Grand Strategy or Contingency? Russia’s Energy Relations in the Eurasian Context David Dusseault Eurasia Energy Group Aleksanteri Institute University of Helsinki

Introduction Energy issue is complicated by the numerous factors that influence the sectoral decision making process; Existing approaches focus on specific aspects in the sector, but are limited in scope and explanatory power; and There is a niche to be filled in energy research.

The Question & an Alternative Is Russia an energy superpower? Full gate-keeper status over domestic and international energy policy; Based on stated policy aims and observed state centralisation. What is the nature of Russian energy policy? Interest maximisation is not guaranteed due to actor agency and conditions; Based on observed gap between capacity & expectations.

Methodology Gap between natural resource based potential and state capability to organise disparate societal interests; KKV (1994): Question, theory, data, & data usage; KKV (1994): Methods, Findings – Public; and KKV (1994): Main goal is inference: descriptive & causal.

Various Treatments Geopolitics: Goldman (2002); Timoshenko (2007); Geography & Economics: Rent Structure (Bradshaw (2006) & Gaddy and Ickes (2005)); Political Economy: Relations between Industry & the State (Milov, et. als (2006) & Sagers (2006)); Geology: Resource Structure (Dienes (2004)); Economics: Inter CIS Trade (Libman (2007)); and Sociology: Frames (Kivinen (2007) & Kennedy (2007)).

Research Traditions ActorsInterest Formation CausalityOutcomes Rational Choice Game theory (Political Science Perspective) Stable set of Individuals Free choice of ordered preferences derived from a particular set of alternatives Economically based rationalityEquilibriums Cultural Politics (Sociological Perspective) Societal actors Culturally based translation of social environment Social ChoiceCulturally based responses (?) Giddens Social Structuration (Sociological Perspective) Societal actors Preferences determined by social structures Social ChoiceSocial policies (?) Wendt Structuration (IR Perspective) States Preferences determined by international structures Strategic ChoiceState based strategies / policies Transition Paradigm (Sociological Perspective) Societal actors Preferences derived from fluctuating set of social, political and economic alternatives Social Choice Overall political, social and economic systemic change Transition Paradigm (Political Science Perspective) Reformers versus conservatives Strategic dichotomy: reform or retrenchment Rationality / Contingency Transition or re-establishment of regime-ancienne

Structuration Paradigm Actors Interest Formation CausalityOutcomes Structuration Paradigm Legal Entities Restricted choice of ordered preferences derived from a particular set of alternatives based on a variable permutation of enabling and constraining factors. Culturally influenced prioritised rationality Structuration of social, economic, and political environment / policies / change in actor base

Scientific Approach Apply social structurationist theory to the study of energy policy; and Define what factors contribute to the formulation of energy policy, how they interact in specific cases, and why and how specific energy policy outcomes emerge.

Research Question & Hypothesis What is the nature of Russian energy policy? The relationship between the balance of enabling and constraining factors and the ultimate energy resource maximisation strategy is a direct, negative correlation: –The lower the level of structured constraints, the more likely it is that an actor will be able to maximise the benefits enabled by its energy resources over time; –The higher level of constraints, the more likely it is that an actor will not maximise its benefits in principle enabled by its energy resources and therefore becomes more dependent upon other actors for its energy policy.

Independent Variables: Enabling and Constraining Conditions 1.Physical Constraints: uneven resource distribution, finiteness of natural resources, existence of energy sector infrastructure, geography, climate, accessibility of resources; 2.Informational Constraints: elites do not possess full information regarding their resources or how to fully maximise their benefits accrued from natural resource wealth; 3.Financial Constraints: finite financial resources for investment and resource exploitation, commodity prices, market size; and 4.Institutional Constraints: ability of state institutions to flexibly determine the rules of the game over time without marginalising actors or seeking rent.

Application: Russia & the EU Physical: Maturing West Siberian fields; ageing pipeline and other infrastructure; new smaller fields and transportation in difficult climatic conditions in the extreme north; high dependence on transit states; Financial: High costs of new fields development; opaque financial sector in the country, high dependence on international financial consortia; unclear investment climate for attracting FDI; Informational: Open strategy for exploiting the new fields; lack of clarity regarding relevant negotiation partners (EU Commission and individual member states); lack of access to all information regarding concerns and developments within the EU; Institutional: Market conditions and competition laws in Europe to an extent preventing monopolistic behaviour; pressures for joining multilateral frameworks like the ECT that are not fully suited to the perceived Russian conditions.

Pertinent Questions & Implications for the EU & Russia Expectations: Who determines Russian energy policy? (EU energy security?) Anticipation: Will Russian energy majors be able to deliver? Will the EU be a cooperative partner? Contingency: What can EU member states & Russia do to optimise relations under changing conditions in the energy sector?

Conclusions The gap between state capacity and long term policy goals provides opportunities for meaningful scientific research; Fluctuating conditions and limits to actor rationality call into question determinism of existing models; Observed contingency calls for a reformulated research programme.