s













The Nixon Center
February, 2008


R
USSIAN
E
NERGY AND
E
UROPEAN
S
ECURITY


A

T
RANSATLANTIC
D
IALOGUE








Paul J. Saunders













The Nixon Center
February, 2008 T
HE
N
IXON
C
ENTER


The Nixon Center is a non-partisan public policy institution established
by former President Richard Nixon shortly before his death in 1994.
Committed to the analysis of policy challenges to the United States
through the prism of the American national interest, the Center is a
substantively and programmatically independent division of the
Richard Nixon Library and Birthplace Foundation.

Major programs of The Nixon Center focus on energy security and
climate, immigration and national security, regional strategy in the
greater Middle East, and strategic studies, as well as U.S. relations with
China, Europe and Russia. The Nixon Center also publishes the bi-
monthly foreign affairs magazine The National Interest. The Center is
supported by foundation, corporate and individual donors as well as by
the Nixon Library and Birthplace Foundation endowment.











Copyright 2008 The Nixon Center. All Rights Reserved.
Russian Energy and European Security: A Transatlantic Dialogue

By Paul J. Saunders


The Nixon Center
1615 L Street, NW, Suite 1250
Washington, DC 20036
Phone:
(202) 887-1000
Fax:
(202)
887-5222
E-mail:
mail@nixoncenter.org
Website:
www.nixoncenter.org







F
OREWORD



How to deal with the energy-rich and increasingly assertive Russia has
become a source of considerable concern and debate in both the
United States and Europe. It is beyond doubt that Russias new energy
leverage represents a challenge to European energy security, European
unity, and indeed Europes unique relationship with the United States.
Yet it is also beyond doubt that Europe needs and will continue to
need Russian energy and that supplies from Russia are useful
alternatives to reliance on the Persian Gulf, particularly Iran.
Emotional characterizations Russian actions are not a substitute for a
sober evaluation of actual Russian policies, U.S. and European
interests, or principled but practical solutions.

Paul Saunders provides useful insight into American and European
thinking about Russias aspirations and capabilities, the multifaceted
realities of Europes energy dependence on Russia, the many
perspectives on Russia within Europe, and how the United States can
work effectively with key allies in Europe, and with Moscow, to
address both energy security as well as wider U.S. and European
interests. Saunders argues that there are red lines which Russia should
not be allowed to cross, but he also suggests that the red lines should
reflect important U.S. and European priorities rather than reflexive
opposition rooted in zero-sum thinking. His recommendations are
tough-minded but realistic and policy-makers in the U.S. and Europe
will benefit from his counsel.

Dimitri K. Simes
President
The Nixon Center








I
NTRODUCTION AND
A
CKNOWLEDGEMENTS



In 2007, The Nixon Center conducted a series of three meetings
between U.S. and European experts to discuss the impact of Russias
increasingly assertive foreign energy policy on Europe and European
security. The project was motivated by concern over Russian conduct
and a desire to compare American and European perspectives and
develop coordinated and effective policy responses that would also
advance broader and shared transatlantic interests in dealing with
Moscow. The German Marshall Fund of the United States provided
essential financial support for the effort.

Participants in the three sessions included a broad range of experts on
European politics and policies on Russia, energy, and related issues;
Russias foreign policy, domestic politics, economy, and energy sector;
transatlantic relations; European security issues; global energy politics
and markets; U.S.-Russian relations; and other topics. They were
drawn from the United States, the United Kingdom, Germany, France,
and Poland and included academics, former officials, journalists, and
representatives of businesses and NGOs with a view to including
diverse perspectives and backgrounds and stimulating a rich discussion.

The first meeting took place at the Stiftung Wissenschaft und Politik
(SWP) in Berlin, with considerable assistance from SWP Researchers
Susanne Dröge and Andreas Goldthau. This session focused on topics
including Russias overall relations with the U.S. and Europe, actors in
shaping Russian energy policy and their objectives, alternative sources
of energy for Europe, and the role of Central and Eastern European

iii
nations. The second workshop, at The Nixon Center in Washington,
examined the impact of Russias elections on its foreign policy, the
status and prospects of Russias energy relations with the U.S. and
Europe, Europes overall energy security picture, and the sustainability
of Russias energy boom. Chatham House hosted the third and final
meeting in London, which concentrated on U.S. and European
interests and policy options in working with Moscow. James Nixey of
Chatham Houses Russia and Eurasia Program offered invaluable help
in organizing the session

I am grateful to Matthew Fontaine of The Nixon Center staff for his
assistance with research, organizing the three workshops, and
preparing this document for publication. Rebecca White of The
National Interest and Christina Haydon of Chatham House were
essential as note-takers during the second and third sessions,
respectively. Julia Nanay of PFC Energy reviewed a draft of this paper
and provided many helpful comments.

Although this paper draws heavily on the discussion during the three
workshops, it reflects strictly the perspectives and conclusions of the
author.

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E
XECUTIVE
S
UMMARY



Even as European concern over Russias efforts to use its energy
resources for political leverage grows, European demand for gas is
itself growing at a rate that can be satisfied only with substantial
additional imports from Russia or, alternatively, a major new
arrangement with Iransomething troubling to many Americans. At
the same time, poor understanding in the United States of Russian
conduct and European constraints feeds a highly politicized debate that
often produces weak, irrelevant, or even dangerous policy proposals.
A more sophisticated approach will be required to advance American
and European interests.

Russia is likely to continue its assertive foreign energy policyand
foreign policyafter President Putin steps down from the presidency.
However, Russian motives are far more complex than one might think
from reading op-ed pages in major newspapers, and the goals of
government officials, company managers, and other key political actors
are not always identical or even coordinated. Some objectiveslike
additional profitsare not so different from the goals of Western
firms. And while Russias vast oil and gas reserves have given the
Kremlin new confidence, Russias heavy reliance on its energy power
ultimately demonstrates the weakness of a state that has few other
useful foreign policy tools. While Moscows behavior has been
troubling and should be resisted, it is also clear that Russia has tried
applying heavy pressure only to relatively weak states along its
periphery.

European nations must decide separately and collectively how to deal
with these challenges and may well be most effective by pursuing the

v
difficult but worthwhile task of putting their own house in order
developing common policies on energy and on Russiarather than
responding in a piecemeal fashion and exposing their differences. For
its part, the U.S. should place the Russian challenge in the context of
both U.S.-European relations and broader global dynamics in a period
of high energy prices, growing demand, and political instability. Of
course, America and Europe will be most effective in handling Russia
if they do so together, on the basis of their substantial common
interests.

Fear that American influence in Europe and elsewhere is waning
during a difficult period is a major source of U.S. concern about
Russian efforts to influence Europe or drive wedges into the U.S.-
European relationship. But Washington can better address these issues
by strengthening its ties with major European partners (and others
around the globe) than by trying to persuade its allies not to buy energy
that they need and cannot get elsewhere at reasonable prices. If the
U.S. needs to compete with Moscow, it should compete politically,
economically, culturally, and even militarilyall areas of great
American advantageand not over energy that Washington cannot
supply.

Within Europe, the U.S. should deal separately with Moscows
sometimes revisionist political aims and its legitimate economic and
commercial goals. On both tracks, America should press for U.S.-
Europe-Russia dialoguein the former case, to try to develop and
systematize a mutually acceptable role for Russia in Europe and in the
latter case, to establish a common set of rules and dispute resolution