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The European Union Energy Policy:

An Initiative in Progress

Anna RulskaApril 2006

I. Introduction

In January 2006, Russia cut off supply of gas to Ukraine. The European Union (EU), dependent

on gas from Russia, delivered through Ukraine, realized the full extent of its vulnerability in the

realm of energy security and a need, more pressing now than ever, for a common energy policy.

Shortages of energy carry implications not only for domestic producers and consumers, but alsofor external security of the EU, for energy becomes a strong bargaining chip for Russia who can

easily exert pressure on the EU membersespecially those who do not possess their own

supplies and whose energy sources are not diversified.

What is the current energy policy of the EU? Can the EU member-states agree on an effective

common energy policy? What is an effective energy policy for the EU? Why has the subject of a

common energy policy climbed the EU agenda now? Can disparity in national interests and

levels of dependency be breached to create a common energy policy? What are the challenges

the EU is facing in creating an effective common energy policy? What dangers lay ahead the EU

if the members do not agree on common policy? These are but a few questions associated with

issues of European energy.

The need for a common EU energy policy is a factand the mechanics and provisions of such a

policy should be left to specialists on energy security. Instead, this essay asserts that the EU

energy policy is really a matter of two intertwined policies: energy policy and security policy.

In terms of energy policy, the issues of security of supply and managing demand are vital. In

terms of foreign policy, assuring diversity in supply in order to reduce the dependence of Europe

on one source of energyand creating political security through a proper management of energy

sources through foreign policy cannot be overlooked. Since the scope of the issues involved in

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the field of energy security presents a broad and complicated puzzle, this paper will focus on the

EUs relationship with Russia and use this particular relationship as an example.

This essay sets out to discuss the issues of European energy at play. First, general principles

governing energy security will be discussed, leading the way to European dependence on energy.

The second part of the essay will present the current energy situation in Europe, followed by

issues associated with divergent energy needs of member-states. Next, energy policy at present

and its proposed changes will be explained, followed by a stipulation on possible obstacles to

implementation of such a policy.1

II. Energy in the European Union

Energy dependency and diversification of energy sources seem to be the buzzwords in

Europe these days when discussing energy issues. While energy dependency shows the extent

to which a country relies upon imports in order to meet its energy needs, 2 diversification of

energy sources indicates diversification of imports with respect to imported energy sources.

These, in turn, are assured through long-term political stability in regions of origin and the

resource base in regions of origin, including the home region/country itself.3 Energy security can

be enhanced through: drawing on foreign energy resources and productsincreasingly aide by

energy treaties and charters and by investment and trade agreements; adequate national/regional

strategic reserves to address any interruptions, shortages, or unpredictably high demand;

technological and financial resources and know-how to develop indigenous renewable energy

resources and domestic power generating facilities; attention to environmental challenges;

diversification in import sources and types of fuels; energy conservation and efficiency

measures.4

1The reader should keep in mind that the issue of European energy policy is a continuous processone that is

developing and unfolding right before our eyes. The urgency of this issue, furthermore, cannot be underestimated.This essay assumes the end of March 2006 as a cut off point for research.2 European Union: Energy and Transport in Figures, 2005, Energy. European Commission Directorate General

for Energy and Transport. Available at: http://europa.eu.int/comm/dgs/energy_transport/figures/pocketbook

/doc/2005/etif_2005_energy_en.pdf.3 Jansen, J.C.; W.G. van Arkel; M.G. Boots. Designing indicators of long-term energy supply security. Energy

Research Centre of the Netherlands. January 2004. Available at:

http://www.ecn.nl/docs/library/report/2004/c04007.pdf.4 Khatib, Hisham. Energy security. World Energy Assessment: Energy and the Challenge of Sustainability.

United Nations Development Programme (UNDP). January 2001. Available at:

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Energy-producing companies, research institutions, and governmental advisors all predict that

while world energy consumption will increase in the next two decades, the energy production

will decrease.5 Europe, dependent on energy imports from other regions, is not impervious to the

global trends and does not differ from the rest of the world in terms of energy issues. A

successful energy policy for Europe should, therefore, aim to find the right balance between

security of supply, consideration for environmental impacts on local and global levels, and

competitiveness.6 The EU imports 50% of its energy. This number is predicted to rise to 70% by

2030 if no measures are taken to change the current European energy policy. In terms of oil, 45%

of imports are coming from the Middle East and 40% of natural gas is acquired from Russia.7

The challenges of dependence on foreign oil and gas are common to all European countries,

albeit to a different extent. Because of this shared need, the EU requires a more cohesive

common policy and is well positioned to act as a unit. As a unit, the EU possesses an enormous

buying power that comes from being the worlds second largest consumer of energy and one of

the most energy-efficient continents. However, Europes approach to energy in the past has been

disjointed, failing to connect different policies and different countries.8 Member-states

divergent levels of dependency on energy, as well as protectionist policies of governments, just

to name a few issues, are responsible for this lack of cohesion in the realm of energy policy.

Europe possesses limited resources of oil. Up to now, it has produced around 50 billion barrels

of oil. Before extraction, Norway and Great Britain possessed 75% of the continents total

original reserves, mostly located in the North Sea. Besides Norway and the UK, only Denmark

has a significant volume of reserves, while Rumania, the only other important producer in

Europe, peaked in 1976 and is now in serious decline. Europe now needs to import around 60%

of its oil needs, mainly from Russia and the Middle East, and it will need to increase imports by

http://stone.undp.org/undpweb/seed/wea/pdfs/chapter4.pdf.5European energy and transportTrends to 2030: The International Framework. Available at:http://europa.eu.int/comm/dgs/energy_transport/figures/trends_2030/2_chap1_en.pdf.6French memorandum for revitalizing European energy policy with a view to sustainable development. January 24,

2006. Available at: http://www.industrie.gouv.fr/energie/anglais/memorandum-anglais.htm.7 Dempsey, Judy. A warning for Europe amid fears of gas crisis. International Herald Tribune. February 16,

2006. Available at: http://www.iht.com/articles/2006/02/16/business/energy.php.8 Europes Energy Challenge.International Herald Tribune. March 8, 2006. Available at:

http://www.iht.com/articles/2006/03/07/opinion/edbarroso.php.

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around 2% yearly to maintain demand at current levels. Norway and, to a lesser extent, Great

Britain are exportersbut they are massively outweighed by the import requirements of

Germany, France, Italy and Spain.9

The EU currently imports 40% of its gas consumption; European gas reserves, located mainly in

Great Britain, the Netherlands and Norway, are also diminishing. The percentage of imports,

therefore, could rise to 70% by 2020. Russian gas imports account for 25% of EU gas supplies

and almost all of them come from one single company, Gazprom, on which the Russian

government has a strong influence.10

The Commissions Green Paperon security of energy supply published in November 2000 drew

a sobering picture of the EUs energy situation. Namely, it predicted the rise of energy

dependency in Europe from 50% in 2000 to aforementioned 70% in 2030. The imports of oil

will increase from 45% to 90%. By 2030, over 60% of EU gas imports are expected to come

from Russiafrom 40% coming from Russia today, 30% from Algeria, and 25% from Norway

with overall dependency expected to reach 80%a 100% increase from 2000.11

Aside from infamous Russia, the Middle East plays a key role in issues of European oil and gas

dependency: 63% of the worlds oil reserves and 35% of the reserves of gas are concentrated

there. Europe imports around 3 million barrels per day from the Persian Gulf, which translates to45% of its oil imports. The EU is the primary purchaser of oil and the primary supplier to Saudi

Arabia (38% of its imports) and Iran, and the main trading partner with the countries in the

Persian Gulf. It is both Kuwaits and the United Arab Emirates leading supplier30-40% of

imported goods.12

The picture emerging from the above numbers is one of European dependency on oil from the

Middle East and on gas from Russia. Any debate on the European energy policy must, therefore,

take this geopolitical dependency situation into consideration.

9 Energy supplyEnergy security in Europe. Petroleum Review . August 5, 2002.10 Gas Crisis: Nuclear Power Part of the Solution.Foratom. January 13, 2006. Available at:

http://www.foratom.org/index.php?option=com_content&task=view&id=177&Itemid=880.11 Geopolitics of EU energy supply. March 23, 2006. Available at: http://www.euractiv.com/Article?

tcmuri=tcm:29-142665-16&type=LinksDossier.12 Paillard, Christophe-Alexandre. The European Union and Oil. Fondation Robert Schuman. November 2, 2004.

Available at: http://www.robert-schuman.org/supplement/sup186an.htm.

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III. The EU Energy Initiative: A Work in Progress

Given the nature of European dependency on foreign energy supply and following in the words

of the EU Commissioner for Energy, Andris Piebalgs: It is clear that Europe needs a clearer

and more collective and cohesive policy on security of energy supply. To date, the issue of

security of energy supply is only really considered at national member state level, but in reality

we need a much greater European-wide approach on this issue.13

Traditionally, EU energy policy has been a subject to stricter boundaries than are imposed on

national energy policies. For almost 30 years, EU energy policy has been confined to the fields

of nuclear energy and coal, as prescribed by the treaties on the European Coal and Steel

Community and on the European Atomic Community. Attempts to extend the EUs jurisdiction

to energy supplies remained unsuccessful. Repeatedly, member states could not accept an energy

chapter in the Treaty on the European Union in Maastricht and Amsterdam. Despite strong

support from the European Commission and the European Parliament, the majority of member

states fear losing their autonomy over energy policy. The main reasons have been differences in

interests between producer and non-producer countries, as well as the different structures of

national energy sectors. As a result, EU energy policy largely relies on intergovernmental co-

operation, in which each member state exercises veto power.14

With the recent expansion of the EU to the East, the policy towards Russia has become far more

prominent on the EU agenda. Similarly, eventual Turkish membership will create an EU border

with Syria and prompt a stronger EU involvement in the Middle East. Inevitably, foreign policy

relations with large suppliers will have a major energy component. From a European perspective,

the partnership idea usually comprises of two strategic dimensions related to energy. One is to

secure energy imports for the EU through economic and political interdependence; and the other

is to use the energy sector as the motor for reform in the countries concerned. Export revenues

are expected to increase investment and bring in foreign expertise, thereby further deepening

13 NucNet: Gas supply concern prompts move towards common EU energy policy. Foratom. January 4, 2006.

Available at: http://www.foratom.org/index.php?option=com_content&task=view&id=178&Itemid=880.14 Egenhofer, Christian. Turning Point: European Energy Policy. Center for European Policy Studies. 2002

Available at: http://www.british-energy.co.uk/documents/Turning_Point_-_European_energy_policy.pdf.

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economic interdependence. The typically applied tool by the EU to exert its influence is to

enhance economic interdependence.15

EU leaders met in Brussels at the end of March, 2006. This summit had energy issues on the top

of its agenda, along with its traditional economic and social agenda. Their goal was to develop a

new Energy Policy for Europe (EPE). Discussions were based on Commission suggestions

presented in a Green Paper published in the beginning of March. EU energy ministers supported

the main points of the Green Paper; however, they insisted on preserving national sovereignty on

key aspects of energy policy including the choice of energy mix and rejected the idea of a single

European energy regulator. Therefore, the summit was limited to more general principles and

already agreed goals of securing energy supply and competitiveness.

Although EU leaders fully realize the need for and the advantage of a common energy policy,

they have a hard time overcoming their national loyalties. Frances President Chirac, whose

country is in a row with Italy over the blocking of Enels takeover bid of the French energy

utility Suez, asserts that the construction of a European energy policy cannot be confined to the

liberalization of markets. Rather, it should aim to develop European champions based on solid

industrial ambition and not on a purely financial approach.16

EU leaders backed proposals to strengthen energy cooperation and confirmed a strategy aimed primarily at increasing the EUs security of energy supply through: increased cooperation

on external policy with main supplier countries such as OPEC and Russia, as well as with major

transit and consumer countries; diversification of energy sourcesboth external and indigenous

and transport routes; and a common approach to address crisis situations in a spirit of

solidarity. The summit insisted on a balanced approach with the two other policy objectives of

ensuring the competitiveness of European economies and securing longer term environmental

sustainability.17

The 2006 Green Paper: Green Paper: Doing more with less tries to integrate national energy

policies under an umbrella of the EU. It identifies five main goals: to speak with one voice on

15 Egenhofer, Christian. Turning Point: European Energy Policy.16 EU leaders take small steps on European Energy Policy. March 24, 2006. Available at:

http://www.euractiv.com/Article?tcmuri=tcm:29-153667-16&type=News.17 EU leaders take small steps on European Energy Policy.

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strategic energy issues; to diversify the mix of primary energy resources; to become the worlds

most energy-efficient region; to become the world leader in low carbon energy research and

development; and to complete the internal energy market by 2007. Furthermore, the Green

Paper proposes six priority areas that should lead to the development of a reinvigorated

European Energy Policy: a common European external policy for security of energy supply;

a common European internal policy for security of energy supply; increase the use of clean and

indigenous energy sources; a strategic plan for European clean energy technologies; Europe-

wide action on energy efficiency; completing the internal European electricity and gas markets

by 2007.18

In contrast, the November 2000 Green Paperunderlined the need to diversify energy sources in

view of an increasing dependency on Russia for gas and the Middle East for oil and led to newlegislative initiatives on the use of renewable energy sources and on energy efficiency. The

Commission also attempted to improve the internal energy market by liberalizing the electricity

and gas sector.19

Increasing oil and gas security top the EU Commission energy agenda. The main actions

specifically proposed by the European Commission include: an harmonization of national

storage systems, with the institution of public and private agency, a wider coordinated use of

security stocks, and an increase in the physical amount of oil stocks. Long term measures for

enhancing oil supply security can be seen on both, the demand and supply sides. Main demand

side policies extend to: energy saving and efficiency, investments in R&D; and reduction of oil

price inelasticity especially for the transport sector. On the other hand, the supply side reforms

include: cooperation and institutional promotion for supply diversification of suppliers and

routes. Main factors that could affect described policies could be the liberalization of

international trade even in the energy sector and the increasing role of oil demand from

developing countries.20

18Green Paper: Doing more with less. Available at:

http://europa.eu.int/comm/energy/efficiency/doc/2005_06_green_paper_book_en.pdf.19Green Paper on a European Strategy for Sustainable, Competitive, and Secure Energy. Available at:

http://europa.eu.int/comm/energy/green-paper-energy/index_en.htm.20 Costantini, Valeria and Francesco Gracceva. Oil Security Short- and Long-Term Policies. International Energy

Markets. September 2004. Available at: http://www.feem.it/NR/rdonlyres/F833EBD1-B28C-493B-AC9A-

3E12CE6091FD/1265/11504.pdf.

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The EU faces the prospects of a substantial increase in gas imports in the next three decades in

the absence of rigorous policies at EU and national levels. The enlargement of the EU to twenty-

five countries temporarily increased the degree of gas-import dependence, as eight new

accession countries are net gas importers. But the enlargement to thirty countries would reduce

the degree of gas-import dependence because of the inclusion of Norway.21

As far as the support of citizens for energy policy goes, majority of EU citizens47%would

prefer European level decisions on the new energy challenges such as energy supply security,

growing energy consumption and climate change, as opposed to 37% who prefer to leave the

decision-making power to national governments, and 8% who want to have it decided on a local

level. Commissioner Piebalgs summarized the results of the Eurobarometer poll in the following

words: The message from the citizens is a clear one energy is a concern for all Europeans andpeople expect clear and concrete actions on all political levels. Europe needs a real energy policy

focused on security of supply, competitiveness and sustainability.22

The survey, conducted in 2005 in the 25 EU Member States, reveals that citizens consider

renewable energy, and research and technology as the main means at national level to reduce the

current energy dependency. Almost half of all EU citizens (48%) believe that their national

government should focus on developing the use of solar power, followed by promoting advanced

research for new energy technologies (41%) and developing the use of wind power (31%).

Regulation for the reduction of dependence on oil (23%) and developing the use of nuclear

power (12%) are less appreciated among the respondents.23

IV. The EU Energy Outlook: Issues at Play

The German foreign minister, Frank-Walter Steinmeier, said recently that no country could

pursue an independent energy policy alone. Throughout the world, peaceful economic

development and energy security are inextricably linked. Energy security involves the security

21 Oostvoorn, van F., ed. Long-Term Gas Supply Security in an Enlarged Europe. Energy Research Center of the

Netherlands. 2003. Available at: http://www.ecn.nl/docs/library/report/2003/c03122.pdf.22 European Citizens in favour of a European Energy policy, says Eurobarometer survey. January 24, 2006.

Available at: http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/06/66&format=HTML

&aged=0&language=EN&guiLanguage=en.23 European Citizens in favour of a European Energy policy.

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of all stakeholdersproducers, transit states and consumers. This global dimension also means

that national efforts alone are inadequate and that we must find an alternative to confrontational

approaches.24 Although the above discussion on the European energy policy makes it clear that

even though there is a need for a cohesive, EU-wide energy policy to ensure security of supply

and reduce demand, hereby reducing the dependence of Europe on foreign energy supply, the

actual creation of such a policy presents a difficult task. Forces at play, such as member-states

sovereignty, protectionism of national industries, issues associated with nuclear energy, different

approach to Russia, all pose obstacles to establishing an effective energy policy. This section

discusses these issues in an attempt to provide a broad framework in which EU leaders operate to

form an energy policy acceptable to all member-states.

Need for a combined foreign and energy policy

Luc Werring, principal advisor to the EU Commission for Energy and Transport asserts that:

We need to integrate our energy policy with our foreign policy.25 A senior German military

officer, Roland Kstner, said that makeshift solutions did not usually ensure energy security.

Energy policy and security policy are closely linked to each other.26 Kevin Rosner, an energy

consultant for G-8 and director of NATOs energy security forum, claims that Russia has signed

off on using energy as a political tool. Energy security moved beyond the sphere of national

security to become an international concern that required an international response.27

With development of European Neighborhood Policy, as well as preparing accession of Turkey

into the EU, energy issues should play a role as well. Most EU countries support the position

that producer countries and transit countries, particularly Ukraine and Turkey, should be

included in a wider European energy community. Swieboda, the Polish Foreign Ministry official,

said that Poland supports an energy policy in which the EU would include south-east Europe on

the one hand as well as Ukraine and Turkey on the other.28

24 Dempsey, Judy and Dan Bilefsky. EU unity on power is elusive. International Herald Tribune. March 23,

2006. Available at: http://www.iht.com/articles/2006/03/22/business/energy.php.25 Dempsey, Judy. A warning for Europe amid fears of gas crisis.26 Ibid.27 Ibid.28 Dempsey, Judy and Dan Bilefsky. EU unity on power is elusive.

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Protectionism vs. liberalization

Several member-states, reportedly led by France and Poland, resist liberalization of energy

market in favor of protectionism.29 Recently, Brussels sent warnings to Austria, Belgium,

Britain, the Czech Republic, Germany, Estonia, Finland, France, Greece, Ireland, Italy,

Lithuania, Latvia, Poland, Spain, Sweden and Slovakia for not adhering to liberalization

directives on gas and electricity. If these states fail to implement the directives in form and

substance, they face lawsuits in the European Court of Justice. The EU Commissioner for

Energy praised Denmark and Netherlands as the only two members to have a clean bill of

health when it comes to liberalization of energy markets.30

The battle between the EU institutions and member-states regarding energy market liberalization

is not new. In theory, companies have been free to choose their energy suppliers since July,2004; 31 however, the practice does not hold up to theory. Now, that the EU leaders agreed to

push for a joint strategy, the EU has no choice but to enforce the law if a common energy policy

is to work effectively.

Power of institutions vs. state sovereignty

A number of countries are reluctant to open their markets to more competition, while others are

struggling with giving the European Commission more powers over the energy sector. Many EU

members regard energy as a crucial national security issue that should not be put under the

control of the Commission. States are mainly concerned with situations where they would come

to the aid of one another in the event of a supply shortage, and whether to connect key transition

grids that run to Europe. Another issue is access to national storage facilities, which are

considered security assets. Several countries, particularly Germany and the Netherlands are

reluctant to open up their storage facilities to other member states, unless in exceptional

circumstances.32

The commission is also facing resistance in establishing a regulatory authority for energy.

Germanys chancellor, Angela Merkel, at the March summit bypassed the issue of granting

29 Ibid.30 EU governments pressed to power up energy reform.EU Business. April 4, 2006. Available at:

http://www.eubusiness.com/Energy/060404121548.ikhiudm0.31 Ibid.32 Dempsey, Judy and Dan Bilefsky. EU unity on power is elusive.

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powers to the Commission and instead focused on the need to diversify energy sources by

opening up the energy grids and fostering much closer relations with countries from North Africa

and the Middle East.33

East-West Diversity

Given the centrality of energy for the functioning of the economy as a whole, this is an area

where aspects of the relationship with Russia, compounded by other problems, contribute to

differences between the older EU members and he new CEE acquisitions.34 CEE states, even

though similarly dependent as the other EU members, face different challenges stemming from

their proximity to and relationship with Russia.

Important differences can be seen in four areas: structure of energy use, energy dependence,

infrastructure, and politization of the issue. The first important difference between the energy

situation of these countries and that of the Western European ones has to do with the fact that the

CEE countries have a much higher level of energy dependence on a single sourcenamely

Russiathan other European countries. This is especially clear in the case of gas, where the

candidate countries dependency in terms of gas is much higher than that of EU member states.

The CEE states combined imports of gas hover around 72%, whereas the rest of the EU

members combined average is close to 42%. The situation is similar in the case of oil, albeit thedifference in imports is less drastic: the CEE imports 87.7% of its oil energy and the rest of the

EU 76.8%. Furthermore, although overall dependency rates may not differ significantly,

dependency on a single supplier is much more marked in the case of the CEE countries. While in

the Western European countries the level of dependency on a single source hardly exceeds 30%,

the CEE countries level of energy dependency on Russian oil and gas oscillates between 50

100%.35

The difference between Eastern and Western Europe is further marked with disparity in

efficiency of infrastructure and the role energy plays in politics. The legacies of difficult

33 Ibid.34 Balmaceda, Margarita M. EU energy policy and future European energy markets: consequences for the central

and east European states. Oil, Gas and Energy Law Intelligence 1:2 (March 2003). Available at:

http://www.gasandoil.com/ogel/samples/freearticles/article_40.htm.35 Ibid.

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relations with the Soviet Union make it very difficult for trade with Russia to be conducted as if

it was trade with any other country. For the CEE countries, energy is the most sensitive part

of trade with Russia, and trade with Russia is not just trade: it is marked by the shadow of it

being trade with the former hegemon.36 Mistrust and apprehension mar the perception of their

relationship with their main suppliersan element that is not present in the relationship of other

European states and their suppliers, be it Norway or Algeria.

Energy as a Political Tool: Example of Russia

As asserted earlier, the lines between energy policy and foreign policy have been blurred. The

developments of January 2006 proved that Russia uses its energy to assert regional control. With

increasingly more centralized power, Russia influences not only CEE states but also the rest of

the EU as well.

37

Russias energy companies have become clear instruments of foreign policy.Dmitry Medvedev, Gazprom chairman, is the countrys first deputy prime minister. Also, Igor

Sechin, chief of the Kremlin administration, is CEO of Rosneft, Russias fastest growing energy

company.38

The problem with a joint energy policy, one that takes into account European dependence on

Russia, again rests on the disparity in perceptions toward Russia between CEE states and

Western Europe. Poland, supported by the Baltic States, said it wanted the European Union to

move quickly in reducing its energy dependence on Russia and adopt a much tougher and

collective stance in dealing with Russia. But Germany and France said they were unwilling to

isolate Russia, preferring instead to engage it in a long term energy relationship beneficial to

both sides.39

European Commission President, Jose Manuel Barroso, met Russian President, Vladimir Putin,

in Moscow in March of this year. Reportedly, Putin assured Barroso that Russia wants to be a

credible and stable partner for the EU. 40 Europe is dependent on gas from Russia, but

conversely, the EU is also the largest client of Russia. If Russia loses credibility as a reliable

36 Ibid.37 Smith, Keith. How Dependent Should We Be on Russian Oil and Gas? CSIS Commentary. April 3, 2006.

Available at: http://www.csis.org/media/csis/pubs/060403_russian_energy.pdf.38 Ibid.39 Dempsey, Judy and Dan Bilefsky. EU unity on power is elusive.40 EUs energy dilemma: with or without Russia? EU Business. March 22, 2006. Available at:

http://www.eubusiness.com/Energy/russia.2006-03-22.

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supplier of gas, it stands to lose revenues in the future. However, two main issues seem to

hamper a healthy relationship between the EU and Russia when it comes to supplies of energy:

European Energy Charter which Russia refuses to ratify and liberalizing energy networks within

Russia with access granted to the EU.41

Russia has made energy security issues the leading theme of its G8 Presidency this year.42

However, so far Russia showed little inclination to give in to pressure to sign an Energy Charter

which would prevent it from curtailing energy supplies and would encourage opening of energy

transport infrastructure to outside competition. This position of Russia is naturalfor who does

want to relinquish control voluntarily? As the worlds second-largest exporter of oil and

owner of the worlds largest natural gas reserves, Russia holds a lot of the cards in the debate on

energy security. But it was also Moscow, that placed energy security at the top of the G8agenda and will likely have to show some flexibility on Western demands for higher

visibility in its energy sector if its G8 presidency is not to be seen as a flop.43

The European-Russian dialogue on energy started in 2000 in Paris with the sixth EU-Russia

Summit. The partners agreed then to institute an energy dialogue to enable progress in the

definition and arrangements for an EU-Russia Energy Partnership.44 German Chancellor at the

time, Gerhard Schrder, put it very well in October of 2000 when Romano Prodi was meeting

with Vladimir Putin: We need energy, Russia needs money, we have money, Russia has

energy: its clear that our interests are coming closer together. 45Jose Manuel Barroso maintains

that the EU is in a strong position to ensure that Russia guarantees its energy supplies: I believe

the leverage we have is strong because we are the main client of Russia, so we are

interdependent in a way. Russia has an interest in selling gas and oil. We also have an interest

in having that security of supply from Russia.46

V. Conclusion

41 Ibid.42 G8 urges Russia to secure reliable energy supplies. February 13, 2006. Available at:

http://www.euractiv.com/Article?tcmuri=tcm:29-152442-16&type=News.43 Ibid.44 European UnionRussia Dialogue. http://europa.eu.int/comm/energy/russia/overview/index_en.htm.45 Balmaceda, Margarita M. EU energy policy and future European energy markets.46 EU has leverage to ensure Russian energy supplies: Barroso. EU Business. March 21, 2006. Available at:

http://www.eubusiness.com/Energy/060321125056.e72q869t.

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The European Union faces a difficult, but necessary, process of constructing and implementing a

joint energy policy. The current global environment in which energy security and international

relations are more intertwined than ever makes this task even harder. The most recent expansion

of the EU to the East, as well as its future expansion to Turkey, add diversity to the EU,

challenging states to find solutions fitted for all member-states. Issues such as liberalization of

energy sectors, diversification of energy supply where some states favor more openness than

others; enhancing European energy networks; connecting the main energy transmission grid

networks that feed gas into Europe from Norway, Russia and North Africa; development of

nuclear power, just to name a few, will have to be taken into consideration to construct a

successful energy policy.

While the issue of energy is not a new topic, year 2006 seems to be the time when energy climbs

the agenda of the European Union, for it ties economic prosperity of the Union with its internal

and external security, as well as foreign relations. Energy policy also presents a test of sorts for

the EU, putting on trial yet again well-being of the collective versus national interest and

sovereignty of individual member-states. The ability of the EU to develop, implement and

execute a joint energy policy will constitute yet another step toward a finality of the EU as a

regional arrangement that transcends national borders, maturing into being more than an

international organization; rather, a joint energy policy will show the EU as deepening

institutionally into a true union of member-states.

BIBLIOGRAPHY

Energy supplyEnergy security in Europe. Petroleum Review. August 5, 2002.

EU governments pressed to power up energy reform.EU Business. April 4, 2006. Available

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EU has leverage to ensure Russian energy supplies: Barroso. EU Business. March 21, 2006.

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EU leaders take small steps on European Energy Policy. March 24, 2006. Available at:

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EUs energy dilemma: with or without Russia? EU Business. March 22, 2006. Available at:

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European Union: Energy and Transport in Figures, 2005, Energy. European Commission

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Europes Energy Challenge.International Herald Tribune. March 8, 2006. Available at:

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European Citizens in favour of a European Energy policy, says Eurobarometer survey. January

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G8 split on nuclear power in energy security talks. EU Business. March 16, 2006. Available

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G8 urges Russia to secure reliable energy supplies. February 13, 2006. Available at:


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