MOSCOW. (Yury Aleksandrov for RIA Novosti)
The European Energy Charter is 15 years old. Russia signed a charter treaty 12 years ago, but has not ratified it up to this day. Moreover, after years of negotiations, our leaders have declared that Russia is not going to ratify its current version at all. What's wrong with this document, which has been signed by more than 50 nations, and ratified by 46?
It seems that the Dutch will find it easier to understand the Russian opinion than other Europeans. The Charter was signed in The Hague 15 years ago. At that time, it was merely a political declaration, which became the Energy Charter Treaty (ECT) three years later. This is the document which we are dealing with now. The Netherlands is a major exporter of natural gas, and for this reason it will better understand Russia's concerns about energy security. Also like Russia, the Netherlands has diversified industries, and maintains modern living standards (better than Russia), which makes it a major energy consumer.
But this is not all. Having started exporting natural gas, the Dutch, who had already had a well-developed processing industry, faced what was later dubbed the Dutch disease. They were the first to encounter this problem - a sharp growth in export revenues strengthened the national currency, which, in turn, increased the costs in the processing industry, made it less competitive, and led to the drain of currency from it.
As the biggest exporter of oil and gas among industrialized countries, Russia is also facing the same predicament. But it has its own specific features, which largely explain what its leaders imply by energy and economic security.
The Russian state has inherited enormous social obligations from its communist past, such as universal free education and healthcare, and state-subsidized rent and utilities services. This is a huge burden on the federal budget, and its surplus in the last few years can only be attributed to skyrocketing global oil prices. But at the same time, the flow of petrodollars has generated the symptoms of the same Dutch disease in the Russian economy. Consolidation of the ruble impedes modernization of industry with imported technologies.
For this reason, Russia needs a stable world market of energy carriers with predictable prices, and a system of mutual responsibility of suppliers, consumers, and transit countries. This is particularly important for gas exports with a limited market price formation. In principle, Russia's interests do not contradict those of the Netherlands or other exporters of hydrocarbons. Incidentally, such major exporters as Norway and Algeria have not joined the Charter, either.
At the same time, the majority of European countries are oil, gas, and electricity consumers. They are mostly interested in reliable energy supplies at low prices. Both goals can be reached through competition among suppliers, and with free access to transit transportation networks of other countries. The United States and Canada are far removed from Europe's problems, and have not joined the Charter, either.
There is one more, truly unique feature that makes Russia different from all other countries. A major consumer and exporter of energy carriers, Russia is a strategically vital transit territory by virtue of its geographical location. Therefore, it is subjected to threats from all sides, and should take good care of its national interests. It has to consider the increasingly difficult conditions of oil and gas production, and its growing risks as a producer. It would be fair if these risks were partially shared by major consumers of Russian fuels. Unfortunately, practically none of them is ready to give Russia access to their profitable domestic energy markets.
But the sharpest disagreements between the EU and Russia have been caused by the issue of free transit of foreign energy carriers in its pipelines. The Russian government cannot accept this because it has to regulate domestic prices on energy carriers during the transition to market economy. It requires certain control over their distribution between domestic consumers and exports.
Moreover, Russia is competing with the EU and the U.S. for control over export supplies of oil and gas from the Caspian region. Eastern European countries, for example, would like to buy gas directly from local producers, and transport it bypassing Russian territory. Ideally, gas should go through Russian territory in line with the Energy Charter requirements. But Russia is itself interested in Caspian hydrocarbons, especially in gas, which guarantees stability of its energy balance - correlation between production, domestic consumption, and export commitments. It is ready to re-export it to Europe, but as its own commodity.
Finally, we do not understand why the EU, while talking about the need to diversify sources of energy supplies in order to reduce dependence on Russia, objects to Moscow's intention to also export its oil and gas to Asia and the Pacific, China above all. Russia views this position as a vestige of the Cold War with its division into hostile camps.
