University of Groningen

M.A International Relations and International Organization

Agha Bayramov

aga_bayramov@mail.com

University of Groningen

15.01.2015

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European Energy Security and the Importance of the Caspian Sea

Introduction

The collapse of the Soviet Union led to both an end of an ideological clash and the

emergence of new geopolitical interests among great powers. To obtain sustainable energy

resources is one of the new political challenges of powerful states. However, the strategic

dimension of energy is not a new issue in international politics. “It has been widely discussed at

least since the 1973-4 Arab oil embargo”(Keukeleire & MacNaughtan 2008, p.222). After the

Arab oil crises, new energy cooperation and partnerships emerged and this process accelerated

after the Cold War. In other words, powerful countries like the United States, Russia and China

realized that sustainable energy resources can accelerate and strengthen their economic and

military interests. In light of this, many countries started to use their political, economic and even

military power in order to obtain and provide cheap and alternative energy sources. Meanwhile,

the importance of energy resources led to the emergence of new conflicts and competitions

amongst great powers. Europe is a major region of international energy politics due to its energy

dependency and interest, yet also because it is the headquarters of the IAEA and IEA. The four

main areas of these organizations - Energy Security, Economic Development, Environmental

Awareness and especially Engagement Worldwide - makes the region a prominent global energy

centers. The IEA is working with both member and non-member states, providing them with

authoritative recommendations and statistics. Meanwhile, it has a strong relations with other

international energy organizations such as OPEC, IRENA and IEF. Thus, these strong

partnerships and engagements make Europe one of the major energy regions.

In addition to the new political challenges, the end of the Cold War sparked an emergence

of new energy rich countries in the international sphere. Russia and newly independent Caspian

Sea countries, Azerbaijan, Turkmenistan, Kazakhstan, have become new and significant energy

actors in international politics, due to having abundant energy reserves. However, the Russian

government has effectively used the disunity of member states for its own advantage and

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established huge energy dependency relations with numerous European countries. At the same

time, Moscow has monopolized the pipeline projects of the Caspian Sea to restrict alternative

access of the EU. Thus, as stated by Zeyno Baran “the EU relies on Russia for more than 30

percent of its oil imports and 50 percent of its natural gas imports” (Baran 2007, p. 132).

Nevertheless, the energy politics of the EU began to change after the gas crisis between Russia

and Ukraine in 2007. The EU has realized that high dependency, lack of energy diversification

and disunity between member states are the main obstacles that prevent member states from

implementing strong energy policies. In light of this, the main research question for this paper is:

is Russia the main obstacle which prevents the EU from establishing alternative energy relations

with other regions, especially the Caspian countries, or are there other internal and external

reasons? This will be explored by developing various sub-questions. To investigate the EU’s

internal side: How successful was the European Union in its energy policy agenda during the

period between 1991-2007 in the Caspian Region? How did competing strategic, economic and

commercial interests impact on the EU policy? To investigate the external reasons: does Russia

need the EU more than the EU needs Russia? How can the Caspian resources influence the

energy diversification of the EU? How will strong EU cooperation with the Caspian states

impact the strategic sphere of its partner United States? In this paper, I use two main

methodologies, analytical and descriptive, to answer the questions. For analytical part, I seek to

outline where the Caspian resources can be located within the present paradigm of the EU energy

security. I make particular reference to R. Young’s Energy Security analyzing concepts of the

energy security and EU foreign policy. For the descriptive part, I utilize international journal

articles to provide comparative and statistical information.

The Energy Policy of the European Union and Challenges

To begin with, what is energy security? and How can one define it? Is there a definition? In his

article on Energy Security Daniel Yergin mentions that “although in the developed world the

usual definition of energy security is simply the availability of sufficient supplies at affordable

prices, different counties interpret what the concept means for them differently” (Yergin 2006, p.

71). For the Russian government, energy security consists of controlling the main energy routes

and monopolizing pipeline projects. However, Nikolay Kaveshinkov explains it from a different

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perspective in his article ‘The Issue of Energy Security’. According to him, “energy security

should be defined as the elimination of a threat that in the longer run the energy factor would

become a potential barrier to the economic development of a country” (Kaveshinkov 2010, p.

589). Meanwhile, he mentions that energy security should be explained in terms of both supply

and demand. Finally IEA defines energy security as “the uninterrupted availability of energy

sources at an affordable price”(Bahgat 2006, p. 965). In short, energy security is not only reliable

and sustainable supplies but is also available at a reasonable price. For the European Union,

energy security has not been the main strategy of foreign policy since the mid-2000s. The

majority of great powers realized the significance of sustainable energy during the Arab oil crisis

in 1973-4. On the contrary, “as was the case then, the looming threat to energy security has not

automatically led to member states developing a genuine ‘common’ energy policy” (Keukeleire

& MacNaughtan 2008, p.222). In other words, the lack of attention and concern of EU member

states to energy issues prevented them from establishing and implementing coherent and

strategic energy policies. Stephan Keukeleire and Tom Delreux mentions critically three main

obstacles to the EU in their book ‘The Foreign Policy of The European Union’

According to them, “the first challenge is the EU’s growing import

dependence” (Keukeleire & MacNaughtan 2008, p. 223). Although the percentage of energy

importer countries varied significantly, every year their dependence rates are increasing

considerably. “According to European Commission statistics, the EU dependency rating has

increased from 47.2 to 53.7 percent since 2002” (Ec.europa.eu, 2014). In light of this, critics

claim that due to high energy consumption and demand in the world market, this dependence

rate will be higher in the near future. In addition, European countries import their energy

resources from different countries that influence their foreign policy priorities. Each of the

member states has independent energy relations with different countries, and their position and

policy toward energy exporter countries differentiate. Thus, high energy dependency is not only

making security of EU countries vulnerable and weak, but also it impacts foreign policy

priorities of its member countries.

Secondly, critics claim that the EU does not have reliable energy partners because energy

rich countries are either undemocratic and authoritarian states-like Russia- or unstable places like

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the Middle East. In other words, because of energy interest, some European countries undermine

traditional values of the European Union and overlook undemocratic regimes. “Even Saudi

Arabia’s violent oppression of the unfolding revolt in Bahrain in 2011 did not lead to any serious

reaction from the EU and its member states” (Keukeleire & MacNaughtan 2008, p. 225 ). Russia

also oppresses human rights and has a lack of democracy, but to maintain sustainable oil and

natural gas imports, the EU condones Moscow’s poor democratic and human rights values. In the

light of this, Youngs mentions that “the standard critical view was that where the West did focus

on such values it was only as a cloak for pursuing oil interests” (Youngs 2009, p. 11).

Meanwhile, most energy producer countries do not ‘really’ support the spread of traditional

Western ideas in their countries so that the EU does not want to destroy its oil interests and

relations with these states.

Some European countries imported their energy resources from the Middle East. Although,

the Middle East is very rich in its oil and natural gas resources, there is always conflict between

countries which makes this region an unreliable energy partner. For example, there has been

conflict between Israel and Palestine since the beginning of the Cold War, and also, during the

1990s, the war between Iran and Iraq in the 1980s, then Iraq invaded Kuwait which led to the

Gulf War. After that, in 2003, the U.S invasion of Iraq. In short, the common point of most

experts is the EU should increase diversification of energy sources to response energy shocks

and disruptions. Meanwhile, instead of undermining democratic values, the EU should use its

energy relations to develop and spread the rule of law and democracy.

The last and the most important challenge of the European Union is the absence of internal

unification that prevents the EU from implementing a common ‘external energy policy’. This

idea is also supported by both experts and the Commission. Amelia Hadfield mentions this issue

in her article on ‘EU-Russian Relations’, explaining how member states accept energy as a

national policy of their countries. According to her, “each EU member state places a different

emphasis on the role of energy within its own national foreign and security policy’’(Hadfield

2008, p. 237). This is also one of the main reasons of high energy dependency because instead

of establishing energy relations under the EU, member states prefer to establish bilateral relations

with exporter countries. At the same time, they do not want the EU commission to interfere their

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national energy relations. “Even energy policy was not formally incorporated within the scope of

the Common Foreign and Security Policy (CFSP) and no legal base existed for the development

of common external energy policy” (Youngs 2009, p. 22). Florian Bauman mentions this

problem in his ‘Outer Dimension of Energy’ article. According to him, “during the gas disputes

between Ukraine and Russia, the common approach of the EU failed due to some bilateral

actions of member states like Germany”(Baumann 2010, p. 78) In other words, most of the

experts and also the EU politicians believe that the disunity among members and ineffective

collective responsibility are more significant obstacle than Russia. “At the end of 2006,

Commission president Jose Manuel Barroso declared that energy had been until recently a

forgotten subject in the European agenda”(Youngs 2009, p. 24).

But, what are the main reasons of these problems? The first reason is the differences

between power and capabilities of member states that impact both their foreign and energy

policy priorities. Small member states fear the power games of great ones. Meanwhile, for the

largest states, “EU composed of powerless member states with little capabilities to

offer” (Keukeleire & MacNaughtan 2008, p. 123). Moreover, divergent levels of capabilities

leads to the second problem: different interests among member states. In other words, due to

their power and capabilities, member states are following different foreign policy interests. Some

members of the EU – France, the UK – have different agendas because they have nuclear

weapons. Due to these reasons, they want to maximize their power capabilities and establish

bilateral relations with third party countries in terms of economic, security and energy policy.

Other reasons are political will and strategic culture. In other words, due to cultural differences,

it is very difficult to establish a common approach. Meanwhile, because of different interests,

capabilities and strategies, member states do not have strong political unity to establish a

common EU approach. But, a lack of universal will doesn't mean that there is a strong

disagreement between EU countries and that they are not united. It rather means that member

governments are reluctant and do not want to take the risk of maximizing their own interests.

Finally, critics claim that the last reason is the differences between energy dependency and

preferences of states. As it has been mentioned before, the energy dependency of states is

different from one to another. For example, “although Latvia, Lithuania and Slovakia are

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obtaining 100 percent of their imported energy from Russia, Sweden, Spain and the UK have a

low dependency on Russia”(Youngs 2009, p. 79). Also, member states have different energy

preferences like, nuclear power plants, that some of them prefer to change their energy from

natural gas and oil to nuclear but others are against this idea. “For instance, France and Finland,

prefer nuclear energy, whereas others such as Germany opted to close nuclear power plants

(Youngs 2009, p. 225). In short, the main point here is to show that many of the issues of EU

energy security are interconnected.

However, after the gas disputes between Russia and Ukraine, European states realized their

own vulnerabilities and energy weaknesses. External-relations commissioner Benita Ferrero

Waldner admitted that “the Russia - Ukraine gas dispute at the beginning of 2006 was a

‘wakeup call’, reminding us that energy security needs to be even higher on our political

agenda”(quoted in Youngs 2009, p. 224). As a result, the importance of common energy policy

was mentioned at Green Paper of Commission in 2006. Also, it was followed by the ‘Lisbon

treaty’ in 2007. In his article ‘Energy Policy of European Union’ Seymur Huseyinli claims that

the ‘Lisbon Treaty’ was a successful development in the energy sector (Huseyinli 2013, p. 22).

However, Kaveshinkov claims that the Lisbon treaty could not influence the foreign policy of the

EU powers. According to him, “although treaty of Lisbon has significantly expanded the EU

competency in the internal aspects of energy policy, EU powers in external policy still remain

very modest” (Kaveshinkov 2010, p. 587).

The Importance of Caspian Energy

“The Caspian is the largest salt lake in the world” (Encyclopedia Britannica 2014). But,

because of scientific controversies about this idea, it is called the Caspian Sea. Five nations

border the Caspian's shores: in the southwest by Azerbaijan, in the south by Islamic Republic of

Iran, in the northeast by Kazakhstan, in the southeast by Turkmenistan and in the northwest by

Russian Federation.

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! Source: U.S Energy Information Administration.

After the collapse of Soviet Union, three border countries of the Caspian Sea- Azerbaijan,

Turkmenistan and Kazakhstan- became independent states. Meanwhile, due to its rich energy

resources and geopolitical importance, the region gained the interest of foreign oil and natural

gas companies and great powers. However, these newly independent states had weak

governments and economies. This led to powerful countries in the region, such as Russia and

Iran, intending to monopolize on the Caspian’s energy resources and strengthen their political

influence over these three countries. Due to its strategic geography and rich energy resources, the

Caspian Sea gained the attention of the United States. Washington immediately recognized the

independence of these states and intended to spread its political influence over them. Thus, the

Caspian Sea has become the ‘new power game’ of great powers.

Although, the European Union did not present themselves as being particularly interested

in the region’s geopolitical importance and energy resources. In his article ‘Ensuring European

Security in Russian Near Abroad: the Case of the South Caucasus’, Lussac explains that “for a

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long time, some EU actors have been reluctant to promote European activism in the South

Caucasus due to Russia’s longstanding influence there” (Lussac 2010, p. 608). This idea is also

supported by other experts. Youngs claims that “European foreign policy struggled to gain a

meaningful foothold”(Youngs 2009, p.102). However, it does not mean that the EU was inactive

in the region during those times. Rather, European programs were mainly intended to spread the

idea of democratization and rule of law. In other words, Lussac claims that at the beginning of

1990s, the EU did not want to compete with Russian energy interests. But, how did European

activities start to change from democracy to energy politics? What are the main reasons that have

prevented the EU from utilizing of oil and natural gas resources of the Caspian Sea?

1. European Union Assistance Programs and Their Limits

After the collapse of the Soviet Union, the EU started to implement several political and

economic development programs. First of them was the Technical Assistance to the Community

of Independent States (TACIS) program. “It wanted to help these new independent states to

implement reforms in the administrative, institutional and legal sectors”(Lussac 2010, p.610).

Also, it was the first tool of the EU to interact with Caspian and Caucasus countries. After this

program, the Commission began to implement the Transport Corridor Europe-Caucasus-Asia

(TRACECA). “It aimed at the development of the transport corridor from Europe, crossing the

Black Sea, the Caucasus, the Caspian Sea and reaching the Central Asian countries”(Traceca-

org.org, 2014). Lussac claims that this program opened trade and transport opportunities with the

European states. “This program contributed substantially to the development of the Azerbaijan

and Kazakhstan oil transportation networks” (Lussac 2010, p.611). Nevertheless, D. Helly claims

that this program was implemented slowly and ineffectively “due to the intertie of member states

and the General Secretariat” (Lussac 2010) However, Youngs mentions that first important

attempts toward the Caspian Sea started by European Neighborhood Policy (ENP). At the

beginning of 1992, the European Union launched the INOGATE program to solve energy crisis

in these countries but its main purpose was a ‘humanitarian aim’. On the other hand, another

critic Bahgat explains that ‘INOGATE’ aims at promoting European investment in Caspian Sea/

Central Asian states in return for their cooperation in supplying energy to the EU (Bahgat 2006,

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p.960). In short, the EU intended to implement several programs to establish both energy and

politic relations with the Caspian Sea in 1990s but these programs could not be successful

enough.

In other words, although, these programs assisted the development of mutual relations

between regional countries and the EU, they were very limited and weak. Especially, some

experts criticize the EU due to its limited diplomatic presence. In his book ‘Energy Security’,

Youngs mentions that the main reason of limited EU presence were disappointments and failures

of diplomats during that times. Lussac mentions unwillingness of the member states. For him,

“member states were not willing to see the EU playing a stronger role in the South

Caucasus” (Lussac 2010, p.612). Furthermore, the EU intended to address internal problems of

countries. Issues such as democracy, civil servants and rule of law effectively implementing

projects, yet the Caspian countries wanted to decrease their economic and politic dependency on

Russia and gain of assistance the West. They aimed to export their energy resources to Western

countries.

Another limit of the programs was budgetary. The Commission provided limited budget

for target countries. In their book ‘The Foreign Policy of the EU’, Keukeleire and Delreux

explain that “the Commission did not have the strength, the economic, and financial capacity to

play a more active role there”(Keukelerie and Delreux 2008, p.124). However, critics claims that

European countries especially big three-Britain, France and Germany,- wanted to establish

bilateral relations with both the Caspian and Caucasus countries because they believed that the

intention of the European Union would be accepted as an anti-Russian policy. Lussac asserts that

the main reason is “any EU political involvement could harm the relationship between Europe

and Russia”(Lussac 2010, p.613). Therefore, these paradoxes blocked the effectiveness of the

EU’ programs and due to the bilateral interests, the EU could not utilize its common approach

toward the Caspian Sea countries. Zeyno Baran is also support this idea in her article ‘EU Energy

Security’, she claims that “Azerbaijan Kazakhstan and Turkmenistan have each been subject to

intimidation by Russian government but the EU leaders could not stand up to this

harassment”(Baran 2007, p.133). In other words, these examples briefly show that the

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Commission and the member states did not want to sacrifice their energy and political relations

with Russia because of the Caucasus and the Caspian Sea.

However, before to pass the importance of the Caspian energy resources, it is important to

mention briefly about the relationship between the EU and Russia. This way, it will be clear why

Russia is very significant for the EU. Also, the question will be asked: does Russia need the EU

more than the EU needs Russia?

Russia

The relation between Russia and the European Union is very special because before the

end of the Cold War, some of its member states especially the Baltic countries were the members

of the Soviet Union. After the collapse of the USSR, they joined the EU and Russia has become

the main ‘successor’ of the USSR. After that, the EU launched several programs to establish

and develop mutual relations with the Russian government. Amelia Hadfield claims that, “the

centerpiece of the EU-Russia relationship is the Partnership and Cooperation

Agreement” (Hadfield 2008, p. 233). However, in his article ‘Towards Strategic Partnership’,

Abellan explains that “PCA is fundamentally limited, acting primarily as an ambitious

normative framework”(Abellan 2004, p.14). Besides spreading democracy and rule of law, using

rich energy resources of Russia was the particular purpose of the EU. Nevertheless, Javier Solana

- High Representative for the EU Common Foreign and Security Policy- “argued that to develop

the partnership with Russia was the most important and the most challenging task that the Union

faces at the beginning of the twenty first century”(Hadfield 2008, p.234).

Although, following the collapse of the Soviet Union, Russia had a weak economy and

was struggling with a political transition, rich energy resources of the country strengthened its

economy and provided a more or less smooth transition. Therefore, both oil and gas resources

and pipeline projects have become national power and new foreign policy tools of Moscow. In

his ‘Russia and Europe’s Mutual Energy Dependence’ article, Paillard, claims that “Russia used

its energy resources, just as it used missiles in the 1980s to disorganize NATO”(Pillard 2010, p.

78). However, Kaveshinkov claims that it is the easiest way to explain power of energy but the

question is “how the peculiarities of the energy industry and the domestic regulatory regime

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influence the goals and practice of external energy policy”(Kaveshinkov 2010, p.587). He claims

that energy should not be explained only from the perspective of politics.

According to statistics, “Russia accounted for 40 per cent of the growth in world oil

production between 2000-2007” (Youngs 2009, p. 79). Russia has become the biggest energy

trade partner of Europe. According to statistics of the European Commission: “in 2007, 44.5% of

total EU’s gas imports (150bcm), 33.05% of total EU’s crude oil imports, and 26% of total EU

coal imports came from Russia. In total, around 24% of total EU gas sources are originating from

Russia” (Ec.europa.eu, 2014). In light of this, according to some experts, the energy dependency

rate of countries differentiate from each other and can be divided to three groups, law, medium

and high dependent on the level of the Russian energy dependency. Spain, the UK and Sweden

are among the less dependent countries. France, Germany and Italy comprise the second group.

“The last group with high dependency on Russian energy, including Finland, Latvia, Lithuania

and Slovakia that obtaining 100 per cent of their imported energy from Russia”(Youngs 2009, p.

80). However, this dependency is not bilateral. In his article ‘The Prism of Interdependence’,

Proedrou claims that, “Russia is dependent on the EU with its vast market power and potential.”

In other words, there is a mutual vulnerability between both sides and this claim is supported by

the Commission. According to the statistics of the Commission, “in terms of overall trade, the

Russian Federation is the third biggest world trade partner of the EU” (Ec.europa.eu, 2014).

Until the gas dispute between Ukraine and Russia in 2006, the EU has been trying to

improve energy relations and partnership with Russia. The EU launched several civil society,

political and especially economic programs to establish strong relations with the Russian

government. In addition, before the dispute, most of European countries believed that with this

partnership they would assure sustainable and cheap energy. As mentioned before, Russia energy

has been a new weapon to dominate over other countries, especially in Europe. Russia believes

that with these means, it can influence political and foreign policy decisions of the EU countries.

Indeed, this policy had been successful until 2006 since Moscow could limit the critics of the

member states. According to Zeyno Baran advantages of energy interest blinded the EU

members.

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“The July 2006 shutdown of the Lithuanian pipeline drew little protest outside of Poland and the

Baltic states. The response from most western European countries was rather muted during that

time” (Baran 2007, p.132).

Diversification of Energy Resources and the Importance of Caspian Energy.

The beginning of 2006 was a turning point of the EU’s energy policy. First, due to high

prices, Moscow cut gas supplies to Ukraine which influenced negatively energy flows to the EU

member states. In the same year, due to so called technical excuses, energy to Lithuania was

stopped by Russia. “Moscow then more than doubled gas prices to Georgia, and in 2007 cut gas

supplies through Belarus in relation to another pricing dispute, this time with President

Lukashenko”(Youngs 2009, p.3). The last example of Russian energy aggression is a second gas

crisis with Ukraine which led to huge protests. In other words, these examples, especially within

Lithuania, increased and warned the EU to evaluate its energy relations with Russia since the

next energy victim would be its member states. For some critics, it is a very significant issue and

the EU should not undermine it. For instance, in her article ‘EU Energy Security’, Baran claims

that the unjust manipulation and interruption of energy supplies is as much a security threat as

military action is” (Baran 2007, p. 133). In light of this, “in late 2006, the Commission

proposed plans to move towards sub-regional energy markets in the Caspian basin, Caucasus and

Central Asia, through a new EU-Black Sea Synergy initiative” (Youngs 2009, p. 105). The aim of

this proposal was to increase EU engagement with region countries and integrate their energy

resources to the European market. After these energy flow issues, the Commission started to give

priority to energy security. In 2006, a French diplomat had a message: “Brussels was willing to

support new gas transportation infrastructures between the Central Asian producing states and

the EU, bypassing Russia” (Lussac 2010, p. 619). But before that, the initial energy step of

European countries was to include the Southern Caucasus in the ‘European Neighborhood

Policy’(ENP). “When Azerbaijan was indeed included in the ENP, Commissioner Benita

Ferrero-Waldner declared that “this offer reflected the country’s geo-strategic location and

energy resources” (Youngs 2009, p. 104). Also, Central Asian states were included in the

Development and Economic Cooperation. This led the EU to increase its energy relations with

countries in the region. However, energy policy of the EU was complicated at that because the

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EU implemented two different cooperation programs dividing the countries in the region into

two. Due to that, “Kazakhstan reacted badly to being excluded from the Neighborhood

Policy.”(Youngs 2009, p. 105). Despite these complications, the EU approach started to change

positively in 2006. For example, although the partnership meetings started with South Caucasus

countries at the beginning of the 2004, the significant decision occurred in 2006. During the

second Baku Initiative ministerial meeting the EU and Caspian countries decided to establish

new ‘Energy Road Map’ to improve mutual energy partnership and cooperation. In addition to

that one European diplomat identified as the main energy related priority “the need to lead

Central Asian states (Turkmenistan and Kazakhstan) towards membership of the World Trade

Organization (WTO)” (Youngs 2009, p. 112).

Although, the Caspian Region cannot be considered a new Middle East, these countries

have several political and economic advantages for the EU. Firstly, they are the source of

sustainable alternative energy. According to the International Energy Agency, “it is the world’s

largest undiscovered reservoir of energy resources.” In his ‘Ensuring Energy Security’, Daniel

Yergin claims that “ the first principle of energy security is diversification of supply.”(Yergin

2006, p. 76). This idea is also supported by Hadfield in his EU-Russia Energy Relations article.

He mentions that “Europe must put its external instruments at the service of more secure and

competitive energy.” However, Noel P. explains energy security from different perspective in his

‘Beyond Dependency’. He does not support the idea of diversification. According to him, “the

most efficient solution to the Russian gas problem lies not in the development of an external

energy policy but in further restructuring of the EU’s internal gas market.” Nevertheless, G.

Bahgat claims that “the potential for energy self-sufficiency within the EU is limited.” Although,

Baran also supports the idea of strong internal market, she claims that “diversifying oil and gas

supplies would not only decrease Russian’s influence but would also loosen Moscow’s grip on

Europe’s neighbors” (Baran 2007, p. 135). Therefore, there are two possible solutions of energy

dependency but in terms of energy diversification, the Caspian countries can be the key to

diversification. Meanwhile, for energy resources, they can be distinguished from each other. For

instance, Azerbaijan is important not only for its natural resources but also its geostrategic

location. Especially, its location is a key aspect of pipeline projects since Azerbaijan is part of

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South Caucasus and the traditional Silk road; meanwhile it has borders with Georgia, Armenia,

Iran, Russia and Turkey. In addition, after the 2001 terror attacks, its location has become a

crucial transportation route to Afghanistan. According to former U.S. Special Envoy for Eurasian

Energy and former U.S. Ambassador to Azerbaijan Richard Morningstar, “Azerbaijani natural

gas is absolutely essential to the development of the Southern Corridor. Furthermore,

“Turkmenistan was also positioned in the top 15 of world gas reserves” (Youngs 2009, p. 102.).

Nevertheless, according to report of Congressional Research Service, despite Turkmenistan’s

desire to export more of its gas, thus far, its orientation seems to be toward the east and not yet

toward Europe. On the other hand, critics explain that the main reason for this attempt is Russia,

because the Russian government prevents Turkmenistan from competing directly with Russian

natural gas. Kazakhstan shares the most important part of Caspian oil and natural gas reserves.

Due to its rich oil reserves, the Kashgan field has special importance. “The EU’s most senior

fording-policy figures defined Kazakhstan as the main target for European energy security

concerns in Central Asia” (Youngs 2009, p. 117). However, critics mention that some EU

energy firms and other private foreign investors have become discouraged in recent years by

harsh Kazakh government terms, taxes, and fines that some allege reflect corruption within the

ruling elite. Turkmenistan and Kazakhstan are also the largest countries of Central Asia.

The second advantage of the Caspian region is its strategic location. In his article

‘Geopolitics and Energy Security’, Justyna claims that the control of this area formed the basis

for the domination of the Eurasian landmass. In other words, to establish strong relations with

Azerbaijan, Turkmenistan and Kazakhstan will provide not only economic advantages for the EU

but also assure geopolitical control of the region. It is clear that both the South Caucasus and

Central Asia are backyard of Russia and this gives them a significant political control over the

region. Its political control limits the spread of democratic values of the EU. In other words, with

strong energy cooperation, the EU can effectively implement and spread its traditional ideas like

rule of law, human rights and democracy. Also it can influence future foreign policy decisions of

Caspian countries. However, it is significant to note that the EU should not separate energy

policy from human rights and democratization. As mentioned before, due to energy relations

with Russia, some European countries limit criticism of Moscow and ignore several human

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rights abuses. If this situation is repeated in the Caspian region, these countries will use

European money for increasing their authoritarian regimes. According to Sir Halford Mackinder,

regarded as one of the founding fathers of geopolitics and geostrategy, “the Caspian region and

its hinterland, can be called the Eurasian Heartland”(Misiagiewicz 2013, p. 64). That is why,

after the collapse of the USSR, Moscow implemented several aggressive politic and military

policies to monopolize region’s control. Justyna claims that “the Caspian states, assisted by

foreign aid, tried to limit their dependence on Russian-dominated infrastructure at the heart of

Caspian geopolitics”(Misiagiewicz 2013, p. 63). However, critics mention that Central Asian

(Turkmenistan and Kazakhstan) states failed to accomplish this idea. According to Huseyinli

“Kazakhstan and Turkmenistan are strongly under Russian influence”(Huseyinli 2013, p. 26)

Moscow knew that after the collapse of the USSR, the Caspian basin would gain foreign interest

of great powers like the United States, China and the EU. At the same time, newly independent

Caspian states intended to explore and deploy their resources with support of Western countries.

To prevent this, the Russian government aimed to monopolize the regional pipeline projects and

make its land as a main energy transport route. In other words, strong European support for these

countries is very significant because it will decrease the dependency of both the EU and the

Caspian countries on Russia. According to experts, “the exploitation of energy resources and the

future routes of pipelines from the oil and gas fields in the Caspian basin will also determine the

future economic and politic development of the region (Misiagiewicz 2013, p. 63).

Lastly, strong EU cooperation with the Caspian states will increase the strategic sphere of its

partner United States. Contrary to the EU, the US has started to play an active role in both the

Caucasus and the Caspian region since the collapse of the Soviet Union. Firstly, the U.S

recognized their independence and then implemented several development and aid programs for

post-Soviet countries. “In the late 1990s, the United States pushed hard for the construction of

several oil and gas pipelines that would carry Caspian energy westward without transiting

through Russia”(Baran 2007, p. 136). The Washington intended to provide newly independent

states with ‘non-Russian perspectives’ and also to decrease economic and pipeline monopoly of

Russia. During the 1990s, Washington supported vital projects such as the Baku-Tbilisi-Ceyhan

(BTC) pipeline is one of the first and most important energy project of the region. It is also called

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the “Contract of the Century”. Although, the EU did not provide strong support for this project,

for the U.S politicians accomplishment of it became very significant until the end. Another

project was the ‘Trans Caspian’ pipeline project which was aimed to transport the Turkmenistan

natural resources.

The construction of these pipeline projects provided significant freedom for region states

and decreased Russian energy monopolization over these countries. In addition, successful

construction of BTC led to the implementation of other energy projects such as the Baku- Tbilisi-

Erzurum gas pipeline. “The gas is extracted from Shah Deniz field in Azerbaijan, crosses Turkish

territory to Greece and from there it is to be extended toward Italy”(Misiagiewicz 2013, p.72).

Meanwhile, Trans Adriatic (TAP) and Nabucco pipeline project are two crucial future oriented

projects that bypass Russia. ”Once built, TAP will play a part in helping secure Europe’s energy

future. One of the most important energy infrastructure projects, TAP will allow Caspian natural

gas to flow into Europe’s energy markets”(Tap-ag.com, 2014). “Nabucco project is also a big

pipeline which aims at directly connecting the Caspian and Middle East gas resources to the EU

gas market”(Huseyinli 2013, p. 27). Despite Nabucco was signed in 2009, due to some

disagreement between project states, its construction process is progressing too slowly. However,

it is important to note that both South Caucasus and Caspian Sea are in the backyard of Russia.

“It is also the largest trading partner of the newly independent states.”(Misiagiewicz 2013, p. 66).

With respect to this, the Caspian states don't want to endanger their relations with Russia. That’s

why, they prefer to have strong energy cooperation particularly with the EU. In other words, US

is a strong economic, political and military competitor of Russia but the EU is not and it has

strong trade relations with Russia. So that, for Caspian states, cooperation with the EU is more

attractive than direct involvement of the US.

However, there are several problems of Caspian countries. The first problem is the status

of the Caspian Sea that hasn't been decided since the 1990. During the Cold War, Caspian Sea

was divided by the Soviet Union and Iran but the problem with boundaries in the basin appeared

with the dissolution of the Soviet Union. Critics mention that it is also a risk that investors have

to consider in doing business in the region. Secondly, there are several frozen conflicts in the

South Caucasus like Nagorno Karabakh and Abkhazia. Especially, the Caucasus is a very

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sensitive region because there is a significant nationalistic feeling among countries. “That is why

Zibgniew Brzezinski called it the “Eurasian Balkans”(Misiagiewcz 2013, p. 64). Therefore,

stability and peace of the region are as important as security of energy. In addition Misiagiewcz.

mentions that there was a lack of clearly defined mechanism for preventing regional conflicts

and instability within new states. In light of this, vulnerability of security is one of the obstacles

of the Caspian Sea. Finally, the EU shouldn't undermine Iran since it is also one of the biggest

and the strongest countries of the region. Meanwhile, it has both rich energy resources and

strategic location between the Caspian Sea and Persian Gulf. In other words, although due to the

sanctions of Washington, this possibility is not strong enough, “Iran could be a cheap and

natural corridor for the oil and gas to the world market”(Misiagiewcz 2013, p. 78).

Conclusion

The paper has explained that besides Russia there are significant external and internal

challenges that prevent the EU from establishing successful energy policies toward Caspian

countries. In light of this, the paper suggests three conclusions. Firstly, the lack of solidarity and

disunity between member states is the most important internal obstacle to the implementation of

a single European energy policy. It also provides advantages to Russia that by using this internal

problem Moscow is increasing their bilateral dependency. In addition, Russia is both a trade

partner and an obstacle of the EU. On the one hand, Russian’s economy highly depends on the

EU’s money and trade agreements and meanwhile, the EU needs Russian energy. In other words,

mutual vulnerability makes them partners. On the other hand, the monopolized energy policy of

Russia is another important reason that prevents both member states and the Caspian countries

from establishing energy relations with each other. Gazprom, the biggest state controlled energy

company in Russia, is particularly playing an active role in the Caspian’s energy politics. For

Gazprom, local state companies of the Caspian states are the potential competitors and it does

not want to lose its energy market in Europe to these companies. In light of this, during the end

of the 1990s, Russia allowed Turkmenistan to utilize its pipelines, if it would sell energy only to

CIS states. Meanwhile, Gazprom has significant partnership relations with the EU states. For

instance, it is supplying a third of the Germany’s natural gas by the ‘Nord Stream Pipeline’ and

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also it has an agreement with the French company Gas de France. In other words, the ambitions

of the Gazprom are wider than just the Caspian Sea. Meanwhile, transportation of the Caspian

resources is another problem that makes the Russian pipelines an alternative. The world energy

markets are far from the Caspian Sea which requiring the large amount of foreign investment to

construct the expansive infrastructures.

Finally, there are three main advantages of Caspian energy resources. First, the Caspian

Region is energy rich. The European Union can utilize the resources of the Caspian basin as one

of the alternative energy diversifications.. With respect to this, the EU should support the

important pipeline projects of the region like NABUCCO. The geostrategic location of the

Caspian Sea is another significant advantage. In other words, the region lies along the traditional

Silk Road and the ‘Eurasian Heartland’. To establish coherent relations with post-Soviet Caspian

countries will provide an opportunity to increase the EU’s political and economic influence over

them. Lastly, strong relations with the EU and the Caspian region directly influences and

reinforces the political position of the United States. However, the EU should notice several

significant aspects of region. Firstly, it is backyard of Russia and continuity of relations with

Moscow is also important. Secondly, the region has several frozen conflicts like Nagorno

Karabakh and Abkhazia. Also, the status of the Caspian Sea has been the controversial issue

since the 1990s. Lastly, beside Russia, Iran is another important factor that the EU should pay

attention to because its energy resources can be used as an alternative source for the member

states in the future.

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