Briefing Paper

Briefing Paper 191 (2016)   

Dividing the EU with energy?
Unpacking Russia's energy geoeconomics


Published 1.3.2016

Toivo Martikainen & Antto Vihma
The Finnish Institute of International Affairs

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Russia’s economic ideology is increasingly based on its national security interests instead of modernisation or free trade. Russia’s use of its energy resources as a means of enhancing its strategic influence in its neighbourhood and the EU can be analysed as energy geoeconomics.

Russia’s current crisis mode, internal mobilisation and confrontation with the West emphasise the tendency for strategic and geoeconomic goals to take precedence over commercial interests. In this view, what matters most is not the profitability of energy projects, but rather their usefulness in achieving geostrategic goals and securing the regime’s power and interests domestically.

With the Nord Stream II gas pipeline project, Russia can portray the EU as weak and disunited. More precisely, the project weakens Germany’s solidarity within the EU ranks, and creates a substantial policy incoherence for Brussels vis-à-vis the Ukraine crisis by undermining Ukraine’s status as a transit state.

The Fennovoima nuclear power project in Finland demonstrates how the geoeconomic operation, in which political ends are tied to economic ones, ‘trickles down’ to countries on the receiving end of large-scale energy projects with Russia.

Many constituencies within the EU are well aware of Russia’s ‘wedge strategy’. However, several actors always see economic interdependence as a positive sum, which makes them vulnerable to strategic dependencies. The EU and the member states should recognise Russia’s strategic behaviour in the energy sector, counter it firmly, and thereby also create space for genuine commercial cooperation.

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