How Effective is Energy as an Instrument of Russian Foreign Policy?
This article was written by Lucy Aspinall, Pinsker Centre Policy Fellow '23, and was originally published in International Relations Today
Over the course of the 21st century, Russia has been able to build up a vast energy supply network, particularly across continental Europe. The Russia-Europe energy network, with infrastructure such as the Nord Stream pipelines, is both extensive and integrated. This network, combined with vast Russian energy resources has been a very attractive asset for energy-scarce European nations seeking new areas of supply to meet increasing energy needs.
As a result, in recent years Russia has been able to evolve as a dominant player in the European energy market, enabling the Russian government to gain significant influence through their abundance of resources. A key example that illustrates this is the vital Nord Stream pipeline which is owned and operated by Nord Stream AG, whose majority shareholder is the Russian state-owned company Gazprom.
Energy has therefore become an integral part of Russia’s foreign policy thinking, with supply and networks utilised as an instrument within their foreign policy to achieve aims beneficial to the Russian Government.
This power and influence was only reinforced by European partners. For example, the 2013 joint commitment to “long-term strategic EU-Russia energy cooperation” set out a ‘Roadmap’ for EU-Russia Energy Cooperation until 2050.
The European Union as a whole remains the world’s largest importer of two strategic commodities— oil and gas—with Russia being its main supplier. This dependent relationship between Russia and its energy partners has meant that they hold significant leverage above influential European states integral to European defence and economic structures such as NATO and the EU.
Russia’s Energetic Manipulation
The Russian Government has attempted to use this leverage and weaponize European dependence on Russian energy imports amidst the war in Ukraine in an attempt to mitigate the strength of European nations’ response to their illegal invasion.
For example, in the months after the invasion of Ukraine, Nord Stream 1, Russia’s largest gas pipeline to Europe was closed indefinitely after several leaks were found in it and a parallel pipeline, Nord Stream 2. It is estimated that Russia has cut its gas supplies to EU states by 88% (2021 – 2022 period) with the wholesale prices of gas in Europe more than doubling in this period.
Evidently, the aim of this, and other moves to restrict energy supply to Europe and thus increase energy prices for consumers, was an attempt to pressure states to renege on the strength of their commitments to Ukraine. This gamble has clearly backfired as, since the Russian invasion of Ukraine in 2022, states (particularly in Western Europe) have now begun to decrease their reliance on Russian energy exports. For example, the World Economic Forum estimated that Russia’s overall share of EU energy imports dropped by more than 10 percentage points between the first and third quarters of 2022, from 25.5% to 15.1%.
Despite utilising energy as a coercive foreign policy tool, Russia has not achieved its desired aims in Europe. But, with an expanding network outside of Europe as Russia remains reliant on the export of its energy resources, could there be potential for it to regain influence elsewhere?
With declining coercive influence in Europe amidst declining energy exports, Russia desperately seeks new markets for its energy resources as it attempts to fuel spending for its continued invasion of Ukraine. However, this time it is the states who are strengthening their energy imports from Russia that hold the leverage and the price at which Russian oil is traded illustrates this.
Russia’s Counterproductive Strategy
Due to current sanctions against Russia, Russian oil is being traded at a significantly lower price per barrel than previously due to a price cap that has been implemented by states. The Centre for Research on Energy and Clean Air estimates that Russia is losing out on approximately $175m (£140m) a day from fossil fuel exports as a result.
Consequently, Russia is offering to cut prices for its energy exports to new partners outside of Europe. For example, Russia’s energy partnership with India, China and Turkey has increased significantly as they attempt to expand their market to mitigate the impact of the loss of the European market. It is estimated that together they now make up 70% of all Russian crude flows by sea.
Russia is no longer able to wield its resources as a coercive foreign policy tool, instead, it is at the mercy of the market with its desperation for exports illustrated by the cut-price trade deals states such as China and India are securing.
For several years the seemingly ‘mutually beneficial relationship’ enabled Russia to gain significant soft power influence within Europe as a reliable supply of energy to meet European energy needs.
The basis for Russia’s relationship with newly forged energy partners is mutually beneficial to some extent as Russia ‘clutches at straws’ desperately seeking new markets as their energy exports fuel the Russian war machine. But, in this case, it is clear who is wielding all the power, and it is not Russia.
Photo credits: Sima Ghaffarzadeh, sourced on pexels.com