Understanding Russia’s energy turn to China: domestic narratives and national identity priorities

Abstract

This study investigates whether, as part of a broader “Asian Energy Pivot,” Russia’s energy giant Gazprom refashioned its export strategy away from Europe, and what impact such a reorientation might have on the EU–Russia gas relationship. It uses four empirical cases to emphasize the domestic movers underlying Russia’s eastward shift in energy trade, developing a constructivist theory rooted in the dynamics of Russia’s dominant public narrative and the contours of domestic politics. It argues that Russia’s national interests changed as a result of how Russian policy-makers interpreted and reacted to the stand-off with Europe, in response to what they perceived as Europe’s attempt to isolate it economically and geopolitically. Russia’s Eurasianists, who had advocated the notion of a necessary turn to the East for a long time, positioned themselves as norm entrepreneurs and their new interpretation of the preexisting material incentives shaped the future course of action.

Keywords:

• Russia
• China
• energy politics
• Russia’s Asian energy pivot
• domestic narratives
• national identity
• world politics

Notes

1. Vladimir Putin declared that this pipeline potentially later could be used to supply southern Europe via a gas hub at the Greek border, if there was sufficient demand.

2. Tatiana Mitrova, Head of the Oil and Gas Department at the Energy Research Institute of the Russian Academy of Sciences, interview with the author, 30 May 2015, Moscow.

3. In 2015 Gazprom supplied 158.6 bcm of gas to Europe. Moreover, in May 2016 Gazprom CEO Alexei Miller told reporters: “Our traditional customers demonstrated a stable growth of demand for Russian gas in January-April 2016: Germany (+19% as compared with the same period in 2015), Italy (+8.7%), France (+43%) and Austria (+23%)” (Interfax, 2 May 2016).

4. In the words of Elena Burmistrova, Director General of Gazprom Export,

Sanctions do not impact Gazprom’s business strategy, while fallen oil prices, of course, had a certain impact on the company. However, we would like to remind that western European countries enjoyed reliable supplies of Russian gas even in the darkest periods of the Cold War.

Interview with the author, 28 June 2016, Moscow.

5. Hans Rhein, Unit for International Energy Relations and Enlargement, Directorate-General for Energy, interview with the author, 21 May 2015, Brussels; Vincent Degert, Head of Division Russia, Eastern Partnership, Central Asia, Regional Cooperation and OSCE, European External Action Service (EEAS), interview with the author, 19 May 2015, Brussels.

6. There is a well-established literature on the connection between domestic institutions and international behavior in the trade sphere (Evans, Jacobson, and Putnam 1993, 233–264, 363–430; Milner 1997; Rogowski 1999; Simmons 1994).

7. This method has the advantage over quantitative methodologies in that it can unpack the exact mix of causes involved in particular cases.

8. EIA estimates based on the BP Statistical Review of World Energy 2015: https://www.eia.gov/beta/international/analysis_includes/countries_long/Russia/russia.pdf

9. Sergei Komlev, Head of Contract Structuring and Pricing at Gazprom Export, interview with the author, 13 August 2013, Moscow.

10. Dmitry Suslov, Russian international affairs scholar, interview with the author, 23 May 2014, Moscow.

11. Sergey Karaganov, interview with the author, 14 August 2013, Moscow. See also Abdelal, Skalamera, and Tarontsi (2015).

12. Overall trade between Russia and China grew rapidly from 2010–2012 and stabilized at around $90 billion in 2013. Bilateral trade targets for 2020 stand at up to $200 billion. For a more detailed discussion, see Skalamera (2014).

13. Ilya Kochevrin, Deputy General Director, Communications, Gazprom Export, interview with the author, 29 May 2014, Moscow.

14. Russian Energy Analyst, Boston Consulting Group, interview with the author, 26 May 2014, Moscow; Alexander Gabuev, Carnegie Moscow Center, interview with the author, 3 June 2015, Moscow.

15. Tatiana Mitrova, Head of the Oil and Gas Department at the Energy Research Institute of the Russian Academy of Sciences, interview with the author, 27 May 2014, Moscow.

16. Valery Kryukov, Director of the Center for Resource Economics, interview with the author, 29 May 2015, Moscow.

17. Zha Daojiong, energy scholar and Professor at Peking University, interview with the author, 6 August 2013, Beijing.

18. Andrei Kokoshin, discussion with the author, 23 May 2014, Moscow; Guan Guihai, Chinese international relations expert, interview with the author, Boston, MA, 28 February 2015.

19. Xavier Chen, President of Statoil China AS, in email correspondence with the author, 2 October 2014.

20. Valery Nesterov, Analyst at Sberbank CIB, interview with the author, 29 May 2015, Moscow.

21. Feng Yujun, Chinese expert on Russia and international relations, interview with the author, 11 September 2014, Beijing.

22. Leonid Grigoriev, Russian energy expert, interview with the author, 23 May 2014, Moscow.

23. Aleksei Grivach, Deputy Director of Gas Projects at Russia’s National Energy Security Fund, interview with the author, 2 June 2015, Moscow. Gazprom has maintained its market share in Europe, and in 2016 Gazprom’s gas supplies to Europe reached an all-time record. At the same time, the European market has become increasingly “liquid” and interconnected. As a result, the Russian company gained market share by playing by the EU’s gas market rules.

24. Vincent Degert, Head of Division Russia, Eastern Partnership, Central Asia, Regional Cooperation and OSCE, European External Action Service; and Wolfgang Behrendt, Russia Division MD-III-B-3, sectoral issues, European External Action Service. Interviews with the author, 19 May 2015, Brussels.

25. Kristof Kovacs, Policy Officer, DG Energy, interview with the author, 20 May 2015, Brussels.

26. Elena Burmistrova, Director General of Gazprom Export, interview with the author, 28 June 2016, Moscow; Marcel Salikhov, Russian energy analyst, interview with the author, 8 September 2015.

27. Klaus–Dieter Borchardt, Director of the Internal Energy Market within the EU’s DG Energy, interview with the author, 21 May 2015, Brussels.

28. Erlendas Grigorovic, International Relations, International Relations & Enlargement, DG Energy, interview with the author, 18 May 2015, Brussels.

29. Policy Officer, DG Energy, interview with the author, 20 May 2015, Brussels. This interview was conducted in confidentiality, and the name of interviewee is withheld by mutual agreement. For a detailed analysis on this issue, see also (Dickel et al. 2014).

30. There has been a great exaggeration of the extent to which the EU can redress the problem of gas interdependence with Russia through foreign policy measures. However, it should also be noted that Russia is more dependent on Europe than Europe is on Russia, and Russia’s vulnerability increases in pace with its break-even price for oil, which in 2014 reached $114/barrel. Since 82% of Russia’s export earnings come from hydrocarbons, the country would incur huge costs by cutting supplies to Europe, where it sells most of its output.

31. EU official at DG Energy, interview with the author, 21 May 2015, Brussels. This interview was conducted in confidentiality, and the name of interviewee is withheld by mutual agreement.

32. Konstantin Simonov, Executive Director, National Energy Security Fund, Russia, interview with the author, 30 May 2014, Moscow.

33. Currently, however, about a quarter of European Union gas comes from Russia, and at least half of that supply flows through Ukraine.

34. However, concerns that these deals will entail less gas for Europe are unfounded. Not only does Gazprom have sufficient gas in its newly developed fields on the Yamal (when one adds the production of Novatek and the oil companies), but Russia actually has a surplus of gas to meet domestic demand and exports to Europe.

35. For realist works that explore how challenge to the existing order comes from rising powers as they become unsatisfied with the status that is accorded them, which they feel is incommensurate with their growing power and capabilities, see Waltz (1979), Gilpin (1981), and Grieco (1990).

36. Alexander Gabuev, Carnegie Moscow Center, interview with the author, 3 June 2015, Moscow.

37. Andrei Kortunov, Director General of the Russian International Affairs Council, interview with the author, 27 June 2016, Moscow.

38. The so-called Bolotnaya protests (2011–2012) reflected dissatisfaction with the general sense of stagnation and the need for political reform. According to Richard Sakwa (2014), the flawed balloting in Russia’s parliamentary elections of 4 December 2011 was the catalyst that brought the simmering dissatisfaction with the system to a boil. An anomalous variation in the vote between and even within regions was attributed to different levels of falsification, with some 15 million extra votes allegedly transferred to United Russia, the party of power.

39. Before this massive yet unanticipated change, the US had been preparing to become a major importer of LNG from the Middle East and North Africa. For more information, see EIA (2017).

40. Vladimir Feygin, President of the Institute for Energy and Finance, interview with the author, 28 May 2014, Moscow.

41. In February 2012 Putin laid out his views on Russia’s national security and economic policy. In an article (Putin 2012) he articulated his views on good governance – essentially based on economic “stability,” the taming of overly powerful subjects and secessionist movements, easing of strained political competition, and nuclear deterrence as an important pillar of strategic stability in the world. See also Sakwa (2014, 137).

42. According to Putin (2011), the ultimate goal is to establish a Eurasian Economic Union “capable of becoming one of the poles in a future multi-polar world.”.

43. In October 2015, according to the Levada Center, a Russian polling agency, more than half of Russians considered television the most trustworthy news source. Complete trust in the information shown on television increased to 59% of poll participants in 2015, up from 47% in 2012 (Moscow Times, 23 October 2015). As part of the process, the president has made himself, in the words of Fiona Hill of the Brookings Institution, a “TV personality” (Economist 2016).

44. Masha Lipman, Carnegie Moscow Center, interview with the author, 30 May 2014, Moscow.

45. Vladislav Inozemtsev, Director of the Center for Post-Industrial Studies, interview with the author, 12 February 2016, Cambridge, MA.

46. Sergei Komlev, Head of Contract Structuring and Pricing at Gazprom Export, interview with the author, 4 June 2015, St. Petersburg.

47. Few Russian policy-makers believe that restoring empire is a practical or even desirable goal. However, they do see the maintenance of Russian hegemony in the region as essential if the country is to regain its former global prominence as one of the major poles in a multi-polar world. Interview with Dmitry Suslov, Russian political scientist, 23 May 2014, Moscow; interview with Timofei Bordachev, Russian international relations scholar, 29 May 2014, Moscow.

48. According to historian Serhii Plokhy (2017), Ukraine was and is central to Russian elites’ thinking about their own great power status, identity, and destiny. On this issue, see also Lieven (2001, 260).

49. Despite a fundamentally altered context, according to a poll by the Levada Center, Putin’s approval rating stood firm at 88%, the highest since August 2008 when Russia went to war with Georgia. The poll was conducted on 24–27 October 2014 among a representative sample of 1630 people across Russia.

50. Although President Putin maintained the approval of 85% of Russians, between November 2014 and January 2015 one-third of the population believed that Russia was headed in the wrong direction according to the Levada Center (Moscow Times, 26 February 2015). By the end of the summer of 2015, Russians’ concern about rising prices had begun to erode President Vladimir Putin’s approval ratings, although they nevertheless remained amazingly high. (Reuters, 28 August 2015).

51. According to IHS Jane, defense spending reached 4.3% of GDP in 2015.

52. According to Russia’s Federal Statistical Service (http://www.gks.ru/free_doc/new_site/vvp/130116/Tab2.htm).

53. In early October 2015, President Putin stated that Russia had reached the peak of its economic crisis, if not having quite passed it, and that the situation in the country was stabilizing. “Russia will return to growth in the coming years,” he added (Bloomberg, 13 October 2015). While in January 2016, more than half of Russians still preferred that Putin return as the country’s president after the 2018 elections and believed no other politician is capable of replacing him, the president’s approval rating had dropped to 82%, compared to his soaring popularity of 89% in June 2014 and the still record-high 85% in December 2015 (Moscow Times 2016a). The share of Russians who still think their country is on the right track has also diminished to 45% (Dolgov 2016).

54. Interview with a Russian foreign policy analyst, 29 May 2014. This interview was conducted in confidentiality, and the name of interviewee is withheld by mutual agreement.

55. What we often see is a process by which domestic “norm entrepreneurs” use “mainstream” norms to strengthen their position in the domestic debate. For analyses of domestic norms and their influence on domestic politics, see Finnemore and Sikkink (1998) and Jepperson, Wendt, and Katzenstein (1996).