacy of the understanding of what constitutes as an external energy policy. Secondly, by having a progressive argument at any level, there will be an impact on how energy policy is understood, and it mostly has to do with having illiberal democracies having a link with Russia. Thirdly, Anceschi noted this all happening in relation to how the elites understand their needs, and the pushing and pulling with Moscow is going to shape energy policies not just in immediate partnership, but with the likes of the EU and Eurasia too.

Commenting on the project itself, Judge lauded the strengths of the project in simplifying the issue of energy politics, and not keeping it for the reserve of academics and policy makers. He noted the patterns of energy dependency will be shifting in the near future, so it will be interesting, given the reflections made at the panel, how they will pan out. Judge also praises the efforts to avoid geopolitical deductionism—not reducing energy security to a narrow geopolitical view. However, he did suggest that the project focus on oil and gas, which although is of course obvious, it appears to neglect one of the big security issues of wider energy security–electricity. Judge stated that 2006 was seen as the start of anti-Russian sentiment, as this was when electricity was stopped by Russia, and caused major blackouts in the Central and Eastern European region. This was, in part, due to the major focus on oil and gas security, but also that electricity companies and energy companies were not doing enough to invest in electricity infrastructure, which didn’t help the situation.

At this point, the floor was opened up to questions and comments from the audience, with questions on the Baltic/LNG question, as well as Moldova-Romanian energy relations. But the question that seemed to demand the greatest response was the question of Chinese investment in the Central and Eastern European region, and whether it could be seen as an alternative to Russia. Having recently returned from Tian Jin in China, discussing this very question, Butler discussed the 16+1 cooperative agreement between Central and Eastern Europe and China. His assessment was that the cooperation was really more a “little smoke and mirrors, and not a true move by china to coordinate with these sixteen countries.” He suggested it was little more than a branding exercise that allowed bilateral access, with countries such as Hungary trying to sell itself as a gateway to Europe for China. Butler said that outside of this bilateral access element, the cooperation was lacking in meaningful infrastructure or investment, and that, in fact, China would quite like to access Russian energy. He found that China is looking to actively court investments, perhaps due to the strategic importance of energy, but that at a basic domestic level energy can have direct impact to life and therefore to government—China would be have to tread very carefully therefore if it were to pursue serious energy relations with Russia.

 

Alexandra Ba-Tin, MSc is a Russian, Central and Eastern, and Eurasian Studies student at the University of Glasgow

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