Research Projects

At the Crossroads

Margarita M. Balmaceda, Marie Curie International Incoming Fellow

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 reach EU markets, oil and gas from Russia must transit through countries such as Ukraine and Belarus, whose own unstable relations with Russia have created risks for Europe’s security of supply. These countries are highly dependent on Russian energy, and states where energy and politics have been strongly intertwined. Yet we lack detailed knowledge about the ways in which domestic political factors affect their energy and energy transit relationship with Russia. This project seeks to fill this gap by analyzing the domestic determinants of energy and transit policies in four energy-poor states, each playing a role in the direct or indirect transit of Russian energy to the EU: Ukraine, Belarus, Lithuania and Moldova.

How do domestic political factors affect their energy and transit policies? This is the main question thisproject seeks to answer. It looks at this question by analyzing these states’ responses to their overwhelming energy dependency on Russia, for each of them one of the country’s top problems. Yet each of these countries has adopted different ways of dealing with this dependency. Belarus did not espouse energy diversification as an official goal until 2006.  The three other cases adopted an energy-diversification rhetoric, but in each of them weakened by strong domestic dynamics. In one of them, Ukraine, official diversification goals were seldom acted upon, as none of the major economic actors had a real interest in ending this energy dependency. In the third case, Lithuania, reduced dependency on Russia was not so much the result of focused diversification policies, but of broader trends in economic transformation and restructuring. In the case of Moldova, an ongoing struggle with a separatist region (Transdniester), as well as infighting within the central government, prevented the country from pursuing clear energy policy goals.  How do we explain these different policies? Our research on the domestic sources of energy and transit policies can offer important insights in order to explain these differences

This differentiated picture is at odds with the conventional narrative of Russian energy relations with former Soviet states, which has largely concentrated on Russia’s use of these states’ energy dependency to pursue foreign or commercial policy goals, sidelining consideration of domestic factors. While Russia’s use of energy for foreign policy goals is an undeniable reality, to look at the question solely in terms of “Russia’s expansion” is not enough. No less important is to look at the domestic institutions, structures and conditions affecting this dependency and its consequences. These domestic dynamics are also crucial for understanding these countries’ de-facto transit policies and the possible threats to energy transit to the EU, as well as proactive solutions to deal with them.

Research Methodology, Case Studies, and Source

The central focus of our investigation is how differences in domestic political arrangements have affected each country’s energy and energy transit policies.

In particular, in order to understand the ways in which the four cases have dealt with their energy dependency on Russia, it is useful to look at the winners and losers of certain patterns of energy trade and energy transit with Russia. This project approaches this question by analyzing patterns of “rents of energy dependency” in each of the cases -- the significant windfall profits that, under some circumstances, can be made out of a situation of energy dependency by economic groups within a country, and compare the patterns of extraction, distribution, and (re)incorporation of these rents in each of the cases. Such patterns are looked at within the context of the system of domestic interest articulation and the political system in general.

The project includes the cases of Ukraine, Belarus, Lithuania, and Moldova (1992-2010). These countries share high levels of energy dependency on Russia, a common Soviet energy legacy, and a significant transit role in the export of Russian energy.  They differ, however, in terms of organization of the energy market,  foreign policy orientation (most notably, Lithuania joined the EU in 2004) and, central for this project, political system. In terms of political systems, the cases range from a personalistic near-dictatorship in Belarus, to a mixed presidential-parliamentary system in Ukraine, to a largely fragmented parliamentary system in Lithuania and Moldova. These political arrangements also affect the patterns of interest representation and the way rents of energy dependency will be extracted, distributed, and reincorporated into the system in each of the cases.

These case studies are analyzed on the bases of field research in Russia, Ukraine, Belarus and Lithuania, and using previously untapped materials from these countries, many of them in the local languages.

Outcomes

This project will result in the completion and publishing of a body of closely-related publications on the issues discussed above. This body of work includes two books (Dealing with Energy Dependency: Ukraine, Belarus and Lithuania Between Domestic Oligarchs and Russian Pressure, 1992-2010 and Turning Economics into Politics, Dependency into Power: Belarus, Russia and Energy under Lukashenko) as well as several related articles.

In addition, the project includes a number of outreach activities aimed at building bridges with
the policy-making sector, the Eastern-Europe oriented business sector, and the media.

Duration: 15 May 2010 - 14 September 2011
Marie Curie Fellow: Margarita Balmaceda, Professor, Seton Hall University, Harvard University
Researcher in charge: Markku Kivinen, Professor, Director of the Aleksanteri Institute (Finnish Centre of Russian and Eastern European Studies of University of Helsinki)
Funding: Marie Curie International Incoming Fellowship within the 7th European Community Framework Programme.

 

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