Energy security is a non-zero-sum game

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MOSCOW, (Nikolai Kaveshnikov for RIA Novosti)

The next Russia-EU summit scheduled for May 25 is certain to discuss energy. Russia and the European Union are connected not only by pipelines, but also by the experience of cooperation within the framework of the Energy Dialogue.

Unfortunately, the Russian-Ukrainian gas conflict has strengthened the stand of those Europeans who distrust Russia and see what they want to see rather than facts. According to them, Russia is using energy deliveries for blackmailing those who reject its imperial policies.

They refuse to see the economic essence of the conflict, or to admit that Ukraine had paid a quarter of the market price for Russian gas over the past ten years, and that it was Ukraine who started the unauthorized withdrawal of Russian gas transported to Europe.

This selective European vision promoted the transformation of the traditional thesis of energy security into "security from Russia." The official EU stand formulated by the Council of Europe in late March was more substantiated, yet it is difficult to accept some of its arguments.

First, the EU has again proclaimed the task of diversifying energy sources.

For the past few years, it has been trying to get the best of both worlds, pressing for guarantees of increased energy deliveries from Russia, while carrying on its energy diversification policy.

This reminds me of a bizarre declaration of love, when a man proposes to a girl but warns her that he would continue diversifying his private life. Moreover, Russia's attempts to diversify its gas export routes are regarded as anti-European.

It would be better to build energy security on a balance of the security of demand and offer. The security of the offer entails guarantees of stable demand for the supplier's energy and opens the door to large-scale investment in long-term projects.

Second, the EU has reaffirmed its intention to press Russia into ratifying the Energy Charter Treaty, though it is badly balanced and its ratification does not offer Russia any advantages. In particular, it does not cover issues of importance to Russia, such as marine transportation of oil and gas, trade in nuclear fuel, and the regime of foreign investment into distribution networks.

The only argument in favor of ratification is the potential inflow of foreign investment, which the ratification would allegedly guarantee. But foreigners have long been investing in the Russian energy sector, and the best examples of this are the Russian-British joint venture TNK-BP, the Shtokman gas condensate field, and the North European Gas Pipeline.

It is counterproductive to force unfavorable cooperation terms on a partner. Energy security that is based on the interests of only consumer states cannot be stable. It should also take into account the interests of producers and transit countries.

Third, the EU has promised to do its best to spread the rules of its common energy market to neighboring countries, including Russia. This promise should be assessed not from the angle of Russian specifics or falsely interpreted sovereignty, but in a purely pragmatic manner.

The goal of a common competitive gas market in the EU is to lower gas prices for the end users. However, Russia's policy is to increase prices in a controlled manner. The application of European rules to Russia would put an end to the export monopoly of state-owned energy giant Gazprom and to export control as such.

Most importantly, this will inevitably level off prices on the "common Russian-European market." Russia is aware of the potential economic consequences of increasing domestic gas prices to Finland's level ($400 per 1,000 cu m).

In other words, the EU attempt to force its model of a market economy on Russia is not an export of values, but "realpolitik" aimed at lowering gas prices on the European market by undermining Russia's competitiveness.

It is impossible to ensure one's security at someone else's expense. A sustainable energy security system can be built only on equality and respect for the interests of all parties, and on asset swaps at all stages of energy production and supply. Russian energy supplies to Europe will be ensured most reliably if Russian and European companies jointly control and get profits along the entire gas route from the well in West Siberia to the gas stove in Scotland.

And lastly, energy security should not be limited to hydrocarbons. There is a huge potential for joint projects in nuclear power (the Russian initiative of creating a network of international uranium enrichment centers), energy efficiency, and the development of alternative energy sources in energy-hungry developing countries.

Moreover, an exchange of technologies could pave the way to joint research and educational projects. The Russian state concern for nuclear-generated electrical and thermal energy (Rosenergoatom) and British Nuclear Fuels Ltd. are implementing joint projects of training nuclear power plant personnel.

The Russian and European business is acting more constructively than diplomats, who should probably take the cue from business in this case.

Nikolai Kaveshnikov is a researcher with the Europe Institute at the Russian Academy of Sciences.

The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.

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