Caspian Report - Issue: 08 - Fall 2014

Romanian
President Klaus
Iohannis.
things appear to have gotten out of
control in East Ukraine.
Prior to the deterioration of bilateral
relations, Russia participated in the
structured security dialogue with
the EU as long as the cost-benefit
ratio was in its favour. But the EU’s
increasing focus on ensuring alternative
energy supply routes has
THE INCREASING MILITARISATION OF RUSSIA’S
FOREIGN POLICY HAS BEEN HIGHLIGHTED BY THE
KREMLIN’S APPROACH TO THE REGIME CHANGE IN
KIEV AND THE SUBSEQUENT EVENTS.
fuelled Russia’s geopolitical frustrations
and security fears. Additional
factors in this respect include: attempts
by some European states to
replicate the shale gas “revolution”
(with the participation of American
corporations); the offshore hydrocarbon
potential in the Black Sea
and the Eastern Mediterranean; the
acceleration of grid interconnectivity
at EU level; and the orientation of
policies ensuing from Third Energy
Package (market transparency, competitiveness
and liberalization, with
direct impact on Gazprom’s business
model).
The pressure on gas prices, due to
the shale revolution in the US, together
with a slow-down in energy
consumption in Europe and the
impact of the EU’s liberalisation
policies led to Russia’s acceptance
of new contractual terms, which so
far had been rigid and favourable
to Gazprom. This provided the major
West European consumers more
flexible terms, and price discounts.
At the same time, Russia’s social and
economic challenges (GDP decrease,
demographic decline, slowdown of
price growth for raw materials, corruption
and costs of political and
military reassertion) have resulted
in gradual changes to the energy security
regime in Russia, and a shift in
its relationship with the EU.
Over the time, the Russian geopolitical
game has resulted in on one
hand an asymmetric energy interdependence
between Russia and
the EU’s eastern flank, and on the
other, a symmetric interdependence
with Western Europe (with a
higher degree of vulnerability for
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CASPIAN REPORT, FALL 2014