Master en études Européennes à finalité Politique

EUROPEAN EXTERNAL ENERGY POLICY : A L IBERAL

INTERGOVERNMENTALIST APPROACH

Jacopo PENDEZZA

Advisor: Vercauteren Pierre

Academic year 2007-2008

1

Contents

List of Abbreviations 3

Introduction 4

Hypothesis 5

The structure of the thesis 6

1. Theoretical Approach to the International Energy Relations 7

About the method 7

The International Energy Relations 7

Definitions of the concepts 12

The concept of 'energy' 12

The concepts of ‘Energy Policy’ and ‘External Energy Policy’ 14

2. The Theoretical Approach to the European External Energy Policy 18

Introduction: theories of European Integration 18

The liberal intergovernmentalist approach 21

The multi-level governance analysis 26

3. Energy Policies in EU Countries 29

Introduction: A European Overview 29

Germany 31

France 33

United Kingdom 36

Poland 37

Conclusions 39

4. Elements for a External Energy Policy 40

Introduction: The Competences of the EU in the Energy field 40

The EEP Proposals of EU Institutions 42

Bilateral energy relationship with Russia 51

2

The Energy Charter Treaty 53

The Role of Member Governments (Germany, France, UK, Poland) 55

Conclusions 61

5. Empirical Conclusions and Theoretical Implications 62

References 66

3

List of Abbreviations CIS Confederation of Independent States

CIEP Clingendael International Energy Programme

DTI Department of Trade and Industry

EBRD European Bank for Reconstruction and Development

EC European Commission

EEP External Energy Policy

ENA Ecole Nationale d’Administration

ENP European Neighbourhood Policy

EP European Parliament

EU European Union

Euratom European Atomic Energy Community

IEA International Energy Agency

IHT International Herald Tribune

mtoe millions tons of oil equivalent

OJ Official Journal of the European Union

OPEC Organisation of Petroleum Exporting Countries

PCA Partnership and Cooperation Agreement

TACIS Technical Aid to the Commonwealth of Independent States

4

Introduction

The study object of my thesis is the Energy Policy of the European Union and of its member

states, in particular I will focus my analysis on the External Energy policy (EEP).

Energy policy is regarded a strategic policy area, because energy has influence on national

economies, whether energy will be available at reasonable prices influences a state economic

competitiveness and power. Changes in energy prices can have enormous effect on a state

budget revenues or on wealth allocation and distribution nationwide and internationally.

Moreover it affects the security in and of a state, as a disruption in energy supply restrict a

state defence capabilities. Energy is both strategic good and commercial good. Therefore,

there are two aspect of energy policy: geopolitical and commercial. Governments take

decisions and conducts negotiations about energy, but there are other important actors

involved, namely major energy companies. Although in some ways European integration has

always included "energy issues" – think of the founding treaties of the European

Communities on Coal and Steel and on Atomic Energy – EU policy-making related to

security of energy supply has gained attention only later. Characterized by strong conflicts

between a common policy and divergent national policies, decisions on energy security were

initially excluded from the central EU level. Member states was very different interests in the

various forms of energy – France wanted to develop its nuclear sector, Germany had vast coal

reserves and needed to support its coal industry – and the High Authority of the ECSC never

became truly supranational. When oil became dominant in Western economies, dependence

an Middle eastern oil resulted in bilateral agreement between exporters and importers rather

than in a common import policy (Matláry 1997). Although the domain of the ECSC and

Euratom Treaties, member states have not ceded some of their competences in the energy

field to the Community: there are a number of reasons for the reluctance of EU member

states to maintain their national competence over energy matters and that there are still no

competences on a European level in the field of external energy policy. Member states

repeatedly were reluctant to include an external energy chapter in the Treaty on the European

Community, as energy policy has been always considered an issue related to national security

and therefore states were unwilling to share with the EU parts of their sovereignty in this

field. Although the member states of the EU pursue a number of shared goals on international

level, as for example the Kyoto Protocol negotiations or negotiations within the WTO,

5

foreign and security policy are fields in which the objectives and policies of individual

countries highly differ.

One can argue that a real integration of the national external energy policies did not happen,

or only very partially.

Hypothesis

The European Commission is convinced that would be better that the EU had a common

external energy policy, but as noted by a number of analysts (see Westphal 2006; Hoogeveen

and Perlot 2007; Dehousse 2007; Andoura 2007) the adoption of a real energy policy

remained a challenge for the European Union since its beginning and the solutions developed

to deal with security of energy supply were mainly national.

Although, as I noted during the reading of several analysis of the EU and energy (see for a

review Finon. and Locatelli 2006, Mañé-Estrada 2006, Costantini et al. 2007), there is a

tendency to consider the European Union already as a autonomous actor in the international

energy arena and the focus of such analysis is on ‘how’ the EU should act in order to achieve

its energy security. On the contrary, in the present thesis, I make a step behind and I try to

review the EEP policy-making within the EU, in order to supply a more precise picture of the

present role of the EU on the international energy stage.

By using the theoretical tools provided by the so-called ‘Regions and Empire’ approach of

the international energy relations (Correlijé and van der Linde 2006), I want to demonstrate

through the ‘liberal intergovernmentalist’ model of the European integration that Member

States do not want to delegate to the European institutions their sovereignty over their own

external energy policy in spite of the fact that the EC makes pressure for the creation of a real

common external energy policy.

The Commission approach is a multilateral governance approach that aims to manage energy

(inter)dependence on the basis of equally applied rules and an access to resources and

investment moderated by market mechanisms, along with strong involvement of private

companies. The approach of the Commission is basically opposite to the approach of member

states. The basic hypothesis is that, according to the ‘Regions and Empires’ approach, EU

member states search to maximise their influence on international energy supplies in a

6

autonomous manner because of the opposite energy relations though of the Commission, the

more entrepreneurial supranational actor at the EU level.

Other hypothesis stem from this general one and they are focused on the policy-making of

the external energy policy of the European Union. According to ‘liberal intergovernmentalist’

model, secondary hypothesis are that the only significant actors of the EU external energy

policy are governments. Furthermore it is assumed that their interest are formed prior to

decision-making at the EU level. Hence the second hypothesis: all external energy policy-

making outcomes in the EU process can be traced to prior governments interests, mainly

energy security interests. The counterhypotheses to these are that institutional EU actors

matter independently, that interests may be formed during the policy-making process and not

prior to it.

The structure of the thesis

The first chapter of the present thesis explains the theoretical approach that I adopt in order to

examine the global energy situation, in particular the presentation of the Empire and Regions

approach, and it presents some useful definition for 'energy' and 'external energy' policy in

order to obtain some theoretic instruments to analyze the European External Energy Policy.

The second chapter below identifies the form and concept of the European integration: in

particular, I adopt Moravcsik's 'liberal intergovernmentalist' approach. The third chapter

identifies the forms and extend of the European Union and its Member States energy

situation and reviews the various energy policies of the UE Member States. The fourth

chapter try to organizes those explanatory concepts of European External Energy Policy

(EEP) into a analysis that depicts the proposals, process and effects of the EEP. Finally, the

thesis end with a conclusion that evidence the liberal intergovernmentalist tendency of the

EEP decision-making.

7

1: Theoretical Approach to the International Energy Relations

About the method

In logic, there are two distinct methods of reasoning: namely the deductive and the inductive

approaches. Deductive reasoning works from the ‘general’ to the ‘specific’. This is also

called a ‘top-down’ approach. The deductive reasoning works as follows: think of a theory

about topic and then narrow it down to specific hypothesis (hypothesis that one can test).

Narrow down further to collect observations for hypothesis (one collects observations to

accept or reject hypothesis and the reason that one does it is to confirm or refute original

theory). In a conclusion, when one uses deduction the reasoning is from general principles to

specific cases. On the contrary, an Inductive reasoning works from observations toward

generalizations and theories. This is also called a ‘bottom-up’ approach. Inductive reason

starts from specific observations, look for patterns (or no patterns), regularities (or

irregularities), formulate hypothesis that one could work with and finally ended up

developing general theories or drawing conclusion. In a conclusion, when one uses Induction

one observes a number of specific instances and from them infer a general principle or law

(Feynman 1999).

In the present analysis I adopt the deductive reasoning in order to demonstrate the liberal

intergovernmentalist characteristics of the European External Energy Policy. So in the first

and the second chapter I will explain the theories that I will use to demonstrate my

hypothesis, indeed in the third and fourth chapter I will collect observations to accept my

hypothesis.

The International Energy Relations

The history of international and regional energy markets shows that the state of the world as a

whole is a key factor in what happens in the global energy industry. (Sébille-Lopez 2006,

Furfari 2007). Two theories of international relations, the neo-liberal paradigm (see in

particular Keohane and Nye 1977) and the neo-realist paradigm (see in particular Waltz

1979), offer opposite interpretations of the evolution of international relations. In the neo-

realist theory summarized by Waltz (1979, 2003), states seek to survive within an anarchical

system. Although states may strive for survival through power balancing, balancing is not the

8

ultimate goal of that behavior, but rather a product of the aim to survive. And because the

international system is regarded as anarchic and based on self-reliance, the most powerful

units set the scene of action for others as well as themselves. Neo-realist theory is opposed to

the neo-liberal paradigm elaborated by Keohane and Nye (1977), which argues that, even in

an anarchic system of autonomous rational states, cooperation can emerge through the design

of standards, regimes, and institutions, in a system of complex interdependence in which the

role of military force in resolving disputes between countries is negated.

In the neo-liberal paradigm, after the collapse of communism in the Soviet Block, general

market-based rules in the international and regional regimes drive some political scientists to

make some optimistic prophecies about the triumph of globalisation and the 'end of the

history'. The prospect of mutual gains from trade provides the rationale for market-based

arrangements. At the EU level, this provided the backdrop for the single market and, at the

national level, programmes of liberalization and privatization under the aegis of the EU. This

is the sum of what Correlijé and van der Lind (2006), in their scenarios of international

energy relations call the 'Market and Institutions' approach to the international economic and

political cooperation: an integrated, multilateral world with effective institutions and

competitive markets.

The 'Markets and Institutions' approach assumes that there is a continuous intensification of

the social, cultural and economic internationalization or 'globalisation' of markets. This also

implies an enduring cooperation in the international political and economic institutions,

supporting a constant development of the multilateral system that governs international

relations. Ideology, religion and political conflicts continually take place at the international,

the national, and the local level, but effective international and regional institutions (like the

UN, EU) manage to deal with most of these conflicts. Further liberalization of markets allows

the international flow of goods, persons and capital to grow. These flows are coordinate by

'market forces', facilitated by strong economic institutions, including the WTO, the IEA,

OPEC, the IMF and regional free trade organizations like EU, NAFTA, MERCOSUR and

SADC. Generally, international firms' subsidiaries operate in a loosely connected manner,

purchasing and selling their respective inputs and production and intermediary markets.

Collective pressures for good governance and effective financial institutions manage to

establish increasingly sound governments. Potentially destabilizing local issues are

neutralized through international peace-keeping and development cooperation, thus reducing

the impact of local political instability, social tensions, terrorism and international crime,

9

even in the periphery. Tensions may arise because of costs of environmental policies. In this

respect there is a clear distinction between a widely supported “Kyoto approach” and a “Non-

Kyoto” world, in which the NIMBY (‘not in my backyard’) phenomenon is powerful. Under

the Kyoto variation there is a much more effective abatement of economic, social and

environmental stress. NGOs and Civil Society play a key role in balancing market forces and

improving corporate responsibility. Environmental and equity issues are embedded in local

economic and social systems, so economic cooperation between nations is based on civil and

corporate involvement (Correlijé and van der Linde 2006).

With regard to the international energy relations, in this approach the emphasis is on the role

of the market over the disturbance (a supply shortfall or a disruption) in the supply of oil and

gas. Under the 'Market and Institution' approach a sudden disruption of oil or gas flows from

existing capacity of whatever kind also belong to the possibilities. Supply arrangements

through markets, however, lead to higher prices reflecting the scarcity of the specific oil, or

products, involved. This induces market reactions and a re-allocation through price. The IEA

and EU emergency schemes may be effective in reducing the price impacts, by alleviating a

temporary shortfall in supply, in close co-operation with OPEC in case the disruption does

not involve a country where the organization's spare capacity is situated (Correlijé and van

der Linde 2006).

On the other hand, the neo-realist perspective stress to an alternative to the multilateral and

free-trade approach that Correlijé and van der Linde (2006) label 'Regions and Empires'. It is

a world primarily based on a balance of diplomatic and military power, in which America

unilateralism has great power and influence, and political and regional blocks complete. It

involves, essentially, a division of the world into countries and regions, on the basis of

ideology, religion and political arguments. Political and military strategy, bilateralism and

regionalism divide the world up into competing US, EU, Russian and Asian spheres of

influence. In this approach, it is difficult for integrated global market to emerge or maintain

themselves. This approach underestimates the European approach to the world affairs based

on integration through the market with neighbours and a multilateral attitudes to international

relations. National and international security issues and military conflicts, bilateralism and

excessive regionalism prevent international economic integration rooted in overall regulation

of the flow of goods, capital, and labour. Trade is part of the broader geopolitical game and

relative gains are more significant than absolute gains. The absence of effective world

markets for strategic goods further stimulates the establishment of bilateral trade

10

relationships and treaties, thus reinforcing the formation of more or less integrated blocks

with satellite regions that compete for markets and energy resources. In this though firms are

less international, but operate from a more national perspective. Moreover, to a greater

extent, their subsidiaries operate in vertically and horizontally coordinated structures, with

internal transfers of inputs and production.

With regard to the international energy relations, in the 'Regions and Empires' approach the

emphasis is on the role of the state power over the disturbance (a supply shortfall or a

disruption) in the supply of oil and gas (Clingendael 2004, p. 101). Depending on the scale,

the specific facilities and the regions involved, a sudden disruption of oil flows causes great

distress in the supply of oil, because of a lack of surplus production and transport capacity

that allows for deliveries to be re-scheduled. Particular regions, for instance those that rely on

the supplies of only one exporting region or country, such as the Persian Gulf, can be

severely affected without the remedy of finding oil supplies elsewhere. In fact, the rigid

contractual trade structure impede a flexible adjustment of trade flows. Dependent on the way

in which prices are determined in contracts, a price shock affect these other contracts as well.

Competitions arise between consumer countries to secure supplies in bilateral contracts.

Eventually, the use of military force to achieve access to shut in production capacity belongs

to the possibilities. Given the underestimate role of the market, and the predominance of

bilateral agreements, there are great difficulties in the operation of the IEA and EU

emergency scheme as part of the crisis management policy, because the countries involved all

have different interests. As a result, countries or regions that rely heavily on imported oil are

forced to create much larger strategic reserves because they cannot rely on the collective

system on the IEA to come into effective operation. Particularly, when one of the major

suppliers in the OPEC is involved in the disruption, the ability of OPEC to apply its

production management tools is widely ineffective. This, in general, induces an increase in

crude and product prices (Clingendael 2004, p. 99).

With regard to the analysis of a slowly energy supply gap, the 'Regions and Empires'

approach emphasizes this possibility as a consequence of a dismal investment climate in

various producer countries. This is evident in the situation in the Persian Gulf and in Russia

(in particular for Russia, see Goldthau 2008). A growing lack of surplus production and

transport capacity in specific regions then induce opportunistic competition between

consumers and suppliers to bilaterally secure supplies or investment elsewhere, normally

with an exclusive contractual character. In this neo-realistic though state and state oil

11

companies become more involved to compensate for the lack of private capital. This easily

lead to more and more politicized oil trade, and a stronger influence of the nation-state on the

world affairs. As consequence, within the IEA and the OPEC, it is increasingly difficult to

calibrate the oil market management schemes, strategic stock and information systems. The

ensuing rigid contractual essentially bilateral trade structure impede a flexible adjustment of

trade flows. In addition, international conflict may arise over the exclusive relations of some

large surplus oil producers with the several 'empires', as recently exemplified by the Saudi

Arabia (Sébille-Lopez 2006). In fact, these circumstances involve an isolationist approach of

the international relations by major producing countries and a refocusing on domestic affairs.

In this situation, the 'Regions and Empires' approach stress the influences of groups in

producer countries. These groups see the oil industry as the bringer of deep internal political

and social rivalry rather than an industry than has create wide social and economic

opportunities. It is clear that this approach taken departs from more radical neo-realist

theories which treats states as 'black box' with fixed preferences. Instead, governments are

assumed to act purposively in the international arena, but on the basis of goals that are

defined domestically.

With regard to the gas market, the 'Regions and Empires' puts the emphasis on the

competition between consumer countries to secure supplies in bilateral contracts. In general,

giving the relative rigid production and transport capacity and the difficulty, in absence of a

proper infrastructure to physically re-schedule delivers, a sudden disruption of gas flows

cause a great distress in the consumer countries. Given the lack of a real global market

because of the nature of gas, and the predominance of bi- or multilateral agreements, there

are great difficulties in the operation of possible IEA and EU emergencies schemes, as the

countries involved all have different interests and gas supply structures.

In conclusion, I adopt the 'Regions and Empires' approach in my thesis because I think it is

the more useful to analyze the intergovernmental nature of the External Energy Policy of the

EU. Factors like UN Security Council decision-making over Iraq, the lack of progress in the

WTO negotiations, the difficult ratification process of the Kyoto agreements, the difficult

progress of EU power and gas market liberalization, the unilateral approach of foreign

relations of the US after the attacks on New York and Washington, developing relations

between China and the rest of the world, all suggest me that world affairs developments

would be more in line with the 'Regions and Empires' world than with 'Markets and

Institutions' (Correlijé and van der Linde 2006).

12

Definitions of the concepts

After the presentation of the theoretical approach to the International Energy relations that I

will use to analyse the EEP, the following section reviews some useful definition of concepts

concerning the energy policies. The definition of the concepts that I will use is

methodologically important because permits to delimitate the research field and to have a

coherent framework to use for collecting and evaluating data and evidences in the next

chapters.

The concept of 'Energy'

Any discussion of external energy policy must start with an understanding of the concepts of

‘energy’. What is become apparent over recent years is the fact that energy governance takes

place in a field of tension between governance based on market and institution (and the rule

of law) on the one hand, and state-centered, power based geopolitics on the other. The latter

represent spaces dedicated to accumulating influence. They are structured by hegemons and

thus capable of resulting in 'Regions and Empires'. The multilateral governance approach

aims to manage interdependence on the basis of anonymously and equally applied rules and

an access to resources and investment moderated by market mechanisms, along with strong

involvement of private companies. The geopolitical pattern seeks to secure exclusive access

to resources, mainly by political and military means (Correljé and van der Linde 2006).

This spectrum of policy approach conducted between the two poles of multilateral

governance and geopolitics and be explained by the specific characteristics of the energy

issue: energy is an ambivalent good in being both a strategic good and a commercial good, as

well as a service (Sander 2007). Taking this into consideration, energy is an essentially

ambiguous good because it can be considered as both a genuine commodity, tradable on the

basis of purely commercial considerations, as a service (e.g. transportation), and above all as

a strategic good to be used as a foreign policy tool (e.g. during the oil crisis 1973-74). Indeed,

the limited availability of energy in the face of growing demand, a twenty-year oil price high,

and the growing concentration of production make it a highly profitable commodity. It takes

up the center of important domestic and international struggles, where visions of energy as

'strategic' and 'commercial' good both coincide and complete. It allows energy to be used as a

13

strategic good or – under a normative view – a good that needs to be used for the 'greater

good' or 'public welfare' in a state. Reflecting the very nature of the energy issue, the

international political economy of oil and gas is characterized by two political approaches to

governing the energy trade: as a commodity embedded in a liberal market economy and, on

the other hand, by the desire to keep it a strategic asset (Westphal 2006).

Since I opt for the 'Regions and Empires' approach of the international energy relation in

order to analyze the European External Energy Policy, I adopt in my analysis a definition of

energy that takes account of its commercial aspect but stress the geopolitical one. Indeed, as

Rittberger and Zürn (1991, p. 178) state 'the properties of issues (pre)determine the ways in

which they are dealt with', in what follow, it will be argued that the very nature of energy as a

strategic good, once instrumentalized for foreign policy goals, impedes multilateral

governance as it calls into question in particular the suitability of the energy issue for

multilateral regimes. Moreover, the geography of the distribution of reserves and the need to

transport oil and gas over long distances bring geographical considerations into politics, often

resulting in traditional geopolitics (Westphal 2006). In the 'Regions and Empires' approach

energy policy is regarded as a vital and strategic policy area. The high priority put on the

issue can be explained by the fact that energy is a major input into national economies, even a

factor of production. Energy is a policy field of great strategic importance: whether energy

will be steadily available at reasonable prices greatly influences a state's economic

competitiveness, domestic capacity, and power. Energy availability also strongly affects the

wealth and security in and of a state since a disruption in energy supply constricts the defense

capability of states. Changes in energy prices have drastic effects on wealth allocation and

distribution nationwide and internationally (Bielecky 2002).

Energy relations in general are characterized by the intrinsic tension between cooperation and

conflict: while there are mutual gains to be realized from international trade, there are also

intrinsic elements of tension. In addition, both the producers as well as the consumers face

the dangers of becoming too dependent on the other side and this can cause conflicts. The

understanding of energy security from the consumers perspective relies on geographical

diversification of energy supplies, diversification of energy sources, and predictable, stable,

and low energy prices (Bielecky 2002). Thus, the key economic concerns of energy importers

are managing disruption and minimizing energy costs. The supplier side is interested in

stability of demand and improving terms of trade (Helm 2002). Moreover, there is an

14

inherent tendency to strengthen one's own market position to the point of establishing

monopoly status to the supplier's own favourable ends. Whereas the buyer of energy has an

interest in competition on the supply side in order to keep prices low, the producer has an

interest in competition only in the demand side. This is because energy prices have highly

redistributional affects. This is why Mommer emphasizes that 'the game is strategically about

prices, and only tactically about capturing of rents' (2000, p. 1, cited in Wesphal 2006).

However, rents play a decisive role, too, and because of the high impact of revenues for the

state budget and the ideological and politicized meaning of energy resources, many states are

reluctant to open their market to foreign investment, in line with the Region and Empires

though of the international energy relations.

The concepts of ‘Energy Policy’ and ‘External Energy Policy’

After a review of the concept of energy as a strategic tool in a power-based world described

in the 'Regions and Empires' approach, this section presents a useful detailed definition of the

Energy Policy and the External Energy Policy. Energy policy in consumer countries involves

three main components. First, there are the basic aims of energy policy: a) low supply costs,

b) security of supply, i.e. the continuity of supply and the dispersion of risks and, more

recently, c) environmental considerations (Clingendael 2004) These basic aims are shared

widely among consumer country governments and international organization (e.g. AIE). This,

however, is not the case with the other two components of the energy policy, where even

among the European countries there is a wide variation in the policy and policy instrument

choices. At the second level, there is how these basic aims are or can be achieved. The way in

which these basic aims can be achieved varies among countries, depend, on their domestic

resource endowments and other policy choices. To achieve their energy policy goals

countries make decisions on a) the balance between domestic and imported sources, b) the

balance between different types of technology and, c) the balance between costs,

environmental and national security considerations. At the third level of energy policy,

countries choose among the various policy instruments at their disposal. These may include

diversification of their energy mix, avoiding over-reliance on a single fuel; diversification of

sources of imported energy; the exploitation of domestic energy resources (expansion of

nuclear energy); strategic reserves of oil on their own territories and promoting energy

15

efficiency and reducing the energy intensity of their economies (Umbach 2004).

Several factors explain the variation in the choice of policies and instruments among

countries at the second and the third level. There are, firstly, technical, natural and

economical constraints, such as the varying energy resources endowments, the structure of

the economy, the structure and size of consumption per capita, and the geographic location. A

second group of factors involve national peculiarities with regard to the organization of the

energy sector and the economy, such ad the institutional structure, traditions and culture, and

the balance of power between various national interest groups. Distinct institutional

structures in EU member states have led to market variations in the objectives and

instruments of energy policy in these countries (Clingendael 2004).

The External Energy Policy in consumer countries is relating to the security of supply of

needed energy. Energy security is one of the core elements of overall energy policy (Matláry

1997, EC 2006a). A standard definition of a security of supply is a flow of energy supply to

meet demand in a way and at a price level that does not disrupt the course of the economy in

an environmental sustainable manner. The concept is vast, multiform and covers the whole

physical and non physical supply chain. It involves technology, politics, economics,

investments planning and weather conditions (Constantini et al. 2007). This concept has also

important time and space dimensions. Chevalier and Corbeau (2005) define more precisely

this concept as:

− A reliable supply of energy. Choices both for primary energy sources and geographical

suppliers ought to be as plentiful as possible, within a competitive framework, in order to

reduce as far as possible the dependence on only one or two. Diversification in these two

areas – primary energy sources and suppliers – is considered by experts the key to

ensuring security of supply (Keppler 2007).

− A reliable transportation of supply. Transportation networks ought to be physically

available to qualified players, well maintained, and expanded as required, and should

offer as many competitive route options as far as possible.

− A reliable distribution and delivery of supply to the final customer. Energy must be

efficiently delivered to the final customer according to particular time and quality

standard without discrimination.

− At 'reasonable price' over a continuous period. In theory, 'reasonable' price means

marginal cost reflective. In practice the price range between 22 and 28 dollars per barrel,

16

maintained by OPEC between 1999 and 2003 was implicitly considered by most market

participants as 'reasonable', unlike the current price of 145 dollars per barrel (June 2008).

The time dimension of security of supply is very important:

In the short term a sudden unexpected disruption may happen in the supply of electricity,

natural gas, oil or coal. It can be caused by a variety of reasons: accidents, sabotage, strike

and other social demonstration, unusual climatic event. In the very short term, such

disruption may be alleviated by rapid repair, military or police intervention, use of available

storage, price adjustment. For electricity, a sudden disruption may be caused by an

insufficient available capacity in which case neither storage nor price may provide an

adjustment.

In the medium and long term, security of supply may be threatened by long lasting political

or social turmoil, lack of available resources but also because the needed investments in

productive capacity, transmission and storage were not made or delayed. Security of supply

has an important investment component (Chevalier and Corbeau 2005

The space dimension indicates that disruption in energy supply may have local, national, but

also international causes and implications, some components of supply are exogenous (world

oil price) and some are endogenous related for example to the organization of the energy

industries, to safety standards or storage obligations.

It is also important to be recalled that security of energy supply has a significant military

dimension. Energy supply is crucial for military forces which are heavily dependent on oil

products for their national and international activities (Chevalier and Corbeau 2005).

With regard to the EU, the European Commission in its Green Paper 'Towards a European

strategy for a security of energy supply' (EC 2000) point out four types of risk that can

disrupt the European energy security: first, physical risks, involving permanent or temporary

disruptions; second, economic risks, referring to erratic price fluctuations in markets; third,

social risks, involving the consequences of the former two types of disruption; and fourthly,

environmental risks, as a consequence of accidents or polluting emissions.

Consequently, the Commission in its Green Paper 'A European Strategy for Sustainable,

Competitive and Secure Energy' (EC 2006a) stress the role of a coherent common EEP as a

'essential to deliver sustainable, competitive and secure energy' (p. 14).

Since the EU is not a nation-state the tools to achieve the aims of this policy are necessary

different from the tools used by a state. As we can see further in the analysis, energy policy is

17

one of the fields in which there are major and persistent conflicts of interest between the

Commission, member governments, and economic groups (Matláry 1997). The next chapter

identifies a theoretical framework of the European Union integration in order to obtain a

useful theoretical model to analyse the EEP. Since this is an area where the EU institutions

enjoy no formal competence, I assume that the member state governments will remain at the

forefront of this process. In my analysis I adopt therefore Moravcsik's 'liberal

intergovernmentalist' approach to the European integration.

18

2: The Theoretical Approach to the European External Energy Policy

Introduction: theories of European Integration

In order to analyses the External Energy Policy of the European Union I utilize the theoretical

tools provide by the 'integration theory'. Contrary to several analysis on international energy

situation, I consider very important evaluate through the integration theory the level of

integration of the European EEP in order to avoid the conceptual trap of consider the

European Union an autonomous actor on the field of the energy security.

Integration theory is the theoretical wings of the EU studies. The emergence and

development of the institutions of the economic integration in Western Europe after the

Second World War provided a valuable site for both the application of existing theories and

the development of new perspectives. The theoretical accounts that emerged in the 1950s and

1960s offered rival though of how and why regimes of supranational governance developed

and how closer cooperation in relatively narrow, technical, economic spheres of life could

generate wider political integration among countries. (Rosamond 2000).

More often than not, integration theorists traded in the vocabulary of the discipline of

International Relations (IR). What seemed to be at stake in Europe were not just the

Westphalian nation-state, but also the interstate system that grew outwards from the territorial

way of organizing government. The great rows that developed within early IR were about the

relationships between the states system and war, or conversely, between 'post-national' forms

of organization and peace. For many intellectuals and politicians of the first part of the

twentieth century, the most important thing is to turn itself to the avoidance of war. So,

federalists contemplated the ways in which states could engineer some sort of mutual

constitutional settlement that involved the delegation of power upwards to a higher form of

government, thereby securing peace. Functionalists, on the other hand chastised the nation-

state as an irrational and value-laden concept. For them, the task was to secure the most

efficient method of administering to the real material needs of the people. Often human

welfare could be best served on a post-national, post-territorial basis. In the meantime, social

scientists were developing new investigative techniques as their disciplines became

increasingly professionalized. Armed with new ideas, scholars began to speculate about the

mechanisms by which communities form. Interesting analogies were draft between the

process of communication that helped historically to solidify national communities and the

19

growth of cross-border, international transactions as the century developed. The earliest

theories of European integration grew out of this intellectual context (Rosamond 2000).

Neofunctionalism grew out of the efforts of a small cluster of American political scientists to

apply Mitrany's functionalist thinking to a delimited international region (Rosamond 2006).

Using the experience of the European Coal and Steel Community (ECSC) and the European

Economic Community (ECC) as their starting point, neofunctionalists as Haas (1958) set

about the task of describing how the deliberate merger of economic activity in particular

economic sectors across borders could generate wider economic integration. They also

sought to explain how this economic integration would produce political integration and how

the creation of supranational institutions could accelerate these processes. These claims came

under serious scrutiny from writers eager to point out that reports of the death of the nation-

state had been somewhat exaggerated. Indeed, the evidence of the West European politics in

the 1960s illustrated some rather profound truths about the persistence and continued

dominance of national interests and international exchange. The resultant conversation

between neofunctionalists and intergovernmentalists is usually presented as the main ongoing

schism in the integration theory literature since the mid-1060s (Pollack 2005). In many ways

they present utter alternatives. In terms of identifying key actors, intergovernmentalists

emphasize the centrality of national executives whereas neofunctionalists point to

supranational institutions such as the Commission as well as national and transnational

interest organizations. Neo-functionalism is a theory of change and transformation, whereas

intergovernmentalist emphasize international politics as usual, albeit under new conditions

(Rosamond 2006, Moravcsik 2006). While there is still much to say in this particular

dialogue, other writers have begun to think about the EU in different ways. The fate of the

nation-state or the issue of 'more versus less integration' was not only issue at stake. For

many, the Union constitutes a polity – a venue where interested actors pursue their goals and

where authoritative actors deliver policy outputs. This may be a radically new form of

political system or simply a polity like any other, but from this perspective the most

appropriate theoretical tools may not be those calibrated to predict the supposed destination

of the integration project (Rosamond 2000).

As pointed by Rosamond (2000) in his useful account of theories of European integration at

present, there are at least four locations of investigation in the study of European Union. The

first of these approaches would be to understand the European Union as an international

20

organization. The literature on international organizations (IOs) is substantial and ever

developing, but IOs are traditionally thought of as intergovernmental bodies designed in the

explicit context of converging state preferences or common interests. For traditional liberal

theorists of international relations, IOs constitute one of the principal means through which

interstate harmony and, therefore, lasting peace can be secured. Quite a lot of the theoretical

work about EU draws on this tradition, but the EU is evidently rather more than a

straightforward instance of an intergovernmental organization (Rosamond 2000).

The second treats European integration as an instance of 'regionalism' in the global political

economy. The ultimate aim is to offer reflections upon and possibly generalizations about the

tendency of groups of territorially-adjacent states to gather into blocs. Inquiry of this sort can

be motivated by a number of guiding questions, e.g. is it possible make comparisons between

the EU and other regional grouping such as the North American Free Trade Agreement

(NAFTA), Asian Pacific Economic Cooperation (APEC) or Mercosur? Do global economic

and political pressures force or enable the creation of such organizations? How do variations

in levels of institutionalization in regional blocs affects the interests and preferences of

actors? Do regional agreements and institutions form a uniform threat to the nation-state and

the international system of state? The pursuit of questions like these explain why many

specialists in International Relations and International Political Economy regard the EU as

valuable studying (Rosamond 2000).

The third broad approach aims to treat the EU as useful location for the study of policy-

making dynamics. Here the EU is an instance of a complex policy system in which

perspectives on policy-making developed largely in the context of national polities can be put

to the test. The focus is turned to the interaction of interested actors and the process of agenda

setting, policy formulation, legislation, interest intermediation and policy implementation.

The analysis of these processes raises questions about the locations of power and the

relationship between formal and informal policy processes. From this point of view, the

development of the EU provides an opportunity to consider policy networks and the role of

institutions in conditions where national, subnational and supranational politics overlap

(Rosamond 2000).

The final approach is less inclined to treat the EU and European integration as an instance of

anything other than itself. Such an approach would regard the EU as a sui generis

phenomenon. These writers consider that there is only one EU and European integration

cannot be a theoretical testing site for the elaboration of wider generalizations. The

21

inclination rather would be to treat the EU as an historically-rooted phenomenon, arising in

utterly specific conditions and therefore without meaningful historical precedent or

contemporary parallel (Rosamond 2000).

In the present analysis of the European External Energy Policy, I focus the location of

investigation on the approach that aims to treat the EU as location for the study of policy-

making. In my analysis I will answer to the questions about the location of power and the

relationship between formal and informal external energy policy processes. Although EU

does not require a sui generis theory, it is a unique institution and political phenomenon.

There are peculiar and substantial differences between the EU and other International

Organizations. The relations among EU Member States are unique and unique is also the

institutional co-ordination within the EU, as evidenced by the depth of its claimed goals, the

richness of the networks it sustain, and, above all, the solidity of its supranational legal

identity. For that reason, even if I have chosen an approach based on a neo-realistic though to

describe the present international energy relations system, I consider scientifically correct to

utilize a different theoretical approach to analyses the European integration and in particular

the EEP. In my analysis of the EEP I will utilize the Moravcsik's 'liberal intergovernmentalist'

approach that clearly relies on the theories of regimes. Moreover, given the fact that liberal

intergovernmentalist model is more useful to explain the process of European integration,

rather than EU policy-making, I will integrate Moravcsik's approach with the multi-level

governance analysis. The MLG analysis supplies some theoretical instruments that are useful

in the analysis of the EEP.

The liberal intergovernmentalist approach

European integration theories attempt to provide a conceptual model upon which the EC/EU

integration process can be analyzed. Each theory is reductive and essentialist to different

degrees, relying on different set of assumptions respectively. After a reading of different

Integration theories (Haas 1968, Hoffmann 1966, Rosamond 2000, Pollack 2005, Rosamond

2006, Schmitter 2006, Moravcsik 2006), in order to examine the European External Energy

policy I adopt in my thesis the 'liberal intergovernmentalist' approach because I consider it

the more useful to demonstrate the elusive character of a common external energy policy.

Rather than resurrecting neo-functionalism, the approach introduced by Andrew Moravcsik

22

in the 1990s takes seriously the self-criticisms of neo-functionalists. Such theory suggest that

the EU is best seen as a peculiar international regime for policy co-ordination, the substantive

and institutional development of which may be explained through the sequential analysis of

national preference formation and intergovernmental strategic interaction. Liberal

intergovernmentalism builds on an earlier approach, 'intergovernmental institutionalism', by

refining its theory of interstate bargaining and institutional compliance, and by adding an

explicit theory of national preference formation grounded in liberal theories of international

interdependence (Moravcsik 1991).

At the core of liberal intergovernmentalism are three essential elements: the assumption of

rational state behavior, a liberal theory of national preference formation, and an

intergovernmentalist analysis of interstate negotiation. The assumption of rational state

behavior provides a general framework of analysis, within the costs and benefits of economic

interdependence are the primary determinants of national preferences, while the relative

intensity of national preferences, the existence of alternative coalitions, and the opportunity

for issue linkages provide the basis for an intergovernmental analysis of the resolution of

distributional conflicts among governments. Regime theory is employed as a starting point

for an analysis of conditions under which governments will delegate powers to international

institutions (Moravcsik 1993). International regimes promulgate principles, norms, rules and

decision-making procedures around which actor expectations converge in given issue-areas,

through which 'the actions of separate individuals or organizations – which are not in pre-

existing harmony – are brought into conformity with one another through a process of

negotiation' (Keohane 1984 p.51). Regime theory provides a plausible starting point for

analysis – a set of common conceptual and theoretical tools that con help structure

comparisons with other international organizations, as well as internal comparisons among

different cases of EU policy-making. At the same time, however, contemporary regime

analysis requires refinements to take account of the unique institutional aspects of policy co-

ordination within the EU (Keohane and Hoffmann 1991).

In the liberal intergovernmentalist approach state action at any particular moment is assumed

to be minimally rational, in that it is purposively directed toward the achievement of a set of a

consistently ordered goals or objectives. Governments evaluate alternative courses of action

on the basis of a utility function. The liberal intergovernmentalist approach departs

decisively, however, from those theories in International Relations, most notably realist and

neo-realist approaches, which treat states as 'billiard balls' or 'black boxes' with fixed

23

preferences for wealth, security or power. Instead, governments are assumed to act

purposively in the international arena, but on the basis of goals that are defined domestically.

Following liberal theory of IR, which focus on state-society relations, the foreign policy

goals of nationals governments are viewed as varying in response shifting pressure from

domestic social group, whose preferences are aggregated through political institutions.

National interests are, therefore, neither invariant nor unimportant, but emerge through

domestic political conflict as societal groups compete for political influence, national and

transnational coalition form, and new policy alternatives are recognized by governments. An

understanding of domestic politics is a precondition for, not a supplement to, the analysis of

the strategic interaction among states (Moravcsik 1991).

The model of rational state behavior on the basis of domestically-constrained preferences

implies that international conflict and co-operation can be modelled as process that takes

places in two successive stages: governments first define a set of interest, than bargain among

themselves in an effort to realize those interests.

This conception of rationality suggests that parsimonious explanations of international

conflict or co-operation can be constructed by employing two types of theory sequentially: a

theory of national preference formation and a theory of interstate strategic interaction.

Unicausal explanation of European integration, which seek to isolate either demand or supply

are at the best incomplete and at the worst misleading (Moravcsik 1993, Moravcsik 2006).

Indeed, the liberal intergovernmentalist model is composed by three stages:

− In the first or liberal stage of the model, national chiefs of governments aggregate the

interest of their domestic constituencies, as well as their own interest, and articulate

their respective national preferences towards the EU. National preferences are

complex, reflecting the distinctive economics, parties, and institutions of each

member state, but they are determined domestically, not shaped by participation in the

EU, as some neo-functionalists had proposed (Pollack 2005). Societal groups

articulate preferences; governments aggregate them. The relationship between society

and the governments is assumed to be one of principal-agent; societal principals

delegate power to (or otherwise constrain) governmental agents. The primary interest

of governments is to maintain themselves in office; in democratic societies, this

requires the support of a coalition of domestic voters, parties, interest groups and

bureaucracies, whose views are transmitted, directly or indirectly, through domestic

24

institutions and practices of political representation. Through this process emerges the

set of national interest or goals that states bring to international negotiations

(Moravcsik 1993). The interest of societal groups are not always sharply defined.

Where societal pressure is ambiguous or divided, governments acquire a range of

discretion. The nature of this constraint varies with the strength and intensity of

pressure from social groups. Sometimes, the principal-agent relationship between

social pressure and state policies is close, sometimes, 'agency slack' in the relationship

permits rational governments to practice greater discretion (Moravcsik 1993). The

liberal focus on domestic interests and state-society relations is consistent with a

number of plausible motivations for governments to support (or oppose) European

integration. These include federalist (or nationalist) beliefs, national security interests

and economic motivations. Here in the present analysis the focus is on motivations

that stem from energy security concerns and the ways in which they constrain

governmental preferences in European negotiation.

− In the second or intergovernmental stage, national governments bring their

preferences to the bargaining table at the EU level, where agreements reflect the

relative power of each member state, and where supranational organisation such as

the Commission exert little or no influence over policy outcomes. By contrast with

neo-functionalists, who emphasize the entrepreneurial and brokering roles of the

Commission and the upgrading of the common interest among member states in the

Council, liberal intergovernmentalist though emphasizes the bargaining among

member states and the importance of bargaining power, package deals, and 'side

payments' as determinants of intergovernmental bargains on the most important

decisions of the European Union (Pollack 2005). The following three assumptions

about interstate bargaining offer a plausible starting point for analysis of EU decision-

making. First, intergovernmental co-operation in the EU is voluntary, in the sense that

neither military coercion nor economic sanctions are threatened or deployed to force

agreement. Thus, fundamental decision in the EU can be viewed as taking place in a

non-coercive unanimity voting system. Second, the environment in which EU

governments bargaining is relatively information-rich. National negotiators are able to

communicate at low cost and possess information about the preferences and

opportunities facing their foreign counterparts, as well as the technical implications of

25

policies that are of the greatest interest to them. Third, the transaction costs of

intergovernmental bargaining are low. Negotiations within the EU take place over a

protracted period of time, during which member governments can extend numerous

offers and counter-offers at relatively little cost. Side-payments and linkages can be

made (Moravcsik 1993). EU can be viewed as a 'co-operative game in which the level

of co-operation reflects patterns in the preferences of national governments' (ibid. p.

499). Yet, relative power of the states is important, even in this relative benign

environment. Bargaining strategic advantage stems from asymmetries in the relative

intensity of national preferences. The more intensely governments desire agreement,

the more concessions and the greater effort they will expend to achieve it. The greater

the potential gains for a government from co-operation, as compared to its best

alternative policy, the less risk of non-agreement it is willing to assume and the

weaker its bargaining power over specific terms of agreement (Moravcsik 1993).

− Third and finally, liberal intergovernmentalist approach puts forward a rational choice

theory of institutional choice arguing that EU member states adopt particular EU

institution – pooling sovereignty through qualified majority voting, or delegating

sovereignty to supranational actors like the Commission and the Court – in order to

increase the credibility of their mutual commitments. In this approach, sovereign

states seeking to cooperate among themselves invariably face a strong temptation to

cheat or defect from their agreements. Pooling and delegating sovereignty through

international organizations allows states to commit themselves credibly to their

mutual promises, by monitoring state compliance with international agreements, such

as those have constituted the EC/EU (Pollack 2005). In the intergovernmental view,

the unique institutional structure of the EU is acceptable to national governments only

insofar as it strengthen their control over domestic affairs, permitting them to attain

goals otherwise unachievable. European institution strengthen the power of

governments in two ways. First, they increase the efficiency of interstate bargaining.

The existence of a common negotiation forum, decision-making procedures and

keeping agreements, thereby making possible a grater range of co-operative

agreements. This explanation is based upon the regime theory, which focuses on the

role of regimes in reducing transaction costs (Keohane 1984). However, in order to

explain the unique level of institutionalization found in the EU, this body of theory

26

must be extended to include the delegation and pooling of sovereignty. Second, EU

institution strengthen the autonomy of national political leaders vis-à-vis

particularistic social groups within their domestic polity. By augmenting the

legitimacy and credibility of common policies, and by strengthening domestic

agenda-setting power, the EU structures a 'two level game' (Putnam 1988) enhances

the autonomy and initiative of national political leaders (Moravcsik 1993).

The multi-level governance analysis

The 'liberal intergovernmentalism' approach is not exclusive of the 'multi-level governance'

(MLG) paradigm (Moravcsik 2006). Far from denying that the EU is a multi-level

governance institution, 'liberal intergovernmentalism' dictates that it must be such a

supranational institution. Liberal intergovernmentalist model of interstate negotiations is a

three-state process of national preference formation, interstate bargaining, and institutional

delegation. In the third step, governments delegate to EU institutions as credible commitment

mechanism, within which further decision are taken. This in turn implies that there is a

substantial uncertainty about precisely what decision will be taken within the treaty

arrangements, otherwise governments would simply negotiate the subsequent agreements ex

ante. These institutions empower national governments to outvote their counterparts; social

and bureaucratic actors to act as litigants, lobbyist or representatives; European citizens to

vote for elected representatives; and supranational actors to render decisions. If institutions

were unimportant, then governments would not need to negotiate (Moravcsik 2006).

The emphasis on governance takes and debates about authority away from the zero-sum

notions associated with discourses of sovereignty. The normal politics of sovereignty is,

therefore, a politics of absolutes. Theoretical treatments that engage this notion indicates that

the sovereignty is own by the state or not. Analysts associated with multi-level governance

do not maintain that the states are unimportant. Indeed, MLG is in agreement with a rather

more pluralistic view of the state as an arena in which different agendas, ideas and interests

are contested (Rosamond 2000). The multi-level governance is useful when the analysis is

more oriented about comparative politics and policy analysis. Indeed, the European Union is

not a precise analogue for the processes of politics within nation-state. The EU may be read

as a hybrid form: neither political system nor international organization, but a sui generis

phenomenon. The multi-level governance literature seeks to avoid two traps: neo-realistic

27

state-centrism and the treatment of the EU as only operating at the European level in the

institutional arena of Brussels. MLG analysis permits to consider that the EU as a polity

where authority is dispersed between levels of governance and amongst actors, and where

there are significant sectorial variations in governance patterns (Rosamond 2000). The multi-

level governance analysis incorporate both vertical and horizontal dimensions. 'Multi-level'

refers to the increased interdependence of governments operating at different territorial

levels, while 'governance' points the growing interdependence between governmental and

non-governmental actors at various territorial level (Bache and Flinders 2004). With regard to

the vertical aspect, MLG authors seek to delineate and explain the substantial variation in the

empowerment of supranational and subnational actors in the various member states. MLG

scholars describe the shift of authority from national governments to the European arena and

to subnational, regional governments in a substantial number of states. It remains

controversial whether such devolution was driven wholly or in part by European integration

or by purely national considerations. Other writers have focused on the horizontal or network

aspects of European integration, drawing on network theory to describe and explain the

working of transnational and transgovernmental networks that can vary from the relatively

closed 'policy communities' of public and private actors in areas such as research and

technological development to the more open and porous 'issue networks' prevailing in areas

such as environmental regulation. The openness and interdependence of these networks, it is

argued, determine both the relative influence of various actors and the substantive content of

EU policies, particularly in the early stage, when the Commission drafts policies in

consultation with various public and private actors (Peterson 2004; Pollack 2005). This

network of form of governance, moreover , has been accentuated by the creation of formal

and informal networks of national regulators, in areas such as competition policy, utilities

regulation, and financial regulation. By contrast with most students of legislative politics,

who emphasize the importance of formal rules in shaping actors' behaviour and polity

outcomes, MLG scholars emphasize the informal politics of the Union, in which such

networks of private and public actors try to determine the broad contours of the policies that

are eventually brought before the Council and the European Parliament for their formal

adoption (Pollack 2005).

In a conclusion, according to this model the first hypothesis is that the only significant actors

of the EU external energy policy are governments. Furthermore it is assumed that their

28

interest are formed prior to decision-making at the EU level. Hence the second hypothesis:

all external energy policy-making outcomes in the EU process can be traced to prior

governments interests, mainly energy security interests. The counterhypotheses to these are

that institutional EU actors matter independently, that interests may be formed during the

policy-making process and not prior to it. With regard to the MLG analysis, is assumed here

that horizontal and vertical actors different than governments matter, but national

governments utilize EU institutions to outvote these actors and to maintain the primary role

in shaping of the external energy policy-making.

29

3: Energy Policies in EU Countries

Introduction: A European Overview

This chapter look at the energy sectors of various EU states in order to provide a basis for the

subsequent analysis of policy-making at the EU level. According to the analytical model

proposed in the previous chapter, it was hypnotized that there are national governments at the

forefront of the EEP process. It was also hypnotized that the outcomes of the EEp can be

traced to prior energy security of national governments. In order to obtain some empirical

evidences to demonstrate these hypothesis, I consider useful to review the structural

parmaters of a number of EU member states because it was assumed that national situations

are determinant to the definition of the common EEP. The parameters of energy sector in the

EU and in four states – Germany, France, the United Kingdom, Poland – are here explored,

as well the organization of the energy sectors, the role of interest groups and government

external energy policy.

In 2006 oil and natural gas accounted respectively for 36.9 per cent and 24 per cent of EU

member states grass inland consumption, followed by solid fuels and nuclear power, which

accounted for 17.8 per cent and 14.0 per cent respectively. The share of renewables stood at

7.1 per cent. Import dependency for the same period amounted to 50.5 per cent of which 83.6

per cent for oil, 54.5 for gas and 41.2 per cent for solid fuels (EC 2008). The dominant fuel in

the European energy mix is oil. The Persian Gulf region is vital for the security of EU oil

supply and a disruption or a supply shortfall is very hard to compensate from other sources.

Over the past decade the gas increased its share in the overall EU energy consumption,

mainly at the expense of coal. With the Eastern enlargement, UE energy dependency has

been more important. Natural gas imports, for instance, may arise from 60 per cent to 90 per

cent and oil from 90 per cent to 94 per cent (Umbach 2007).

However, the analysis of the energy mix of each UE member state shows clearly the

heterogeneous character of each national situations, i.e. the importance of the nuclear sector

in France, natural gas in United Kingdom and in the Netherlands, and coal in Germany and

Greece. There has always been a marked difference between the political interest of energy-

importing and energy-producing countries. Importing countries have the problems of

securing reliable supplies, and share a common interest in a policy that will safeguard those

30

supplies. Producing countries typically have different interests: they want the freedom to

export as they consider profitable, and therefore typically seek to avoid common policies at

the international level (Clingendael 2004). Producers sometimes form alliances, as in OPEC,

and international cartel formed to control oil prices, but within Europe the is no formal

cooperation of this type. Importers cooperate within the IEA, which provides an emergency

oil-sharing mechanism (Furfari 2007). Norway and the United Kingdom are the main

producers of oil in Europe; Norway and the Netherlands are major suppliers of gas to the

Continent. Oil is sold on the world market and thus there are no direct links between

producer and importer. For gas, however, there is the physical link of pipelines between gas

field and user. Three non-member states are major gas exporter to the EU: Norway, Russia

and Algeria (Matláry 1997). National energy policies have clearly dominated European

energy policy since the Second World War. An understanding of the role of national

governments in this area is therefore essential to any analysis of EU energy policy. As early

mentioned, there are basic structural differences between EU countries with regard to energy

and these structural parameters place a large constraints on policy-makers. Energy is a field

where natural resources are very influent in determining a state’s interests and possibilities,

but beyond this there are various political and economic choice possibilities for policy-

makers (Helm 2004).

In the following, the analysis shows the structural parameters of given states’ energy sector:

their energy mix, indigenous resources, supply dependence and import needs. But I am also

interested in the political structure of the energy sector – the role of the state and economic

actors, the relationship between the governments and energy companies, and so on.

Furthermore, I am particularly interested in the analysis of the energy security and the

national security of supply policies and considerations. Through a multi-level governance

analysis, I assumed that horizontal and vertical economic and political actors matter in the

definition of the national external energy policy.

The reason why this types of information is important in my analysis of the EU external

energy policy is that governments will probably try to use the EU arena in order to achieve

their domestic-shaped objective (Moravcsik 2006). As Putnam (1988) has pointed out,

governments may invoke rules from European institutions to justify domestic policy

measures, arguing that the governments is bound to implements a certain policy despite

subnational opposition.

31

Because an in-depth study of all the EU member state is beyond the scope of this thesis, in

the following I focus my attention to four EU member – Germany, France, the United

Kingdom and Poland – because, given their economic and political differences, they can

provide a comprehensive picture of the European energy situation. These differences are

caused by different national energy mix, different degree of domestic energy resources

availability and different degree of state intervention in the economic system and in the

national policy of energy security. Moreover, I choose these states also because they can

provide examples of different approaches vis-à-vis the European Union: beyond France and

Germany, EU founders, I choose the United Kingdom and Poland as examples of states that

joined the Union in different years (UK in 1973 and Poland in 2004) and with peculiar

attitudes from founder states in relation to the Union.

Germany

Energy parameters

Germany is a large importer, a substantial producer and an transporter on energy in the EU. It

energy consumption is 349 mtoe in 2006. The main sources of German energy supply are oil

products and natural gas. While natural gas accounts for 22.7 per cent of German energy

consumption, the percentage of oil products is 35.6 per cent. The fossil fuels account for 23.5

per cent, while nuclear sector for 12.3 per cent (adapted from EC 2008). Germany depends

on oil imports to a vary high degree (97 per cent). Imports from Russia are crucial for oil and

gas, covering 33.7 per cent of oil imports. The situation is similar for gas, Germany imports

gas at 80 per cent of its consumption and it relies on Russian gas imports for 39.1 per cent

(Sander 2007).

Germany maintains a significant coal-based electricity generation capacity to avoid over

dependence on imported energies. A coal-fired plan that emits no greenhouse gases is

schedule to enter into operation in 2008 (Marcelis and Maurer 2006).

Energy actors and policies

The is no uniform energy sector in Germany in terms of organization and government

32

involvements. The role of the state in the coal and nuclear sector is a major one, whereas the

oil sector is governed by free-market rules (Matláry 1997). Energy policy is determined not

only by government but also by the Länder, since Germany is a federal political system.

There is a decentralised structure of decision-making with specific competences at various

level, as well as sharp differences in organisation between the energy forms (Bulmer and

Paterson 1996).

Germany is the key transporter of Russian gas through major pipelines to other parts of

Europe. The gas pipelines are privately owned, including the ones that transport gas from

third countries through Germany. One of the main economic actors in this field is E.ON

Rurhgas (former Rurhgas, in March 2003 included in to E.ON). E.ON Rurhgas is the biggest

provider of natural gas in Germany. The company contributes to the reduction of the German

vulnerability in crisis-situation through its 5.2 billion cubic metres of gas stock. It is

important to note, therefore, that the company receives all of its gas from Russia, mainly

from Gazprom. This relation of dependence is framed by the involvement of the company in

the governing body of its main supplier. For example the E.ON Rurhgas CEO is elected to

the boards of directors of Gazprom since 2000. He is the only representative of a non-Russian

company within the structure of the gas-monopolist (Sander 2007). A second major private

actor in this field is WINGAS. The company was founded with the aim of circumventing the

monopoly of Rurhgas by establishing direct import relations for natural gas. Like its

competitor, the company looks mainly to Russia for its gas imports.

In the oil sector too, private companies dominate and there is no government intervention or

policies (Matláry 1997). Concerning the external dimension of energy policy, both in oil and

gas sector, the central actors are private companies with political actors only in a supportive

role. The federal government is supportive to any involvement of private actors into Russian

market and encourages any action in this direction. Within the German government, the main

responsibility for the external energy policy has traditionally been located within the Ministry

for Economic Affairs (BMWI). Since the beginning of the Merkel’s governing coalition, the

political leadership in the overall field of energy policy is claimed by the Ministry for

Environmental Protection (BMU). This competition between the two bureaucracies and their

leading representatives correspond with a structural cleavage within German energy policy.

Nevertheless, the competencies in the international dimension of energy policy are still firmly

concentrated within the BMWI with the BMU focus on energy efficiency and renewable

energies. The Foreign Ministry (Auswärtiges Amt) defines its task as the creation and support

33

of stable international economic relational and positive international conditions for German

companies (Sander 2007)

The nuclear sector in Germany is important but very controversial. There are 21 nuclear

plants, all in West Länder, the ones in the new Länder having been shut down for safety

reasons. The Schröder’s governing coalition launched a gradual phase-out under which

Germany would shut down all its nuclear reactors by 2020. The two current ruling parties,

the Christian Democrats and the Social Democrats, are, however, divided over nuclear

energy, the CDU/CSU would like to see the issue revisited, but the departure from the use of

nuclear is seen as one of the central achievement of the SPD. So far, Chancellor Merkel has

chosen not to re-ignite the debate. This opting-out of the nuclear option and the decrease of

coal production for environmental reasons make Germany even and even dependent on

imports of coal and natural gas (Marcelis and Maurer 2006).

In summary, the role of private actors in German energy policy and energy security remains

crucial. Economic actors are closely involved in the Germany decision-making process in the

field of energy policy. The companies play and important role not only in the definition but

also in the implementation of energy policy. The government is not an autonomous actors in

the German energy policy, because of the decentralized structure of the political system, the

lack of national energy policy and the lack of uniformity in the organization of the sector.

(Matláry 1997, Sander 2007).

France

Energy parameters

France is a net importer of energy. It energy consumption is 273 mtoe in 2006. The main

sources of French energy supply are oil products and nuclear. While oil products account for

33.8 per cent, nuclear sector account for 42.5 per cent. The fossil fuels count for 4.8 per cent,

while natural gas for 14.5 per cent. France imports 95 per cent of its oil, as well as 95 per

cent of gas (adapted from EC 2008). A difference with other EU member states is that

France’s import requirements are provided not only by Russia: 51 per cent of oil imports

come from the Middle East and North Africa, and 32 per cent from the North Sea, with only

23 per cent from Russian Federation (IEA 2007). The situation for gas is similar: France has

diversified its gas imports. They come mostly by pipeline from Norway (28 percent), Russia

34

(21 per cent), Algeria (12 per cent), and the Netherlands (19 per cent). About 25 per cent of

France’s natural gas supply is Liquefied Natural Gas (LNG), mostly from Algeria with minor

amounts from Nigeria and Egypt (IEA 2007).

Fear of excessive dependence on nay one import source has therefore always rank highly in

France’s energy concerns. The development of nuclear energy has been the logical response

to this situation. Nuclear energy distinguishes France from the rest of EU member states:

nuclear generates now more than three quarters of France’s electricity (Marcelis and Maurer

2006)

Energy actors and policies

In France, the history of energy policy has always been characterized by a very strong

intervention of the state. Public firms, or controlled by the state, allowed the development of

the French energy sector and played a major role in its modernization, in the promotion of

independence and in security of supply. The very French concept of national champion is

well exemplified in state owned Électricité de France (EDF) and GDF Suez.

EDF is the main French electricity distribution company. It was founded in 1946 as a result

of the nationalization of several electricity produces, transporters and distributors. Until the

2004 it was a government corporation, but it is now a limited-liability corporation under

private law (société anonyme). The French government partially floated shares of the

company, although it retains almost 85 per cent ownership (Bennhold 2005). EDF is one of

the world’s largest producers of electricity. In 2003, it produced 22 per cent of the European

Union electricity, primarily from nuclear power (www.edf.com).

GDF Suez is a company active in natural gas, renewable energy and now also in electricity

generation and distribution . The company was formed by the merger of Gaz de France and

Suez in July 2008. Gaz de France was the gas monopolist for France. The government

continued to hold 80 per cent stake until the merger with Suez. At present, the government

holds approximately 35.7 per cent of the company (IHT 2008).

The oil companies have been privatised as part of the government’s economic strategy. In

early 1992 it had reduced its participation in Total, from 35 to 5 per cent. In 1994 government

sold most of its share in Elf. In 1998 Total acquired Belgian Fina and in 1999 also its

competitor Elf. The merger with Elf made Total a ‘national champion’ and the fourth largest

oil company in the world (de Lestrange et al. 2005)

35

As mentioned early, French government intervene strongly in the definition of the national

energy policy. At present, French policy is defined by the Energy Act of 2005 (Loi n°2005-

781 du 13 juillet 2005). (Meritet 2007). The government produced a White Paper about

energy policy that caused a huge debate among the French society and caused several

comments and contribution from energy actors, trade union, political parties and associations.

Finally, the Energy Act was presented and discussed in Parliament in 2004, and later

approved in 2005.

With regard to the security of supply, the governments government takes measures to ensure

the long-term security of energy supplies. The Energy Act indicate the intention of

government to put in place various instruments to regulate the market so as to ensure the

security of electricity supply :

- Multiannual objective contracts signed with the operator of the public distribution

system (RTE) and with the companies that fulfil public service missions, i.e.

Électricité de France (EDF), Gaz de France (GDF) and the other distributors;

- “ Multiannual programming of investment in production” (PPI) which defines the

objectives in terms of breakdown of production capacities by primary energy sources

and by production technique and geographical area (Loi n°2005-781).

To reduce France's energy dependence, it has been decided to promote energy saving and

invest in nuclear electricity generation and renewable energies. These energies are considered

by French governments to provide a reliable long-term supply without greenhouse gas

emissions, and nuclear energy ensures stable electricity prices. For that reason, in 2004 it was

decided to commence construction of a demonstration model EPR (European Pressurized

Water Reactor), not only in order to have the option of eventually using this technology to

replace the present generating facilities, but also to support these facilities and maintain

industrial capacity whilst leveraging exports ( www.industrie.gouv.fr).

In summary, the role of government in French energy policy and energy security remains

very determinant. Indeed, the main debate in France is the privatisation of the energy sector:

there is no agreement on how far privatisation should go. The state’s share of French energy

companies is still large and there has been very strong opposition to privatisation by the

companies themselves and trade union (Matláry 1997). Security of supply is of course

another major issue and France needs to diversify its energy mix, but finally it is less

dependent on energy imports than other member states because its strong nuclear sector.

36

United Kingdom

Energy parameters

The United Kingdom is one of the major European energy-producing and exporting country,

together with the Netherlands and Denmark. Its energy consumption is 230 mtoe in 2006. the

main sources of British energy supply are oil products and natural gas. While oil products

account for 35.8 per cent, natural gas account for 35.2 per cent of the total consumption. The

fossil fuels count for 17.9 per cent and nuclear sector represents 8.5 per cent (adapted from

EC 2008). The UK became in 2005 a net importer of crude oil an annual volume basis for the

first time since 1992. However, net exports of refined oil products means that the UK

remained a net exporter of overall oil (crude, feedstock, and refined products) (IEA 2007).

The UK exports nearly all of its oil to the EU and to Canada, Norway and the United States.

However, oil production is expected to decline in the next few years, despite discoveries in

the North Sea (Marcelis and Maurer 2006). The fields will soon be depleted and the UK will

have to import. Gas production from the North Sea has declined and the UK now imports

around 10 per cent of its annual needs of gas (ibid.).

Energy actors and policies

Between 1980 and 2000, the British government made dramatic changes to national energy

sector in line with its overall economic policy. The state-owned fuel industries were

privatised, starting with oil and gas and continuing with electricity and coal. However, this

privatisation programme was not specific to the energy sector, but was a part of the general

privatisation programme of the Conservative government (Nelson 1993). Gradually the

energy industries were privatised (although in fact the Labour Government had begun the

process in the late 1970s by selling some of BP). British Gas was sold in 1986, and the rest of

BP in 1987, followed by the main part of the electricity industry in 1990 and 1991, with

British Coal and Nuclear Electric following in the mid-1990s. By the end of the 1990s

virtually all the energy sector was in private hands, save for the more technological end of the

nuclear industry (BNFL) (Helm 2004).

The government still regulates the market to a certain extend through licensing,

37

environmental and safety controls as well as through fiscal measures. In general, the

government intervenes only to make the market function better, for instance to create the

conditions for competition in the gas and electricity sectors. It has not interest in retaining

control of the energy sector by indirect means (Matláry 1997).

With regard to the security of supply, the lack of investment of the 1980s and 1990s revealed

that the privatisation approach had focused overwhelmingly on costs rather than on

investment in infrastructure. The UK was to experience in the first half of the 2000s a series

of shocks in terms of security of supply. These were both in infrastructure (power cuts) and

in tightening gas supplies, as the lack of storage and the complex interface between

continental long-term contracts and the British spot-driven market limited physical gas

supplies at points of capacity constraint. The gas effect was particularly important given the

dash-for-gas power station investments in the 1990s. As early mentioned, much of the North

Sea gas sources are been depleted (in oil too). The UK had depleted its oil and gas reserves at

the time period when prices were at an historical low and as fast as possible, because the idea

was that the value of these reserves would be replaces by international financial market

investments (Kemp and Stephen 2007). The UK did not preserve its resources, it did not set

up a state fund for investing the proceeds limiting itself only to taxation and levy instruments

(Helm 2004).

In summary the British government pursued a strategy of general privatisation despite

opposition from the energy sector between 1980s and 2000s. It is promoting competition in

this sector, having divested the economy of many public responsibility. But putting

competition and economic liberalisation over security of supply concerns, the governments

made the British system ill-prepared for the new investments required in the energy sector

and for the increasing dependence the UK on oil and gas imports. The security of supply is

now a major issue of the British debate and the government want to be an active actor (DTI

2006) but the lack of policy instruments creates some problems of efficacy.

Poland

Energy parameters

Poland is a large importer on energy. It energy consumption is 98 mtoe in 2006. The main

sources of Polish energy supply are coal and oil products. While coal accounts for 58.2 per

38

cent of Polish energy consumption, oil products and gas account for 24.7 per cent and 12.6

per cent respectively. At present, Poland does not have a nuclear sector (adapted from EC

2008). Domestic sources of primary energy dominate total supply, 97 per cent of electricity in

Poland is produced from fossil fuels. However, virtually all consumed oil and 70 per cent of

the natural gas are imported (Jankowski et al. 2002). With regards to oil, Poland relies

principally on one major source, Russia that accounts fro 89 per cent of oil imports. Poland

relies on Russian gas for 61 per cent of total gas imports (Marcelis and Maurer 2006).

Energy actors and policies

The transformation process of converting the Polish economy into a market-oriented

economy began in the early of 1990s. One of the last sectors to undergo this transformation is

the energy sector. A detailed schedule of action, taken to liberalise the energy market, was

approved in December 1999 by the Ministry of Economy. The main aims was giving

permission to trade in energy with many companies, i.e. energy producers, distribution

companies, final consumers and wholesalers. Official prices were replaced with the so-called

‘‘tariff’’ and contract prices. Any tariff-fixed price should let the producer gain an income,

which would both cover the operating costs and modernization expenses, and would be

acceptable to the final consumer. To protect the particular consumers against high tariff-

prices, the levels of prices were verified and approved by the Energy Regulatory Authority

(URE). Therefore, the tariff price has become the base for fixing the price for the final

consumer, for the Polish Power Grid Company (Transmitting System Operator) and the heat-

and-power generating plants, whereas the price agreed by direct bilateral contracts between

the energy producers and the distributing companies is settled by negotiation (Kulczycka and

Lipinska 2003). However, it is not possible to consider the energy sector in Poland a modern

and market-oriented sector. The Polish electricity sector consists on 45 public plants and they

are mostly state owned companies. The Polish Power Grid Company monopolises high-

voltage transmission service. The district heat sector is more decentralized and is

characterised by companies owned generally by local authorities. The majority of industrial

plants in Poland receive their heat and electricity supply from their own boilers and

generators. The Polish coal sector is organized in four coal companies, each of them owning

and managing a group of hard coal mines. It is now undergoing a restructuring process aimed

at reducing costs and capacity (Kudelko 2006).

39

One of the main actors in the Polish energy system is Orlen, a oil refiner and petrol retailer

company. Orlen is the largest oil company in Poland and in Central Europe. The firm was

created by the merger of Poland’s two petroleum oil monopolist in 1999, when both firm

were partially privatised. The company holds three refiner in Poland, three in Czech Republic

and one in Lithuania. The majority of refined oil comes from Russia. At present, the

company’s capital is partially floated, and the Polish government continues to hold 27.5 per

cent stake in the company (Dempsey 2006; www.orlen.pl).

Poland does not have a nuclear plant but in January 2005 the document ‘Energy policy of

Poland until 2025’ prepared by the Ministry of Economy (2005) was adopted by Council of

Ministers. According to this document power generation based on nuclear sources will be an

indispensable condition for the country’s development. The government’s program for the

development of the energy sector assumes the construction of one plant in 2021, while by

2030 there should the three working nuclear power plants in Poland.

With regard to the security of supply, Polish vulnerability to potential supply disruption,

perceived or real – domestic reserves of coal are likely to be sufficient for about 60 years et

the current rate of exploitation –led government to put this issue at the top of preoccupation.

Other aspect of energy policy such as competitiveness and sustainable development, are

treated as second-rank issues (Wyciszkiewicz 2007). This position stems from the immense

reliance on a single dominant supplier of oil and gas, namely Russia. Principally, it is the gas

concern that makes government fell insecure. The main part of supplies is imported under

long-term contract with the Russian monopolist Gazprom. This contract envisaged gradual

increases of gas supplies based on the principles of ‘take-or-pay’ and ‘destination clause’

(which prevent importer from re-selling the gas elsewhere) combined with the obligation to

construct two-branch gas pipeline Yamal-Europe linking Russian deposits through Belarus

with Polish and German Market. Due to overestimate gas consumption projections in Poland

and the unwillingness of Russia to build the second branch, the Polish government reopened

the negotiation process (Wyciszkiewicz 2007). This problematic relationship with Russia led

the attention of governments to be focused on a policy of diversification of sources.

Searching for new suppliers is now a key elements of energy relations with other European

countries and a major driving force of the external energy action of the Polish government.

Conclusions

40

EU countries vary considerable in energy structure and political system and this affects their

external energy policy. There are national policy traditions on state versus market that largely

determine how energy sector have been structured, and the availability of domestic fuels

supplies plays a major role in this. The interest of net importing countries differ from those of

net exporting countries, but apart Denmark, all other EU member states are net importers of

energy. As demonstrated the analysis of the four countries under consideration her, this is the

only common characteristic of the EU member state external energy policy.

41

4: Elements for a External Energy Policy

Introduction: The Competences of the EU in the Energy field

This chapter turns to the analysis of policy proposals that go in the direction of the formation

of a common external energy policy (EEP), whereby policy-making power would be

transferred from the member states to the EU institutions, formally and/or informally.

The first section of this chapter analyses the point of view of the EU in the field of the

external energy policy, in particular identifies the market-oriented ideology of the European

Commission in the formulation of the EEP proposals. The second section presents two

example of EU external energy actions: the EU-Russia relationship and the Energy Charter

Treaty. I focus my attention to these two action because I consider them important examples

of a European bilateral and multilateral policies, respectively. The third section reviews the

role of four EU member governments – Germany, France, the United Kingdom and Poland –

in the definition and implementation of the previous two examples of EEP. The fourth section

concludes by emphasising the evident differences between the Commission proposals and the

EU and EU member states actions.

Theoretically, energy was always been a prime objective of the European integration. In

1951, coal was with steel the objective of the first Community (ECSC). In 1957, atomic

energy was the object of a particular treaty (EAEC or Euratom). Nevertheless, there has

never been an EC chapter about energy policy. Since the termination of the ECSC in 2002,

there are only two Communities in charge of energy. The EC Treaty covers all energy

sources, except the atomic energy which is covered by the EAEC Treaty. It is important to

note that neither the Convention on the future of Europe, neither the Treaty of Lisbon did not

manage to suppress the EAEC Treaty. A first problem is the fact that the EAEC, due to

political conflicts linked to the military aspects of the atomic energy, has never been

completely implemented. This situation has allowed a shared vision where the fundamental

choices regarding nuclear energy are seen as the monopoly of the member states (Dehousse

2007). There are no provisions in the EC Treaty regarding a European energy policy. In other

areas where there was a rationale for a high level of positive integration, the EC Treaty had

generally foreseen specific legal basis. For energy, this was not the case. Nevertheless, the

42

EC Treaty fixes several objectives, which can serve as a basis for a European energy policy:

‘establishing a common market, […] sustainable development, […] sustainable and non-

inflationary growth, […] a high degree of competitiveness, […] a high level of protection and

improvement of the quality of the environment’ (art. 2 TEC), actions at community level ‘if

severe difficulties arise in the supply of certain products’ (art. 100 TEC),’prudent and

rational utilisation of natural resources’ (art. 174) (ENA 2002, p. 12). With regard to the

Treaty on the Functioning of the European Union (TFEU), still there are not specific

provisions for a real common energy policy. Article 2c of the Treaty on Treaty on the

Functioning of the European Union (TFEU) inserts energy as a shared competence between

the Union and its member states, which gives the EU a means to exert little more influence

on energy policy decision-making. It retains the right of member states to determine the

conditions for the exploitation of their energy resources, the right to decide national energy

mix, the general structure of their energy supply and provides the unanimity in the Council

decision-making process.

For that reason, the European Commission deals with energy issues on the basis of its

competences in the common market; competition policy; environmental policy: regional and

research policy; Trans-European Networks (TENs); and consumer protection. Its most

important competences are related to the internal electricity and gas markets. With regard to

the EU external energy policy, decision-making is subject to intergovernmental cooperation,

where decisions are taken by unanimity. The Commission promote a more cooperative

approach with energy suppliers in cooperation with the High Representative for External

Affairs.

In a conclusion, even if there are not specific legal basis for a EU external energy policy, the

major obstacles to a common policy is more of political nature than of juridical one (ENA

2002). because the ability of European institutions to define common objective depends more

on will of member states than on the existence of a juridical basis. This is in line with a’

liberal intergovernmentalist’ approach of the European integration, which proposes that the

member state governments are the main actors in the European decision-making process

(Moravcsik 1998).

The EEP Proposals of EU Institutions

Nevertheless, the Commission, the principal entrepreneurial EU-level actor, has always

43

proposed the implementation of a common EEP and has consistently taken advantage of

external ‘windows of opportunity’ to launch EEP proposal (Matláry 1997).

The Commission Green Paper of 2000 (EC 2000) was the first policy document dealing with

EU external energy situation. In this Green Paper, the European Commission called for the

introduction of a strategy of security of energy supply aimed at reducing the risks linked to

the external dependence. The approach of the Commission was very prudent. The main

proposition was a launch of a new and deep debate in these question. According to the Green

Paper, the main objective of an energy strategy was ‘to ensure, the uninterrupted physical

availability of energy products on the market at an affordable prices for all consumers, whilst

respecting environmental concerns and looking towards sustainable development’.(p. 10).

Furthermore, the Green Paper outlines the main elements of a long-term strategy. The

Commission called for the EU to rebalance its supply policy by clear action in favour of a

demand policy (calling for a real change in consumer behaviour). With regard to gas and oil

security of supply, the Commission argued in favour of stronger mechanism to build up

strategic stocks and new import routes for increasing amounts of oil and gas.

More recently, a new approach has been set out in the EC Green Paper ‘A European Strategy

for Sustainable, Competitive and Secure Energy’ (EC 2006a). The three core objectives of a

European energy policy announced in the paper are sustainable development,

competitiveness, and security of supply. Moreover, six priority areas for common action have

been identified by the Commission. Three of these are directed related to the external energy

policy and the issue of security of supply. Stressing the need for a common external energy

policy, the Commission proposed priority measures for action. The most important measures

are: to identify infrastructure priorities for the EU security of supply (including pipelines and

LNG terminals); to provide a road-map for the creation of a pan-European energy

Community with a common regulatory space; to identify a renewed approach with regard to

European partners (especially Russia); the revision of the existing Community legislation on

oil and gas stock (to ensure they can deal with potential supply disruptions); and the

establishment of a European Energy Supply Observatory (Andoura 2007).

The March 2006 Green Paper argues that energy security can best be achieved through a

“pan-European energy community”, a “common regulatory space” around Europe. This is

said to require “[r]einforced market-based provisions on energy in the EU’s existing and

future agreements with third countries”. The Green Paper asserts that as a guiding direction,

“[i]t would be a mistake to pay too much attention to the geographical or national origin of

44

today’s oil imports. In reality, the EU depends […] on a global oil market” (EC 2006a cited

in Youngs 2007, p. 2). Finally, the Commission proposed to present to the Council and

Parliament on a regular basis a Strategic EU Energy Review covering all energy policy

issues. In summary, the fact that the EC 2006 Green Paper was ‘green’ and not ‘white’, and

very short, reflected the lack of true political will. Indeed, the 2006 Green Paper was not

much better of the earlier 2000 Green Paper: both diagnosed the problem of security of

supply, but neither delivered a real step change in policy (Helm 2007b).

The European Council of 23-24 March 2006 (Council 2006) stressed the need for a ‘coherent

and coordinated’ external energy policy. Recognising the need for a European energy policy,

it invited the Commission and the Council to prepare a set of actions with a clear timetable,

in order to adopt an Action Plan at its meeting in March 2007. The Commission and High

representative Javier Solana subsequently prepared a Common Paper on ‘An External Policy

to Serve Europe’s Energy Interests’ (EC 2006b). This paper considers how all EU external

relations, including Common Foreign and Security Policy, can be used more effectively to

enhance the collective external energy security of the Union. Security of energy supply can

be obtained through different instruments, ranging from political dialogues and Community

policies such as trade, development, research, competition and environment through to

financial grants and loans, including those of the European Investment Bank, the European

Bank for the Reconstruction and Development. According to this paper, any European

external energy policy must be coherent (backed up by all Union policies, the member states

and economic actors), strategic (to fully recognise the geopolitical dimension of energy-

related security issues) and focused (geared towards initiatives where action at EU level can

have a clear impact in furthering its interests). The paper also stress the importance of a clear

identification of EU interests with regard to the EEP and a reliable risk assessment, by

endowing the EU with the necessary monitoring capability, including a network of energy

security correspondents. (EC 2006b). The Commission and High Representative divide the

concept of security of energy supply into two main dimensions: functioning markets and

diversification. Through the functioning market approach, the EU should ‘extend its own

energy market to include its neighbours within a common regulatory area with shared trade,

transit and environmental rules’ (EC 2006b, p. 2) . More widely, the EU should advocate

reciprocity in market opening and respect for market rules. ‘We need to convince non-EU

consumer countries that world energy markets can work for them. If they were to conclude

that the only route to security lay in bilateral deals, the risk of disruption of the energy system

45

would grow’ (EC 2006b, p.2). Through diversification, the EU must give prominence to

diversifying energy sources and geographical origin as well as transit routes.

The European Commission proposed that a Strategic EU Energy Review would be presented

to the Council and Parliaments on a regular basis, covering energy issues. The aim of the

Commission is to use this instrument as stocktaking and action plan for the European

Council, monitoring progress and identifying new challenges and responses (Andoura 2007).

The first European Commission Strategic Review (EC 2007a) issued in January 2007

endorses the vision of a long-term framework for the external energy policy set out by the

Commission and High Representative joint paper. The Commission stresses the search for

international partnerships based on ‘shared rules or principles derived from EU [internal]

energy policy’ and the need to promote ‘transparent legal frameworks’ in producer states

(EC 2007a cited in Youngs 2007). Crucially, in its high profile September 2007 ‘unbundling’

proposal to break up the production and distribution of energy – included in the third energy

legislative package – the Commission reiterates the importance of internal market rules

facilitating rules-based influence over third country producers.

The European Council on 9 March 2007 (Council 2007) agreed on an Action Plan to put in

place a European energy policy by year 2009, based on the Commission 2006 Green Paper.

According to the conclusions of the Council the European energy policy, ‘fully respecting

Member States' choice of energy mix and sovereignty over primary energy sources and

underpinned by a spirit of solidarity amongst Member States, will pursue the[…] three

objectives [of] increasing security of supply; ensuring the competitiveness of European

economies and the availability of affordable energy; and promoting environmental

sustainability and combating climate change’ (Council 2007, p.11). The Energy Action Plan

addresses the issue of security of supply and the responses to potential crises. It stresses the

importance of making full use of the instruments available to improve the European bilateral

cooperation with all suppliers and ensure reliable energy flows in to the EU, ‘the

development of a common approach to external energy policy has to been speeded up,

involving consumer-to-producer as well as consumer-to-consumer and consumer-to-transit

countries dialogues and partnership including through organisations such as OPEC’

(Council 2007, p.19). in order to contribute to security of supply in the event of an energy

supply crisis, the European Council underlines ‘the need to enhance security of supply for the

EU as a whole as well as for each Member State through: effective diversification of energy

sources and transport routes, which will also contribute to a more competitive internal

46

energy market; developing more effective crisis response mechanisms […]; improving oil

data transparency and reviewing EU oil supply infrastructures and oil stocks mechanisms

[…]; a thorough analysis of the availability and costs of gas storage facilities in the EU; an

assessment of the impact of current and potential energy imports and the conditions of

related networks on each Member State's security of supply; establishing an Energy

Observatory within the Commission. (ibid. p.18). Whether the conclusions of the Council are

in the direction of the creation of an energy policy for Europe, the implementation of the

agreed objectives, which is the most important and difficult part of the whole process, still

has to be achieved.

In a summary, through the analysis of official documents and communications from EU

institutions, it appears that the European Commission in the EEP proposals adopts a

combination of market and governance principles, that might be termed a ‘market-

governance’ nexus (Youngs 2007, p. 2). This concept appears been more than simply a free

market model, but rather an apparently clear example of the EU reproducing its own

constituent norms – now widely recognised as central to the EU international identity (for a

review of ‘normative power Europe’ concept see: Manners 2002; Laïdi 2005). The logic is to

extend as many of its rules as are political and economically feasible outsides European

Union. The major aim is the development of inter-connecting energy systems between

different geographical areas, based on EU regulatory norms and the acquis, as a means of

transcending the so far partial technical cooperation pursued separately with individual

partner states. The Commission basic goal is to extend the principles of the 1994 Energy

Charter Treaty (ECT) successively to the different areas of the EU neighbouring countries ,

from Russia, through Central Asia and the South Caucasus, Ukraine, the Balkans and into the

southern Mediterranean (Youngs 2007).

In the vision of the Commission, recent energy agreements with different third countries have

the aim to extend the EU energy norms and infrastructure as the main solution to security

concerns:

• Following the Russian rejection of the ratification of the ECT, the Commission tried

alternative options to persuade Russia to adhere to at least some of the market-

governance principles (see infra). The EU-Russia energy dialogue, which commenced

in 2000, has aimed at enhancing infrastructure connections, including Tacis funding

(Youngs 2007). In May 2003 at the eleventh EU-Russia Summit in St. Petersburg the

47

formal aim was enunciated of extending the internal European energy market to

Russia. A focus on practical and industrial cooperation, was reinforced by the

agreement in 2003 to reorganise EU-Russia relations around four ‘common spaces’.

One of this area of discussion (the Common Economic Space) included energy

cooperation and the development of pan-European networks of energy facilities. The

EU linked its support for Russian WTO accession to Moscow’s assent to ‘favour the

growing integration of the continent’s energy markets’ (Ferrero-Waldner 2005).

• European neighbouring countries, either as suppliers or transit countries, have the

potential of playing a more direct role in a European energy security strategy. The EU

has therefore provided for energy cooperation sections in its European

Neighbourhood Policy (ENP) with the main goal of energy market integration. The

main geographic areas for cooperation under the ENP are Mediterranean, Black Sea

and Caspian regions. Until 2008, several Action Plans have been concluded with

Armenia, Azerbaijan, Ukraine, Israel, Moldova, Morocco, the Palestinian Authority,

Tunisia, Georgia Egypt and Lebanon (see ENP website). The energy component of

these ENP Action Plans generally includes trade liberalisation, convergence of energy

policies and regulatory frameworks, better interconnection of infrastructures and

networks, and increased energy dialogues on other energy issues. The main tool used

for those proposes is the impact and leverage of EU funding. The European

Commission aims to strengthen the ‘neighbouring’ energy dimension in the

framework of its new European Neighbourhood and Partnership policy through the

new European Neighbourhood and Partnership Instrument and the new

Neighbourhood Investment Fund (Andoura 2007).

• Ukraine is a key transit country for energy resources from Russia and the Black Sea

to Europe (Pirani 2007). Moreover, Ukraine has the potential to become an exporter

of electricity energy to the EU and has expressed the wish to enter in the Energy

Community based on the Energy Community Treaty (Andoura 2007). For that reason,

energy is a sector where bilateral EU-Ukraine cooperation is expected to grow

substantially ‘with a view towards integrating its energy market with that of the EU’

(Ferrero-Waldner 2006). The EU-Ukraine ENP Action Plan, includes several energy-

related objectives such as to guarantee the overall performance, security of the

Ukrainian energy infrastructures and transit networks, the reform of the internal

Ukrainian gas and electricity markets and regulatory framework through its gradual

48

convergence to EU norms.

• The Caspian energy reserves and in particular the pipelines system that bring oil and

gas to Europe are increasing in importance. The countries of Eastern Europe,

Caucasus and Central Asia hold important potential as energy producing and transit

countries for the EU to secure and diversify its external energy supplies (see Mathieu

and Incoronato 2007). In 2004, the European Union launched in 2004 the Baku

Initiative to enhance energy relations with Black Sea and Caspian Littoral states and

their neighbours. The Bake Initiative is a political dialogue aiming to develop the

progressive regional integration of these energy markets into the European market as

well as secure and safe transportation of the extensive Caspian oil and gas resources

towards Europe – once again using European internal market as a template (Youngs

2007). This process implies the progressive converge of energy policies on issues of

regulation, trade, and transit as well as environmental rules. The parties have thus

made commitments towards market-oriented reforms, safety and security of energy

production, transportation and supplies, sustainable development, as well as

investment security (EC 2007b).The Commission Black Sea initiative similarly aims

at the progressive integration of this region into the European energy market. In late

2006 the Commission proposed plans to move towards ‘sub-regional energy markets’

in the Caspian Basin, Caucasus and Central Asia, through a new EU-Black Sea-

Caspian Sea Common Energy House. Policy here will be based on prompting and

supporting the convergence of these energy markets with that of the EU, with the

ambitious aim of having this whole broader region ‘functioning on the basis of the EU

internal energy market’ (Ferrero-Waldner 2006).

• To the south, priorities of the Commission in the Mediterranean countries are the

reform of the energy legal and regulatory framework, the restructuring of the energy

industry in the region, and the modernisation of the existing infrastructure, to be

carried out on the lines of EU norms (Andoura 2007).

• Algeria with its significant oil and gas resources has been a reliable energy provider

for the European Union. Algeria is the third largest exporter of gas to the EU member

states behind Russia and Norway, the second largest exporter of fuels to the EU,

behind Russia, and the EU’s sixth largest source of energy in general terms. (IEA

2007). In order to replace the outdated 1976 Cooperation Agreement, Algeria and the

EU signed an Association Agreement in April 2002 which entered into force in

49

September 2005 (OJ 2005). Moreover, the European Union and Algeria cooperate in

the framework of the ENP policy (with current discussion on a ENP Action Pan) and

through EU financial assistance (mainly through the EU Mediterranean programme

MEDA). This strategic partnership is mainly focus on three broad topics: regulatory

convergence of Algerian and EU energy policies and frameworks, he development of

energy infrastructures of common interest, and technology cooperation and exchange

of expertise. The EU is pushing Algeria to adopt a new hydrocarbon law (oil and gas)

providing for predictable legal and regulatory frameworks, with the aim to enhance

the transparency and stability of the Algerian energy markets (Andoura 2007).

• Similarly, the 2006 Energy Community Treaty aims to create a common single

regulatory space with the extension of the EU internal energy market regulation to the

South East Europe region. The main goals are to create a stable and regulatory market

framework capable of attracting investments, to create a single regulatory space for

trade, to enhance security of supply, to improve the environmental situation and to

develop electricity and gas market competition. It sets out a roadmap for the adoption

of the EU acquis, thus anticipating part of the accession process (Grant 2006).

• The African continent is an energy supplier on the global market. Besides, important

energy consumer countries, with China leading (Taylor 2006), are increasingly

dynamic in Africa. Africa has important energy resources that could therefore be

better devoted to the EU energy security of supply. In Africa, energy action is

considered as a part of development policy and governance issue. Access to energy is

a key priority for developing countries, especially African countries. Besides, the EU

launched a ‘European Union Energy Initiative’ at the 2002 World Summit on

sustainable development, as part of the process of achieving the Millennium

Development Goals. In a communication of 2002, the Commission proposed to

integrate energy as horizontal element of European cooperation with developing

countries and of development aid programmes. The key horizontal actions identified

by the European Commission are the overall reform of the energy sector, technology

transfer, promoting diversification of energy supply and facilitating the development

of networks and interconnections (EC 2002). One instrument agreed under this

Initiative is the 220 million euro Energy Facility, to support projects strengthening

energy delivery to rural areas. The October 2005 EU Strategy for Africa attaches

priority to the funding of regional energy infrastructure, including links between sub-

50

Saharan and North Africa. The 2005 statement on Policy Coherence for Development

(PCD) commits the EU to strengthen programmes in the energy sphere, the

coordination of regulatory frameworks, and the integration of energy into poverty

reduction programmes (EC 2005). In October 2006, energy cooperation was for the

first time identified explicitly as a priority focal area for the €23 billion European

Development Fund (EDF) budget. An updated review of EU-Africa cooperation

issued in April 2007 advocates more efforts in the extension of internal market

principles to Africa, as part of an Africa- EU Energy Alliance. In 2007 new dialogue

commenced in Brussels between the EU and China on Africa with the declared aim –

on the European side – of getting China signed up to market rules. (Youngs 2007).

The review of official documents and international agreements points out that the EU

institutions, and in particular the European Commission, insist that the internal market both

defines the EU essential approach to energy security and ensure that member states bilateral

foreign policies are converging around a unified set of guiding principles. Commission’s

policy-makers argue that the internal single market leaves increasingly little room for market-

distorting bilateral deals. The approach of the Commission with regard to the international

energy relations is that the ‘external’ energy policy extends the nature of ‘internal’

cooperation already developed between member state. The Commission considers the reform

of internal energy market an advantage for the energy security of Europe. Internal

competition laws have obliged several reforms that determine important characters of

external policy. One example is the scrapping of traditional ‘destination clauses’ in third

country agreements. These clauses enabled producer states to prevent a buyer passing on

surplus supplies to other states and thus protect the exclusivity of bilateral contracts –

something contrary to the basic ideas of the EU internal market. Their demise permits a more

flexible switching of supplies between member states, a contribution to better energy security

(Gault 2004). The Commission considers the reform of the foreign energy market a key

objective of the European policy of security of supply. Stressing the ‘market-governance’

(Youngs 2007), the internal market is presented by the Commission as orienting the EU

towards energy strategy based on extensive rules-based governance reform. Benita Ferrero-

Waldner claims that the EU’s ‘added value’ to external energy policies is to ensure that rule

of law principles prevail through ‘enhanced legal framework for [EU] energy relations both

within the EU and with [EU] energy partners’ (Ferrero-Waldner 2006). The new energy

51

partnership agreements represent the Commission approach of attempting to use contractual

agreements to attain adhere to rules-based behaviour on market regulations, transport and

safety (Youngs 2007). Another example of this approach is the Commission goal to extend

the principles of the Energy Charter Treaty. The ECT is considered important because of its

focus on the rule of law and the aims to create an open, diversified international energy

market in providing robust frameworks for foreign investments in the energy sector. In a

conclusion, it is clear that the approach of the European Commission is more in line with the

aforementioned ‘Market and Institutions’ approach of the international energy relations

(Correlijé and van der Linde 2006). This though emphasises the role of the market over the

disturbance in the supply of oil or gas.

In the next section, I focus the analysis on two specific examples of such a external energy

policy of the EU, the EU-Russia partnership and the Energy Charter Treaty (ECT). I have

chosen these two external actions because are examples of bilateral and multilateral policies,

respectively. This fact permits an analyses of a huge range of political instruments that EU

and member states use in foreign policies The section tries to evidence the role of EU

institutions, member states governments and economic actors in the definition and in the

implementation of these two external actions. The analysis seek to show that the significant

actor of the European external energy policy are governments. Moreover, it seek to point out

that the external energy policy-making outcomes can be traced to prior governments interests,

mainly energy security interests. The next section argues that the governments external

energy policy is in line with the ‘Regions and Empires’ approach, unlike the official

discourses of the EU institutions, in particular European Commission.

Bilateral energy relationship with Russia

Energy is a central element in EU-Russia relation and has become even more important

following the energy crisis between Ukraine et Russia at the beginning of 2006.Russia

exports exclusively towards Europe (EU and CIS countries), and export of 30 per cent of its

production cover 70 per cent of gas revenues, which, via profit taxes on the gas producer,

finance 20 per cent of the federal budget. The market share of Russian gas, which is currently

33 per cent of European imports, could reach 50 per cent approximately 2020. However, at

the same time, Russian gas exports will continue to be captive to European buyers for a ling

52

time, given the time and capital resources required to develop infrastructure linking other

regional markets. Nonetheless, beyond a mutual interest in trading large volumes of gas,

relations between Russia and European countries are increasingly structured by the

politisation of energy relationships (Finon and Locatelli 2008).

The legal basis for the development of the relations between EU and Russia is the Partnership

and Cooperation Agreement (PCA), which came into force in 1997 for a period of ten years.

The Agreement covers cooperation in various sectors, including energy. The EU and Russia

launched a bilateral Energy Dialogue in 2000. It is composed by high level interlocutors,

expert groups on infrastructures, investments, energy efficiency and trade comprising official

and industry experts from the Member States, the European Commission and Russia, and a

Permanent Partnership Council on energy with EU Troika and Russian Industry and Energy

Minister. The main issues addressed by this dialogue are the opening of Russia’s domestic

energy market to competition, security of energy supplies, technology transfer, energy saving,

and climate change including the Kyoto Protocol (Milov 2006). While Russia primarily

wants EU support to modernize its energy sector and protects its position in Europe through

the EU, the objective of the EU is the reform and the opening of the Russian energy market

through the creation of a positive business climate and market mechanisms. The ambivalent

strategic interest of the Russian government, also determined by foreign and security

interests, are reflected in its unwillingness to ratify the 1994 Energy Charter Treaty and to

sign the Transit Protocol. Both documents foresee that market mechanism alone determine

adequate oil and gas production and an expanded network of pipeline (Umbach 2004). At the

Moscow summit of May 2005, both sides agreed on four Road Maps aiming at the creation

of four ‘Common Spaces’ for deeper integration. The road map for the Common Economic

Space has a chapter on energy mainly repeating these issue addressed by the energy dialogue

(Andoura 2007). To address the main issues concerning the energy sector, the EC 2006 Green

Paper proposes to enhance the EU-Russia Energy Dialogue. The results of the dialogue

would subsequently be integrated into the framework of EU-Russia relations due to replace

the current EU-Russia Partnership and Cooperation Agreement in 2007. The agreement

should underpin ‘the strategic partnership by preparing the ground for stronger results-

oriented political co-operation, deep economic integration, and a level playing field for [UE-

Russia] energy relations’ (EC Press 2006a). How, and to extend to which, the new

Agreement will deal with energy policy is likely to be a issue in the negotiation of the new

agreement. While the Commission appears committed to including energy in the new

53

agreement, it is unclear how it will be squared with the proposal to conclude a new

comprehensive agreement on energy with Russia, as suggested by the Commission in June

2006. In its energy action plan of 2007, the European Council emphasised that ‘negotiating

and finalising a post-partnership and cooperation agreement with Russia in particular

relating to energy issues’ was an essential element when further developing the common

voice of the Europe Union in support of its energy policy objectives (Council 2007, p. 19).

Waiting for such ambitious EU-Russia Energy Treaty, another agreement already exists at

international level namely the Energy Charter Treaty, which contains trade, investment and

transit provision regarding energy products. Nevertheless, this treaty still needs to be ratified

by the Russian Duma. The European Commission claims to intensified the efforts in order to

secure ratification by Russia of the Energy Charter Treaty and conclusion of the negotiations

on the Transit Protocol. More generally, in the framework of these relations, the EU is trying

to rebalance its partnership with Russia on a more equal basis. The fact that the EU is

importing important amounts of oil and gas from Russia therefore makes its most essential

commercial partner of Russia. In summary, there has been some progress but on many of the

more important issues there are still big obstacles. The strategy of Russia towards EU

members states is aimed to dividing member states, for example by using trade to put

pressure on critics and to reward its supporters. This create internal tension among EU

members and pose difficulties in from of a coherent external energy policy. Meanwhile,

bilateral deals between Russia and separate EU States continue to prevail over a specific EU

approach (Umbach 2007).

The Energy Charter Treaty

The 1991 European Energy Charter, a non-legally binding political commitment for pan-

European cooperation, was proposed by the then Dutch Prime Minister Lubbers at the 1990

European Council of Dublin. After three years of negotiations, in December 1994, the Energy

Charter Treaty (ECT) was finished. The ECT is legally binding and effective under

international law. It is the first economic agreement and international regime that tries to

unite all the Republics of the Former Soviet Union, the formerly centrally planned Central

and Eastern European states, the European Communities, and their member states, as well as

Japan, Australia, Norway, Turkey, Switzerland, and the United States (Westphal 2006). The

ECT process was conducted by the EU alone, although there was talk of making it an IEA or

54

OCSE process. The place of the Treaty in EU energy policy, as seen by the Commission, was

underlined in a EC communication to the 1992 OCSE conference in Helsinki. The

Commission here delineated the role of the two organisations: the ECT was a follow-up of a

OCSE recommendation in the energy field, and that to avoid duplication, no new initiatives

need be taken in Helsinki. However, the OCSE should support the charter it added (Matláry

1997 p. 75).

The Treaty aims to manage interdependence and to promote multilateral cooperation in the

energy sector based on WTO rules, designated to create an open, diversified international

energy market and would represent a further step towards the internationalisation of energy

law (Bradbrook 1999). The ECT also provides binding dispute settlement for the resolution

of State-to-State or Investor-to-State disputes. Among the main areas of regulation are the

transit provisions which apply transit rules to energy networks (Andoura 2007). The main

general objectives are setting standards for the energy market economy and providing basis

for contractual and trade relations on order to create a ‘rule of law’ system which would also

allow smaller companies to negotiate individual agreement with governments to start

activities. It is important to note that the Treaty does not impose privatisation or Third Party

Access. It also reaffirms national sovereignty over energy resources, namely the rights of

national governments to determine the territory to be exploited, depletion and reserve

policies, and taxation, and to participate in exploration and production (see art. 18 ECT).

There are several features of the Treaty under discussion and that explain why some countries

are reluctant to ratify it. The ECT states national treatment for foreign investment, a

mechanism for the resolution of disputes which gives foreign but not to domestic investors

access to international arbitration against the government (Mitchell et al. 2001 p.118).

However, two main partners of the EU have abstained from ratifying the treaty: the United

States and Russia. The USA has refused ratification, arguing that the Treaty is not enough in

the protection of investors’ rights in some of its bilateral investments treaties. In general US

business were not enthusiastic about ECT in general and about energy efficiency Protocol in

particular, fearing it could be strengthened and force the government to control business

activities. Sceptics argued that there were too many loopholes and that investors rights, such

as the ability to transfer capital or the guarantee of property rights, were not sufficiently

protected. Large companies, especially those already with projects in the East, no longer

believed that they needed a treaty (Axelrod 1996). Russia has not ratified it mainly because

of the Transit protocol. The reason is that Russia would have faced a significant loss in its

55

strategic position as a supplier and a major transit country to Europe – a position which it has

increasingly used in recent years to gain advantages in international relations, in line with the

Regions and Empires approach explained in the first chapter. The US and Russia (among

others) have abstained because the ECT, like any regime, consists of agreed principles,

norms, rules, decision-making procedures, and programs that govern the interactions of

actors in specific issue areas and alter the overall distribution of power among the key actors

by establishing new social practices which operate differently. Herein lies the reason why the

ECT has not been working as expected (Westphal 2006).

In particular, for Russia, the main obstacle to ratification of the ECT is the Protocol of Transit

which is the centrepiece of the Treaty and simply not in Russian interest. The treaty would

oblige Russia to accept the principle of freedom of transit without discriminations concerning

the origin, destination, or ownership of the energy. That is clearly in contrast with the policy

of Gazprom, the Russian natural gas monopolist and operator of the Russian gas pipelines.

Russia is in a very favourable position with regard of energy transit. Moreover, Russia has

anticipated the struggle for market share in the European gas market with Central Asian

states, which are all members of the treaty but which are dependant on Gazprom’s pipeline

network if they want to export their gas to European market. To keep this status quo, in 2002

Putin suggested the creation of a Eurasian gas alliance among the post-Soviet gas producers

(Boussena et al. 2006). This ‘Gas OPEC’ was de facto realized thanks to Russia’s good

bargaining position by the conclusion of bilateral treaties between Russia and Kazakhstan, as

well as Russia and Turkmenistan.

In summary, Russia has managed to maintain its quasi-monopoly as the major energy

supplier (and transit country) to the EU. At the same time, the pressure on Russia to ratify the

ECT are very low, because of diverse agendas and interests in the EU member states

(Westphal 2006). As consequences, this attempt to create an effective multilateral framework

for international energy community is rather weak because of non-ratification of Russia and

United States.

The Role of Member Governments (Germany, France, UK, Poland)

This section shall examine the attitudes of four member states – France, the United Kingdom,

Germany and Poland – towards the two specific European external energy actions.

56

Bilateral energy relationship with Russia

Each member states taken in consideration has a peculiar approach with regard to the Russian

energy relations. Formally, France, the United Kingdom, Germany and Poland support the

European Commission on the EU-Russia dialogue. In reality, member states pursue their

strategic energy goals with a clear national logic, despite the formal declarations of the

necessity of a common action vis-à-vis Russia.

Both France end the UK mention the strategic relationship with Russia in their vision of a

external energy policy. France emphasises the necessary ‘application by all of the rules

jointly agreed concerning freedom of transit and permanent and non-discriminatory access

to the transit infrastructures […] to improve the security of supply as well as the

transparency of the gas market, the ratification of the Energy Charter Treaty and its transit

Protocol’ (Breton 2006). Although, given the relative independence of France from Russian

energy supply it is unclear if French government intends to force the Russian government to

cooperate in the framework of the EU-Russia dialogue. This because France has other

options without looking to Russia, including use on nuclear power and access to liquefied

natural gas.

With regard to the United Kingdom, since 2005 the governments support a deeper European

integration on the field of energy, because it is going to be a net importer of Russian gas. UK

wants a more liberalised European internal market in order to assure its energy security

because of strong privatisation and liberalisation process of its energy market deprived the

government of political tools to assure the security of supply (Helm 2007b). Consequently,

British government support the Commission also in the EU-Russia dialogue on energy issues.

The monopoly of pipelines to Europe has created considerable bargaining power for

Gazprom, whilst the political manoeuvres with Algeria and the Caspian producers, and the

bilateral deals with Germany, Austria, Hungary and France, have further divided the

European gas market. Britain’s market approach has no answer to these political

developments or to Gazprom’s market power, and for this reason the solution for the UK is a

more coherent EU external energy policy.

Russia is also one of the main aspect of German external energy policy. Former Chancellor

Schroder made the choice to rely mainly on Russia. Cooperation has been facilitated by the

specific thematic working group German-Russian Energy Cooperation established in March

2003, and by the German-Russian energy summit. The latter focus on energy supplies and

57

should develop a enduring partnership between the two states (Marcelis and Maurer 2006). In

fact, representatives of German energy corporations believe that through participation in

Russian shipment companies, they enjoy an unrivalled position. In July 2004, German

companies made an agreement with Gazprom allowing the participation of German

companies in the complete chain of Russian gas production, from exploration and transport,

through a new pipeline, to marketing in Western Europe. German companies have also been

granted access to Siberian gas fields, in return, the German energy enterprises, BASF and

E.ON agreed to support Gazprom in its planned expansion onto the European gas market.

The latest important project is a gas pipeline through the Baltic Sea, connection Russia

directly with Germany (North European Gas Pipeline, now Nord Stream). The project was

signed in November 2005. Gazprom would hold a 51 per cent majority stake in the planned

pipeline, the remaining shares will be divided equally between the BASF subsidiary

Wintershall and E:ON, the deal with Gazprom will facilitate the participation of German

companies in the processing chain of Russian gas production and the joint exploration of the

Yuzho Russkoye gas field in Siberia (Marcelis and Maurer 2006). The Nord Stream project

would guarantee future deliveries to Germany and Western EU member states, mainly

because of the need to amortize the necessary large investment. By contrast, this project is

undermining a main principle of the security of energy supply: diversification of energy

sources (Bielecky 2002). Moreover, the project widened the distance between Eastern and

Western EU member states. The Eastern European transit states have to face a de facto loss in

their status of transit countries, a status that was regarded as the main bargaining chip in the

negotiations about prices and as insurances against vulnerability in relation with Russia.

Consequently, Eastern EU countries as foremost Poland and the Baltic States, face a

weakening of their position. Even if formally Germany support the Commission on the EU-

Russia dialogue at the same time strengthens its bilateral relationship through several

bilateral agreements and projects. According to the analysis of German energy situation, that

stated the important role of energy major in national energy policy, the German government

support bilateral partnership with Russia not only because providing security of supply for

decades to Germany, but it also ensure a strong position of German companies compared to

European competitors.

Indeed, accession to the EU in May 2004 has not changed the general Polish vision of

external energy policy. Poland government resents and fears the special relationship between

Russia and Germany. In the point of view of Poland, the Russian/Ukrainian crisis in January

58

20061 seems to confirm that Russia is using energy as a political tool. Despite a contract

running with Gazprom until 2022 that prevent any renegotiation of price, Poland is worried

about receiving sufficient quantities. The building of Nord Stream pipeline will end Poland’s

transit status and consequently transit fees and political leverage with larger countries. The

Polish government is strongly against financing the project through the European Investment

Bank (EIB), the EU financing institution that provide financing for capital investment

furthering EU policy objectives (Marcelis and Maurer2006). This situation explains why

Poland is pushing for a fruitful EU-Russia dialogue. From the point of view of Poland

government, the dialogue should be enhanced on the basis of a fair and non-discriminatory

treatment, and of a reciprocal liberalisation of markets. The process of liberalisation of the

EU energy market should be accompanied with similar measures implemented in the Russian

market (Wyciszkiewicz 2007). Poland government retains idea of being heard and supported

at international level when acting at a European level. According to the foreign affairs

minister, the construction of the Nord Stream gas pipeline is the ‘greatest danger’ for Poland.

For Polish government adhesion to the EU energy policy towards Russia is a response to the

national policy of German. Indeed, Polish government considers the liberalization of the

internal energy market (one of the major objective of the European Commission internal

energy policy) less important of the diversification of supply sources. It fears the

monopolization of the market by dominant external suppliers, thus affecting energy security

and distorting competition. Diversification of energy supplies is a crucial part of Polish

energy security, and this leads Poland governments to seek backing from the USA and to

support the accession of Ukraine to NATO (Marcelis and Maurer 2006).

In a conclusion, the EU-Russia dialogue became necessary since the ECT was not working as

expected. Its success at the present is limited, not only because of the fact that it had brought

more tactical results concerning second-level issues than answer to strategic questions

concerning the building of a common energy space (Westphal 2006). The interests and

strategies of EU and Russia have diverged over central issues such as market harmonization

ad market transparency. Moreover, the exiguous results of the EU-Russia relationship can be

also attributed to the fact that especially the large member state have regarded the Dialogue

mainly as the Commission’s approach and have preferred to pursue their own bilateral

1 The dispute between Russia and Ukraine over natural gas prices started in March of 2005 (over the price of natural gas and prices for the transition of Gazprom's gas to Europe). The two parties were unable to reach an agreement to resolve the dispute, and Russia cut gas exports to Ukraine on January 1, 2006. The supply was restored on January 4, 2006, when a preliminary agreement between two gas companies was settled.

59

strategy thereby responding to the Russian preferences for bilateral exclusive deals.

The North European Gas Pipeline through the Baltic Sea illustrates this because it

exemplifies an increasing trend for national approaches on the part of EU member states in

order to secure their energy supply towards Russia. The maintenance of national policies

have wakened attempts to deepen integration in the field of external energy policy.

The Energy Charter Treaty

The following section examines the attitudes of the EU institutions, member governments

and economic actors towards the Energy Charter Treaty.

The United Kingdom strongly favours the charter because it will extend the liberalisation of

the energy market to all of Europe, but it does not favour a new EU institution to administer

the charter (Matláry 1997). Any elements that could lead to a transferral of power to the EU

institutions or a new supranational institution was not accepted. The British government

essentially see the ECT as a free trade regime in energy.

The view of the German government is similar. The need to establish Western commercial

conditions is stressed, and that the major role should be played by private firms (Sander

2007). EU administration of the Treaty should be as minimal as possible and both countries

see it as advantageous that the US and Canada join the Treaty (Matláry 1997). On the

contrary, France view the charter as an EU initiative that is intended to form the basis of a

general external energy policy towards Eastern Europe and Russia. Initially France was not

very interested in the Treaty, because its relative energy independence. It resisted the scope of

the charter, especially as it extended beyond Europe to include, for example, the United

States. Another concern was that the French nuclear interest vis-à-vis Central Europe would

not receive sufficient attention. However, as the work progressed France began to participate

fully (Matláry 1997). Poland signed and ratified the Energy Charter Treaty, the Energy

Charter Protocol on Energy Efficiency and related Environmental Aspects in April 2001.

Members states formally fully support the Energy Charter Treaty, as a mean to extend the

European market-based energy relation to the extra-European arena. But in reality, each

member states government has a peculiar position on the ECT, position shaped by domestic

interests, mainly security of supply interests.

Initially, the United Kingdom supported the ECT because of the market opportunity that

60

might open up in Eastern Europe for petroleum technology. Moreover, as already mentioned

in the previous chapter, British government pursued a strategy of general privatization and

liberalization of the energy sector between 1980s and 2000s. In the view of UK government

the ECT was a free trade regime in energy, something of favorable for British energy majors.

At the present the UK energy security is a political issue because of the increasing

dependency from external energy sources. The energy policy of the UK is changing, also

with regard to external policy. For example, Gazprom has considered in 2006 the acquisition

of a UK gas supply business, Centrica. Energy. Britain's deregulated energy market means a

foreign takeover should in theory attract little political opposition. Contrary, the governments

stopped this operation, fearing a Russian control on the major British gas company (Hotten

2007). This action towards foreign investments shows that even in the United Kingdom,

where the energy market is the most liberalized, the attitude of governments is now more

oriented towards the security of supply than the strengthening of the market-oriented

principles of the ECT.

As part of the discussion on the negotiation mandate for the new EU Partnership and

Cooperation Agreement with Russia, the Polish government has taken steps to persuade the

European Union to demand from Russia the final ratification of the Energy Charter Treaty

and signing the Transit Protocol (Mite 2006). The Polish government seeks to force Russia to

sign the ECT using the EU-Russia dialogue action. Poland has vetoed the start of talks of the

new EU-Russia new partnership agreement in November 2006 and claimed Russia should

make commitments on energy supplies by ratifying the ECT before talks can begins. (Mite

2006) Polish government utilizes EU as instruments of its external energy policy, in

particular vis-à-vis Russia, in order to maximize its relative power in the international energy

arena.

With regard to German government, it declares its support to the Commission will to push

Russia to ratify the ECT, but in reality this is not the case because German major of energy

import and distribution enjoy a dominant position on the European market given the fact of

the ‘special relationship’ in particular between E.ON and Gazprom (Sander 2007).

There have been no serious national efforts to encourage Russia’s ratification of the ECT

(except for Poland) and to strategically coordinate energy policies, in particular in regard to

infrastructures, as proposed by the Commission. Instead, the member state have pursued

bilateral energy strategies .

61

Conclusions

This chapter analysed the various proposal of the European institutions for a European

external energy policy. The first section of the chapter reviewed the Commission attitude

towards the security of supply issue. The analysis of official documents and secondary

sources confirms the ‘market-governance’ (Youngs 2007) approach of the Commission. In

the second section the focus was on two example of external energy policies. Empirical

evidences and secondary sources showed that, according with a ‘Regions and Empires’

approach of international energy relations, there is a tendency of (re-) nationalisation of the

security of supply issue. Even where there are some kind of true proposals for a common

EEP, for example the United Kingdom that, since 2005, call in favour of strengthening Union

powers after long being scornful of EU institutions involvement in the energy sector, or the

attitude of Polish governments towards the ECT in the EU-Russia dialogue, it is because of

national security of supply reasons and not because member states follow Commission

proposals.

62

5: Empirical Conclusions and Theoretical Implications

These conslusions shall attempt to assess the relative importance of the various EU actors in

the European external energy policy. It is assumed that member governments’ interests are

largely fixed prior to the start of the decision-making process at the EU level, and that they

use the EU as an arena for furthering these interests, both at the EU level and domestically. In

order to analyses not only the role of governments, but also the role of economic actors and

EU institutions, I utilised the liberal intergovenmetalist approach, integrated with a multilevel

governance analysis. Below the chapter moves on to a theretical discussion on the

demostration of the hypotesis.

Chapter 3 discussed the nature of the interests of governments of Germany, France, the

United Kingdom and Poland. Chapter 3 and chapter 4 empirically demostrated that initial

hypotesys are largely confirmed. The first hypothesis was that the only significant actors of

the EU external energy policy are governments and the second hypothesis was that all

external energy policy-making outcomes in the EU process can be traced to prior

governments interests, mainly energy security interests. Among EU member states there are

huge differences both in the domestic energy situation and the role of economic actors in

shaping national energy policy, as showed in Chapter 3. For example, in France the state’s

share of energy major is still important, contrary to the British situation, where the

privatisation of energy sector is completed. German government supports national private-

owned energy majors, whereas in Poland the energy sector is yet in transition to market

economy.

Chapter 4 analysed the present situation of the European common external energy policy. The

chapter demonstrated that the are governments the main actor in EU external energy policy.

This means that economic national actors are influential, but principally at the national level.

Consistent with the aforementioned liberal intergovernmentalist approach of the European

integration, in the first stage of this model national governments aggregate the interest of

their domestic constituencies, as well as their own interest. National preferences are complex,

reflecting the distinctive economics, parties, and institutions of each member state, but they

are determined domestically, not shaped by participation in the EU. In my analysis, I focused

principally on interests that stem from energy security concerns, that are principally concerns

of national governments, but indirectly also of economic actors. In the though of the

international energy relations based on ‘Region and Empires’ approach is indeed evident that

63

national governments tend to compete for the energy security instead of cooperating. The

empirical evidences presented in chapter 4 demonstrates that this vision is mostly valid also

as regard to the energy relations among European Union member states. Member states have

been unwilling to give up their sovereignty in energy matters, considering the nature of

energy as a strategic good, that instrumentalized for national policy goals, tends to impede

multilateral governance. The larger member states have relied on national firms, most often

public utilities, to take charge of their energy supply and reduce dependence by promoting

technologies such ad nuclear power. The privatization and liberalization of electricity and gas

European market mainly proposed by the Commission, has not fundamentally called into

question the governments policy to rely on their leading national firms to secure long-term

energy supplies, which these major have been able to do thanks to their bargaining power and

their significant financial capacity.

In the second or intergovernmental stage of Moravcsik’s model, national governments bring

their preferences to the bargaining at EU level, where agreements reflects relative power of

each member states and where supranational organization such as the Commission exert little

influence over policy outcomes. As chapter 4 showed, this is really clear with regard to the

External Energy Policy of the European Union. The European Commission has tried and try

to play an entrepreneurial role in pushing the EEP because it is convinced that it would be

better the EU had a common external energy policy. Through the analysis of official

document and policy proposals, chapter 4 outlined the approach of the Commission on the

EEP. This is a ‘market-governance’ approach, that try to extend the internal market-based

logic outsides European Union, the development of inter-connecting energy systems between

different areas, but based on EU regulatory norms and the acquis. For example, the

Commission supports the Energy Charter Treaty to promote harmonization of norms on

investments in energy sector and access to infrastructure in Eastern Europe, in particular in

Russia. Consistent with the ‘liberal intergovernmentalist’ model, empirical evidences

demonstrated that Commission had little power on the development of a real common

external energy policy. Relative power of the member states is important in this stage of

decision-making. Although, I found some problems in my analysis to determine the relative

power of states in EEP, principally because I did not collect enough primary sources about

bargaining on the EEP policy-making. I did not make interviews, except one with a civil

servant of the Commission, because neither civil servant of the Commission nor European

politicians nor energy majors executives accepted it. Another important problems that I found

64

in the evaluation of the role of each member governments in the policy-making of the EEP is

the intrinsically elusive character of the outputs of this policy. For example, as regard with

the EU-Russia dialogue analyzed in chapter 4, at the present the evaluable results of such

policy are very poor. At the present stage of the development of the external energy policy of

the EU and with the available sources that I collected during my research, I can only

conclude that the focus of the analysis is possible more on an assessment of the level of

cooperation between member governments than on the relative power of governments during

the process of the EEP policy-making. The empirical evidences suggest me that the co-

operation level between member states is low and on the contrary sometimes national

external energy policies are in contrast with the claim of a common EEP.

In the third and finally stage of the liberal intergovernmentalist approach it is arguing that EU

member states adopt particular EU institution in order to increase the credibility of their

mutual commitments. In this view pooling and delegation sovereignty through European

institutions allows states to commit themselves credibility to their mutual promises. In the

intergovernmental view, the unique institution structure of the EU is accepted to national

governments only insofar as it strengthen their control over domestic affairs, permitting them

to attain goals otherwise unachievable. EU institution strengthen the autonomy of national

political leaders vis-à-vis particularistic social groups within their national arena. Analysis of

evidences in chapter 4 confirms this view, but with a important modification of the role on

EU institution. I found evidences that member states governments, when energy interests

permit to cooperate at European level, use EU institution to strengthen their power. Although,

I consider that governments utilize EU institution structure in order to strengthen their

relative power in relation to external actors of the international energy relations, notably

governments of states energy supplier. These politics of scale (Ginsberg 1989) refers to the

benefits that member states perceive when they act together as a bloc than when they act

separately.

Through the ‘liberal intergovernmentalist’ the hypothesis that governments are the principal

actors in the EEP is confirmed. Although this does not mean that EU institutions are totally

uninfluential. As showed in chapter 4 UE institutions, in particular European Commission,

have their own proposal about European energy policy. The Commission has a ‘market-

governance’ (Youngs 2007) approach in the international energy relations. The EEP proposal

of the Commission attempt to use contractual agreements to attain adhere to rules-based

65

behavior on international actors. The Commission considers the reform of the foreign energy

market a key objective of the European policy of security of supply.

This is the main theoretical obstacle to a coherent formulation and implementation of a

common external energy policy. The basically proposals of the Commission are not in line

with the objectives and the instruments of external energy policy of members states. And this

because, consistent wit the ‘Regions and Empires’ approach, member states do not act in a

world based on market rules, but in a world where the objective is maximise influence on

energy resources. In a conclusion, there is a rift between the vision of the international energy

relation of the member states and the Commission, a supranational actor, with different

interests and political tool from a nation-state. This difference of vision is the cause of the

limited integration of national energy policies and the elusive European external energy

policy.

66

References

Bibliography

Andoura, S. (2007) 'Security of Supply and the External Dimension of a European Energy

Policy', Studia Diplomatica, Vol. LX, 2007, n°2, 67-110

Axelrod, R. S. (1996) ‘The European Energy Charter Treaty’ Energy Policy, Vol. 24, No. 6,

pp.497-505

Bache, I. and Flinders, M. (2004) 'Theme and Issues in Multi-Level Governance', in Bache

and Flinders (eds.) Multi-Level Governance, Oxford: Oxford University Press, 1-11

Bennhold, K. (2005) ‘EDF shares fails to light up market’ International Herald Tribune, 21

November

Bielecky, J. (2002) 'Energy security: is the wolf at the door?' The Quarterly Review of

Economics and Finance 42, 235-250

Boussena, S., Pauwels, J.-P., Locatelli, C. and Swartenbroeks, C. (2006) Le défi pétrolier.

Questions actuelles du petrole et du gaz, Paris: Vuibert

Bradbrook, A. J. (1999) ‘Significance of the Energy Charter Treaty’ Applied Energy, Vol. 64,

pp. 251-262

Breton, T. (2006) ‘Mémorandum français pour revitaliser la politique énergétique européenne

dans une perspective durable’ Communication presented at the Economic and Financial

Affairs Council, 24 January

Bulmer, S. and Paterson, W. E. (1996) ‘Germany in the EU: Gentle Giant or Emergent

leader?’ International Affairs Vol. 72, No. 1, January, 9-32

Chevalier, J-M and Corbeau, A-S (2005) European Energy: Revisiting Security of Supply,

67

Cambridge: Cambridge Energy Research Associates (CERA)

Clingendael International Energy Programme (CIEP),(2004) Study on Energy Supply Security

and Geopolitics, Institute for International Relations, Clingendael: The Hague.

Correljé, A. and van der Linde, C. (2006) 'Energy supply security and geopolitics: A

European perspective' Energy Policy 34, 532-543

Costantini, V., Gracceva, F., Markandya, A. and Vicini, G. (2007) 'Security of energy supply:

Comparing scenarios from a European perspective' Energy Policy 35, 210-226

Council of the European Union (2006) Presidency Conclusions – 23/24 March 2006,

7775/1/06, 18 May, Brussels

Council of the European Union (2007) Presidency Conclusions – 8/9 March 2007, 7224/07

(CONCL 1), 9 March, Brussels

de Lestrange, C., Paillard, C.-A., Zelenko, P. (2005) Géopolitique du petrole, Paris: Edition

TECHNIP

Dempsey, J. (2006) ‘Polish Energy Company to Buy Most of Lithuanian Oil Refinery’ The

New York Times, 30 May

Department of Trade and Industry (2006) The Energy Challenge : Energy Review Report

2006, London : TSO

Ecole Nationale d’Administration (2002) ‘Une politique européenne de l’énergie?’,

Seminaire ‘Energie et Societé’

ENP website; http://ec.europa.eu/world/enp/index_en.htm

European Commission (2000), ‘Towards a European Strategy for the Security of Energy

Supply’, Green Paper COM(2000) 769 final, 29 November

68

European Commission (2002) ‘ Energy Cooperation with the Developing Countries’,

Communication from the Commission to the Council and the European Parliament,

COM(2002) 408 final, 17 July, Brussels

European Commission (2005) ‘Policy Coherence for Development’, Communication from

the Commission to the European Council and the European Parliament, COM(2005) 134,

12 April, Brussels

European Commission (2006a), A European Strategy for Sustainable, Competitive and

Secure Energy, Green Paper COM(2006) 105 final, 8 March

European Commission (2006b) ‘An External Policy to Serve Europe’s Energy Interests’,

paper from Commission/High Representative, June, S160/06, Brussels

European Commission (2007a) ‘An Energy Policy for Europe’, COM (2007) 1 final, SEC

(2007)12, 10 January, Brussels

European Commission (2007b) ‘Black Sea Synergy – A New Regional Cooperation

Initiative’, Communication from the Commission to the Council and the European

Parliament, COM(2007) 160 final, 11 April, Brussels

European Commission Press (2006a) ‘EU-Russia: first round of negotiations for the new

Agreement’IP/08/1099, 3 July

European Commission Press (2006b) ‘The EU and the countries of the Black Sea and

Caspian Sea regions agree on a common energy strategy’ IP/06/1657, 30 November

European Commission (2008) ‘EU Energy in Figures 2007/2008’ Brussels

Ferrero-Waldner, B. (2005), Speech to the European Parliament, 26 October

Ferrero-Waldner, B. (2006), Opening address, External Energy Policy conference, 20

69

November, Brussels

Feynman, R. P. (1999) The Pleasure of Finding Things Out, Cambridge, MA: Perseus Books,

1999

Finon, D. and Locatelli, C. (2006) ‘L’interdépendence gazière de la Russie et de l’Union

européenne. Quel équilibre entre marché et la géopolitique ?’ Cahier de recherce CIRED,

November

Furfari, S. (2007) Le Monde et l'Energie, Enjeux géopolitiques, Paris: Editions TECHNIP

Gault, J. (2004) “EU energy security and the periphery”, in Roland Dannreuther (ed.),

European Union Foreign and Security Policy: Towards a Neighbourhood Strategy,

London: Routledge, p. 170-185

Ginsberg, R. H. (1989) Foreign Policy Actions of the European Community: The Politics of

Scale Boulde, CO: Lynne Rienner

Goldthau, A. (2008) ‘Rhetoric versus reality: Russian threats to European energy supply’

Enegy Policy, Vol 36, pp. 686-692

Grant, C (2006) Europe’s Blurred Boundaries: Rethinking enlargement and neighborhood

policy, Centre for European Reform, London

Haas, E. (1968) The Uniting of Europe: Political, Social and Economic Forces 1950-1957,

2nd ed Stanford: Stanford University Press.

Helm, D.R. (2002) 'Energy policy: security of supply, sustainability and competition' Energy

Policy 30, 173-184

Helm, D.R (2004) Energy, the State, and the Market: British Energy Policy since 1979,

revised edn, Oxford: Oxford University Press.

70

Helm, D.R. (2007a) ‘The New Energy Paradigm’, in D.R. Helm (ed), The New Energy

Paradigm, Oxford: Oxford University Press, 9-36

Helm, D.R. (2007b) ‘The Russian dimension and Europe’s external energy policy’, paper

published on personal website, retrieved 15 June 2008 from

http://www.dieterhelm.co.uk/publications/Russian_dimension.pdf

Hoffmann, S. (1966) 'Obstinate or Obsolete? The Fate of the Nation-State and the Case of

Western Europe', Daedalus, 95(3), 862-915

Hotten, R. (2007) ‘UK must tackle reliance on Russia’ The Telegraph, 24 April

International Energy Agency (2007) World Energy Outlook 2007 Edition, Paris: IEA

International Herald Tribune (2008) ‘French court puts brakes on merger of Gaz de France

and Suez’ International Herald Tribune, 22 January

Jankowski, B., Suwala, W., Gaj, H., Kudelko, M. And Kaminski, J. (2002). Global Climate

Initiatives and Countries in Transition. Case Study for Poland., Krakow: MEERI

Publisher

Kemp, A G.. and Stephen, L. (2007) ‘UK Oil and Gas Depletion Policy with Growing Import

Dependence’ , in D.R. Helm (ed), The New Energy Paradigm, Oxford: Oxford University

Press, 181-222

Keohane, R. O. and Nye, J. S. (1977) Power and Interdependence: World Politics in

Transition, Boston: Little, Brown and Company

Keohane, R. O. and Hoffmann, S. (1991) 'Institutional Changes in Europe in the 1980s' in

Keohane and Hoffmann (eds.) The New European Community: Decision-Making and

Institutional Change, Boulder, CO: Westview Press, 1-40

Keppler, J. H. (2007) ‘International relations and security of energy supply’, external study

71

for the European Parliament, PE 374.366, February

Kudelko, M. (2006) ‘Internalisation of external costs in the Polish power generation sector:

A partial equilibrium model’, Energy Policy 34 pp.3409–3422

Kulczycka, J. and Lipinska, A. (2003)‘Barriers to liberalisation of the Polish energy-sector’

Applied Energy 76, 229–238

Laïdi, Z (2005) Norme sans la force. L’énigme de la puissance européenne, Paris: Presses de

Science Po

Loi n°2005-781 du 13 juillet 2005 de programme fixant les orientations de la politique

énergétique, Paris

Mañé-Estrada, A. (2006) ‘European energy security: Towards the creation of the geo-energy

space’ Energy Policy, Vol 43, pp. 3773-3786

Manners, I. (2002) ‘Normative Power Europe: A Contradiction in Terms?’ Journal of

Common Market Studies, Vol. 40, No. 2, pp. 235-58

Marcelis, C., and Maurer, A. (2006) ‘Perspective for the European Union’s External Energy

Policy. Discourse, Ideas, and Interest in Germany, the UK, Poland and France’, SWP

Working Paper, September 15, Berlin

Matláry, J. H.(1997) Energy Policy in the European Union, Basingtoke and New York:

Palgrave

Mathieu, R and Incoronato, E (2007) ‘Quelle politique énergétique extérieure pour l'Union

Européenne: la sécurisation par la diversification; l'option de la mer Caspienne’, Insitut

Royal Supérieur de Défense, Brussels, March

Meritet, S. (2007) ‘French perspectives in the emerging European Union energy policy’

Energy Policy 35, 4767-4771

72

Milov, V. (2006) ‘The EU-Russia Energy Dialogue: Competition Versus Monopolies’

Russie.Nei.Vision (IFRI), No. 13, September

Ministry of Economy and Labour (2005) ‘Energy policy of Poland until 2025’ Document

adopted by the Council of Ministers on 4 January, Warsaw

Mitchell, J., Morita, K., Selley, N. and Stern, J. (2001) The New Economy of Oil. Impacts on

Business, Geopolitics and Society, The Royal Institute of International Affairs, London:

Earthscan

Mite, V. (2006) ‘Russia: Poland Holds Up EU Partnership Talks’ Radio Free Europe/Radio

Liberty, 14 November

Mommer B. (2000) The Governance of International Oil. The Changing Rules of the Game,

Oxford Institute for Energy Studies, WPM 26

Moravcsik, A. (1991) 'Negotiation the Single European Act: National Interests and

Conventional Statecraft in the European Community', International Organization, 45, 19-

56.

Moravcsik, A. (1993) 'Preferences and Power in the European Community: A Liberal

Intergovernmentalist Approach', Journal of Common Market Studies, 31(4), 473-524.

Moravcsik, A. (1998) The Choice for Europe. Social Purpose and State Power from Messina

to Maastricht, Ithaca: Cornell University Press

Moravcsik, A.(2006) 'The European Constitutional Compromise and the neofunctionalist

legacy' in Börzel, Tanja A. (ed.) The Disparity of European Integration: Revisiting

Neofunctionalism in Honour of Ernst B. Haas, London: Routledge, 133-170

Nelson, B. (1993) The State Offshore: Petroleum, Politics and State Intervention on the

British and Norwegian Continental Shelves, New York: Praeger

73

Official Journal of the European Union (2005) Euro-Mediterranean Association Agreement

between the European Community and its Member States, of the one part, and the

People’s Democratic Republic of Algeria, on the other part, OJ L292, 8 November

Peterson, J. (2004) 'Policy Networks' in Wiener and Diez (eds.) European Integration Theory,

Oxford: Oxford University Press, 117-35

Pirani, S. (2007) The Ukrainian Gas Industry: Domestic and International Perspectives,

Oxford: Oxford Institute for Energy Studies

Pollack, M. A. (2005) 'Theorizing EU Policy-Making' in Wallace, H., Wallace, W. and

Pollack, M. A. (eds.) Policy-Making in the European Union. Fifth Edition, Oxford:

Oxford University Press, 13-48

Putnam, R. (1988) 'The Logic of Two-Level Games' International Organization, Vol. 42

(Summer)

Rittberger, V. and Zürn, M. (1991) 'Regime Theory: Findings from the Study of East-West

Regimes' Cooperation and Conflict 26, pp. 165-183

Rosamond, B. (2000) Theories of European Integration, Houndsmills: Macmillan.

Rosamond, B. (2006) 'The uniting of Europe and the foundation of EU studies: revisiting the

neofunctionalism of Ernst B. Hass' in Börzel, Tanja A. (ed.) The Disparity of European

Integration: Revisiting Neofunctionalism in Honour of Ernst B. Haas, London:

Routledge, 21-38

Sander, M. (2007) 'A "Strategic Relationship"? The German Policy of Energy Security within

the EU and the Importance of Russia' in 'Dealing With Dependency. The European

Union's Quest for a Common Energy Foreign Policy' Foreign Policy in Dialogue Vol.8,

Issue 20, 11 January, 16-24

74

Schmitter, P. (2006) 'Ernst B. Haas and the legacy of neofunctionalism?'in Börzel, Tanja A.

(ed.) The Disparity of European Integration: Revisiting Neofunctionalism in Honour of

Ernst B. Haas, London: Routledge, 39-56

Sébille-Lopez, P. (2006) Géopolitiques du pétrole, Paris:Armand Colin

Svedberg, M. (2007) 'Energy in Eurasia: the Dependency Game' Transition Studies Review

14(1) 195-202

Taylor, I. (2006) ‘China’s oil diplomacy in Africa’ International Affairs, Vol. 82, No. 5, pp.

937-959

Umbach, F. (2004) ‘Global Energy Supply and Geopolitical Challenges’ in Godement, F.,

Nicolas, F. and Yakushiji, T. (eds) Asia and Europe: Cooperating for Energy Security,

Japan Center For International Exchange

Umbach, F. (2007) 'Towards a European Energy Foreign Policy?' in 'Dealing With

Dependency. The European Union's Quest for a Common Energy Foreign Policy' Foreign

Policy in Dialogue Vol.8, Issue 20, 11 January, 7-15

Waltz, K. (1979) Theory of International Politics, New York: McGraw-Hill 1979.

Waltz, K. (2003) The Anarchic Structure of the World Politics, International Politics:

Enduring Concepts and Contemporary Issues, New York: Addison-Wesley Publishers

Westphal, K. (2006) Energy Policy between Multilateral Governance and Geopolitics:

Whither Europe?, IPG 4/2006, Berlin.

Wyciszkiewicz, E. (2007) ‘One for All, All for One – The Polish Perspective on External

European Energy Policy’ in 'Dealing With Dependency. The European Union's Quest for

a Common Energy Foreign Policy' Foreign Policy in Dialogue Vol.8, Issue 20, 11

January, 34- 42

75

Youngs, R. (2007) ‘Europe’s External Energy Policy: Between Geopolitics and the Market’,

CEPS Working Document No. 278, November

Personal Interviews

Interview with Lombardini Massimo, Principal Administrator, Energy Policy and Security of

Supply Unit, DG TREN, European Commission, 6 June 2008