The Conflict-Cooperation Nexus. Politicisation, Security and Domestic Institutions in EU-Russia Energy Relations

Over the last decade, EU–Russia gas relations have witnessed significant deterioration—the bilateral agenda has been narrowed down to ad hoc consultations, disputes over investment and long-term contract provisions have multiplied, and disagreements between the EU and Russia have significantly hindered the multilateral process of the Energy Charter Treaty (the ECT). This deterioration seems to be rather paradoxical in light of high gas interdependence between the EU and Russia and a rich history of well-established cooperation during the Cold War under profound ideological and strategic constraints. In addition, conflictual patterns in EU–Russia gas relations occurred in the beginning of the 2000s, during the period of high oil prices and growing global natural gas demand—the period when enhancement of cooperation would be a more expected outcome. Therefore, the core research question of the thesis addresses the puzzle: why, despite decades of cooperation during the Cold War between Western European countries and the USSR, have EU–Russia gas relations become conflictual since the 2000s? By answering this research question, the study seeks to contribute to the analysis of institutionalisation of energy relations and to reveal factors that lead to cooperative or conflictual outcomes. So far, IR research inquiries in the field have prioritised resource and normative determinisms in addressing the success or failure of energy cooperation, which assume a geopolitical-realist struggle for energy resources and a priori benevolence of free markets in line with the neoliberal economic agenda respectively. The broader geopolitical approach has explained energy conflicts by structural factors of unequal resource allocation across the world and attributed a direct impact of a state resource base (an energy-rich or energy-poor state) on states’ behaviour in the international arena. Another strand of the literature, ‘the market approach’, has also viewed problematic cooperation as a result of different interests of energy producers and consumers—but from a slightly different perspective. Limited institutionalisation of interactions has been explained by different models of gas markets producers and consumers choose. Thus, consumers favour a model of the competitive liberalised gas market (a market actor model), while producers would opt for a model of vertically-integrated monopoly and resource nationalism (a geopolitical actor model) in order to preserve control over resources. Pointing to a number of opposite cases, this study disregards the straightforward assumption that there is a direct link between a resource base and states’ strategies in the international arena. Bringing domestic conditions back to these debates, the study argues that increasing differences between the EU and Russia’s domestic institutional models of the gas market have been the main factor that has triggered conflictual patterns in EU–Russia gas relations since the 2000s. These domestic institutional changes have replaced attempts to build a strategic partnership with ad hoc consultations at the level of practical implementation, and have triggered broader deinstitutionalisation of multilateral gas governance in Europe. The three case studies analyse three instances of EU–Russia gas relations, tracing the crucial differences to determine the outcome—cooperation (a creation of a new or enhancement of an existing international institution), institutionalised conflict (disagreements regarding institutional settings of interactions, which are discussed and settled within the procedures of pre-existing or negotiated international institutions), or institutional conflict (expansion of disagreements beyond the pre-existing or negotiated framework of international institutions, which are no more accepted by the parties for conflict resolution) between the parties. The thesis contributes to ongoing debates about the impact of domestic institutions on actors’ policy strategies in the international arena, bringing insights from energy economics, energy law, and regulatory studies to IR. It argues that differences in domestic models under conditions of high interdependence might lead to politicisation of gas market issues and broader aspects of energy governance. The study also enriches debates about energy security, arguing that energy security depends also on a stable and predictable institutional framework for interactions, which inter alia requires compatibility of actors’ domestic models.