fbpx

The Politics of Reciprocity

Simon Tisdall made mention of a briefing note released a few days ago on the EU-Russia Summit prepared by Katinka Barysch of the Centre for European Reform. The full 11-page PDF can be downloaded here, and below I include some interesting excerpts:

Russia’s political elite has never loved the EU. Now many deem it acceptable to be rude about it. I heard one Russian politician recently describe the EU as “the area people fly over to get to Asia”. Another said that only “uneducated journalists and stupid commentators” could describe Russia as anything but a liberal democracy. Yet another claimed that the EU was worse than the Soviet Union because it is run by the “diktat of bureaucrats”. … For years, the Europeans have been trying to persuade Russia to ratify the Energy Charter Treaty, a set of international rules for investment and trade in the oil and gas sector, supplemented by a protocol on energy transit. But the Kremlin cherishes the power that comes with controlling not only the exports of Russian hydrocarbons but also those from the Caspian and Central Asia through its pipeline monopoly. The EU is now trying to get some of the principles from the Energy Charter Treaty included in the post-PCA agreement. In return, it offers Russia a free trade agreement. However, Moscow has limited interest in better EU market access. Three-quarters of Russian exports to the EU now consist of raw materials that are hardly affected by trade rules. What do we mean by reciprocity? If this trade-off does not work, the EU may be looking for a deal within the energy sphere. Here, the buzzword is reciprocity. Everyone from President Putin to Chancellor Merkel to Commission officials now insists that this is the way forward in EU-Russia energy co-operation. Reciprocity implies mutual advantage and long-term interdependence. The idea is that Russia should make it easier for companies from the EU to invest in the Russian energy sector, which could help to avert possible future supply shortages. Russia in turn, gets ‘security of demand’ in Europe, not only through long-term supply contracts with European utilities as in the past, but now also through direct access to gas consumers. However, this kind of balanced relationship, while superficially attractive, would not translate easily into practical agreements. In fact, the EU and Russia mean different things when they talk about reciprocity, in line with their very different approaches to energy policy: market and rules-based in the EU; state-controlled in Russia. For Europeans, reciprocity means a mutually agreed legal framework that facilitates two-way energy investment. For Russia, reciprocity means top-level talks to identify assets of similar market value, and then swap these assets. Since the EU is not making headway on the Energy Charter Treaty, while Gazprom has been acquiring more and more downstream assets in Europe, it looks like the Russian idea of reciprocity is prevailing at present.