The Nexus Between Foreign Policy and Energy Policy: The Quest for Energy Security
"Perhaps Foreign Policy is a matter of energy policy amidst the energy transition"
Written By: Iacopo Esposito
Energy and power are profoundly intertwined, insomuch that often foreign policy is energy policy. At the same time, there is also a tendency to look at energy as a utility for our daily life: to heat our houses, run our cars or make the economy function. But if one looks at it from the prism of security, the role energy plays as a fundamental geopolitical factor becomes clear. The current events in Ukraine are just a stark and additional reminder of how energy interplays with other circumstances in defining war and peace.
As best explained by D. Yergin in his must-read book for anyone interested in energy, “The Prize: The Epic Quest for Oil, Money & Power”, many of the conflicts that have taken place around the world, including World War II, have been won because of energy resources, or have been fought to gain or retain access to sources of energy. One the one hand, without the ingenuity of placing gasoline jerrycans in underground locations on the European soil, the US Army and resistance forces would not have won the war against Germany and its allies. On the other, the underlying motivation for the 1991 Gulf War, so-called Desert Storm, was also access to energy. Situationally, when Saddam Hussein invaded Kuwait in 1990, the West feared that half of the world's entire oil supply could fall under the control of one man, if he then marched into Saudi Arabia too. This marked the moment when the United States and their Allies entered the conflict, and the war ended in 100 days with Saddam Hussein’s defeat. A resemblance of stability was restored in the region – materialized with the price of oil returning to $40 a barrel.
As events in Ukraine are still unfolding at the time of this writing only history will tell with certainty, yet energy likely represents a significant dimension of Russia’s attack, coupled with the Russian President’s design to restore Russia’s power over the former Soviet space. Energy has always been high atop Russia’s foreign agenda. Indeed, President Putin was reported to have said that “oil is no doubt one of the most important elements in world politics”, and the Russian Federation wields a significant amount of it. It is one of the three big oil producers (joined by the US and Saudi Arabia) and the second-largest producer of natural gas, second only to the US. Russia exports 11% of its oil and natural gas production to Europe and Europe imports 25% of oil and 40% of natural gas from Russia. It is a common view by now that President Putin miscalculated the united and compact reaction of the US and its European allies when it was question of adopting very stringent economic sanctions, including in the energy sector. Most probably, energy dependence was factored in by Russia as a deterrent pushing Europe to opt for a milder reaction to its military aggression of Ukraine, as was the case on the occasion of the invasion and subsequent illegal annexation of Crimea in 2014.
While the EU sanctions stop short of banning all oil and gas import from Russia, at least for now, what is interesting to notice is that Europe’s dependence from Russia for energy has not prevented it to, first, adopting a sanction policy aiming at deglobalizing Russia, and, second, taking the risk that Russia could have stopped the flow of energy to Europe – probably a “calculated” risk because Europe is aware that Russia needs the gain from oil and gas exports to finance its war machine. However, notwithstanding years of keeping the dialogue open with Russia and the resistance from the German political leadership to stop the construction of Nord Stream 2, thereby reducing its energy dependence from Russia, Germany, finally, suspended the approval of the new pipeline on 22 February 2022. The Nord Stream pipeline, inaugurated in 2011, was meant to deliver Russian gas directly to Germany under the Baltic Sea, thereby passing over the traditional Ukraine route. At the time, Russia celebrated it as its “contribution to European energy security”, due to the gas clashes between Russia and Ukraine that had repercussion on Europe in the 2000s.
As much as the US, the European Union and its member states are now actively laying the ground to make Europe independent from Russian fossil fuels by 2030, the fact remains that Europe cannot switch from Russian to other energy providers overnight. Steps to reduce dependence and diversify suppliers are nonetheless being taken and they will improve Europe energy security. Lithuania and Poland, already back in 2014 and 2015 respectively, opened LNG terminals to sever their dependence from Russian gas and increase their security – the Lithuanian terminal called symbolically “Independence”. Following Ukraine’s invasion, further steps have been devised, such as increasing LNG supply from the US (the US committed to provide additional liquified natural gas (LNG) volumes for the EU market of at least 15 billion cubic meters in 2022 with expected increases going forward) , re-directing towards Europe the Qatari LNG destined to Asia in the spot market, and the frenetic diplomatic outreach by the EU to oil and gas producers in the Middle East and North-Africa.
European Commission President von der Leyen and US President Joe Biden, in their joint statement on 25 March 2022, also renewed their commitment to “strategic energy cooperation for security of energy supply and reducing dependence on fossil fuels” and established “immediate cooperation to address the emergency energy security objective of ensuring appropriate levels of gas storage ahead of next winter and the following one”. Such a statement equates the importance of energy security in foreign policy with the need to transition away from non-renewable energies. In conjunction, the EU is launching its long-term plan “REPowerEU – eliminating our dependence on Russian gas before 2030”, which revolves around two pillars: (i) diversifying gas supplies, via higher LNG imports from non-Russian suppliers, and larger volumes of biomethane and renewable hydrogen; and (ii) a gradual replacement of these with stable, affordable, reliable, and clean energy sources.
All the developments above point in one direction: energy security is already having a crucial role in re-shaping the new geopolitical context. As such, to ensure Europe’s energy security, diversification is pivotal. While in the short-term this implies revamping existing channels of communication with oil and gas producing countries, namely in the Middle East, establishing new channels with Africa could also provide some energy stability. Opening a new strand of foreign policy for the EU and its member states, who already made of Africa one of their priorities for external action, could see the creation of some long-term partnerships. Such partnerships could become even more important with Africa’s economic development in the next decade, and the importance of having it shift to renewable energies from the start. Similarly, closer ties will be established with the US from the energy perspective as the country will increase its supply of gas to Europe, in particular LNG, along with Canada. This could boost their short-term relationships and forge the foundations for the long-term plan to use natural gas as bridge-fuel for the energy transition to renewable energies.
It thus goes without saying that energy will continue to shape the political agenda of the US, Europe, China and the world at large. Tectonic events in the geopolitical context, such as the Russian war in Ukraine, are only confirming this pattern and will bring on new foreign policy challenges and adjustments across the world. Energy remains a leverage to unite and divide countries alike. But the new geopolitical and energy market reality will also provide the opportunity for countries around the world to boost the clean energy transition, replacing fossil fuels with renewable energies and more electrification.
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