EU - Russia Energy Relations and Political - Economic Ideology

Russia and the European Union cannot reach a conclusive agreement on major issues in energy relations.Russian and EU economic policymaking from the 1970s onwards developed mutually incompatible ideological foundations.The EU adopted a neoliberal market framework with some social market characteristics, while Russia functions along economic nationalist ideas.These ideological influences informed the development of energy policy in each respective party.The EU insists that Russia deal with the internal European Energy market through a free market framework, while Russia prefers to do business with the EU without modifying its economic model in the energy industry.This has resulted in disagreements in negotiations for Partnership and Cooperation Agreement, the Energy Charter Treaty, and the Third Energy Package.Both Russia and the EU would benefit from cooperation due to energy interdependence, but each party needs to recognize and acknowledge their counterparts' interests for achievable long-term progress. Chapter 1: Introduction Research ProblemEnergy security is a foremost concern among the EU and its member states over the last two decades since the fall of the Soviet Union.European energy demands in natural gas and oil have steadily increased over the same period, and are projected to continue doing so into the near future.Since at least 1995, Russia has steadily become Europe's largest source of oil and natural gas supplies; in 2010, Russia's energy exports to Europe (180,654 thousand tonnes) were nearly equivalent to the combined export volumes of the next four largest suppliers to Europe (Norway, Libya, Saudi Arabia, and Kazakhstan). 1 Ever since 1991, the EU and Russia have attempted to lay down a framework to establish a stable, predictable supply of energy from Russia to Europe. Some of the most notable attempts have been the Partnership and CooperationAgreement, the Energy Charter Treaty (ECT), and the Transit Protocol and the Third Energy Package, the latter of which, although is not directed at Russia, has an impact on the latter's energy interests in Europe.To date, neither of these agreements have come to fruition or led to any substantive outcome.Russia initially signed on to the ECT, but has since withdrawn; Russia refuses to ratify the Transit Protocol, and continues to criticize the Third Energy Package. 1 1 European Commission, EU Energy in Figures Statistical Pocketbook 2012.2012, p. 64.http:// ec.europa.eu/energy/publications/doc/2012_energy_figures.pdf(Accessed July 1, 2013).Weights of nonliquid and non-solid energy products are converted into tons according to their calorific content relative to oil (see EU Energy in Figures Statistical Pocketbook 2012, Appendix 6. No. 2).All subsequent measurements follow this methodology.5 Denzau and North, "Shared Mental Models," p. 4. 6

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