The Role of Energy in Foreign Policy

Report
The Case of Energy-Rich, SecurityPoor Azerbaijan
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Problem Definition and Significance of the Topic
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Research Objectives and Questions
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Brief Literature Review
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Definitions of key words: Security, Foreign Policy, Energy
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Theoretical Framework
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Energy as a Foreign Policy Tool: Energy and Provision of National
Security
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Energy as a Foreign Policy Issue: cause of political leverage and
interdependence
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Bibliography
This research explores how energy shapes the foreign policy of an
energy-exporting country - Azerbaijan. Interrelation among energy –
security – foreign policy is to be addressed in an example of
Azerbaijan in this presentation.
What makes the topic compelling?
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Fundamental factors such as growing importance of energy resources,
insecurity stemming from dwindling of conventional resources and
incremental demand, threats of various kinds to energy infrastructure
 Concentration
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of production in a few, mainly unstable regions
An unprecedented intense competition for energy resources among
consumers
More frequent and efficient use of energy as a foreign policy tool
The situation urges us to research not only foreign energy policies of great
powers who are predominantly high energy importers and consumers, as well
as to understand the role of energy in foreign policy of energy producing
countries.
Why Azerbaijan?
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It sits on vast energy – oil and gas resources
It is both an energy producing country and an alternative transit
route for energy flows from the landlocked Central Asia
circumventing Russia and Iran
It is a key country in the Southern Corridor gas project and hence
important for EU’s energy security
It was a drive for Westernization of the region
It has significant place in the development of world oil industry – its
cradle
Energy openly manifests itself in the foreign policy of Azerbaijan
Energy plays an exclusive role in shaping the country’s and region’s
future
I believe that understanding the role of energy in this part of the
world will help us to present some generalisations about other
regions where energy predominantly plays an important role
Being from Azerbaijan has explicitly affected my choice of research
topic
Objectives
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Understand how the ownership of oil and gas reserves
affects foreign policy challenges that the country faces
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Explain how developed energy relations with the
regional/international powers and increased geostrategic
significance, high revenues from exports and following
political-economic stability contribute to the security of
Azerbaijan, if do contribute at all
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Contribute to filling the gap in the existing literature both
by exploring the role of energy from a producer country’s
perspective and by focusing on Azerbaijan as an
understudied country in the Western literature.
Has energy brought security to Azerbaijan and how
has it impacted on the country’s key foreign policy
problems?
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Has energy brought security to Azerbaijan: has energy
developments contributed to the mitigations of foreign policy
disputes and facilitated cooperation, or has it added to the
complexity of the problems and instigated competition with the
neighbours?
How are the concepts of energy, security and foreign policy
interrelated in the case of Azerbaijan?
In what ways is energy being used as a foreign policy tool for
national security purposes? Have energy developments
strengthened national security of Azerbaijan?
To what extent have Baku’s energy connections affected its affairs
with regional and international powers? What is the role of
energy as a foreign policy issue in the country’s international
relations?
In order to provide thorough answers to these research
questions a wide range of secondary literature has been
drawn on. Though the existing literature on energy security
and integration of energy into foreign policy does not
highlight the case of Azerbaijan in particular, it helps draw a
general picture which elucidates interregional and inter-state
energy relations from trade to political ties. The researchers
warn about the negative consequences of an increasing
concentration of fossil fuels’ production in the world, growing
demand of consumers alone with the producers themselves,
skyrocketing prices and market volatilities. This leads us to the
key debates among in the literature
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Disagreement on the unequivocally accepted definition of
energy security: the economic approach to the notion (Noel),
political understanding (IEA, EU documents, Klare, Yergin, and
others), or an integrated definition (Checci et al)?
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Energy security from the perspective of consumers (mainstream)
or producers (limited attention)?
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Peak oil debate
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Disagreement whether the future energy relations will be
dominated by competition for the remaining resources (Klare,
Kalicki, Goldwyn, Deese, Giordano, Wolf) or cooperation for
possible collective gains (Thomson et al, Godement et al)?
Problems with literature
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Despite the recent increase in a number of works on energy
security, the concept still remains underdeveloped and
problematic
Interrelation between energy and foreign policy and energy and
security have not been necessarily addressed which can be
explained with energy’s being a new addition to FPA and in a
lesser degree to security studies (though its presented as a
traditional security concern in majority of the works)
There has been little interest in researching producer countries’
energy policies other than OPEC key members and Russia
Although Central Asian countries have recently drawn attention
of the scholars, the Caspian Basin, particularly Azerbaijan still
remains an under-studied country and there is very limited
number of works available in the Western literature on the
country
Literature on Azerbaijan
The available literature on Azerbaijan can be classified into several
branches:
 The group of works that are exclusively on energy resources and
infrastructure development in the region. A chapter on the Caspian
basin and its energy resources is included to almost all the works
examining energy security. The authors draw attention to the “New
Great Game” in the new world order between the Russian Federation
and the West
 Research of the US policies towards the region and its support to the
development of the first energy projects in Azerbaijan in early 1990s
is of particular importance. Yet, recently policies of the EU have
come to the centre of attention with the discovery of vast natural
gas reserves in Azerbaijani waters in addition to the massive
resources of Turkmenistan. Chinese and Indian policies towards the
Caspian region, though mainly towards Central Asia, have drawn
increased attention recently
 The next group of works are reports of the key energy companies on
energy figures of Azerbaijan and Caspian basin, such as BP Statistical
Review of World Energy and reports of SOCAR
 Academic works on the history and geopolitical implications of
energy developments for the region
However, most of these works have been written from the Western
viewpoint with the leading idea of how the West can benefit from
the oil and gas resources that are not controlled by the Kremlin and
that do not have to be transported through the insecure Persian
Gulf. Understanding of energy security of the owner country, its
concerns and expectations derived from the active Western
involvement to the regional affairs have not been comprehensively
and properly addressed in these publications. Another shortage is a
general regional character ruled in these works. They have
researched the whole region, not specifically Azerbaijan, which
prevent them from being comprehensive and detailed investigation
of individual countries of the region.
Security
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There is not a unilaterally agreed definition and generally accepted as an
essentially contested concept (Buzan 1991; 2009)
Disagreements on referent objects – who/what should be secured; threats
and risks to security – external or internal; factors affecting security and
means to be employed to be secure have led to the development of various
definitions
Though a state has been approached as a key object to be secured in most
of the history, recent concepts, on security of citizens within states, security
of society or the planet of Earth for example, challenge this view
Traditional understanding of security is further contested with wideningdeepening approaches to the range of threats and dangers to security: not
only inter-state military threats can bring about insecurity; economic and
societal threats including environmental challenges; domestic conflicts
within states; weapons of mass destruction; terrorism; transnational
organized crime can be listed (Report of the UN High-level Panel on
Threats, Challenges and Change, 2004:2)
Most stated definitions
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‘Security in any objective sense, measures the absent of threats to
acquired values, in a subjective sense, the absence of fear that such
values will be attacked’ (Wolfers 1952:485)
‘Security is “a relative freedom from war, coupled with a relatively high
expectation that defeat will not be a consequence of any war that should
occur” (Bellany 1981:102)
‘Security involves gaining a degree of confidence about our relationships
that comes through sharing certain commitments with other actors,
which, in turn, provides a degree of reassurance and predictability’
(Williams 2012:7).
‘Security encompasses both coercive means and acts of persuasion,
“bolstered by the prospect of mutually shared benefits, to transform
hostility into cooperation” (Kolodziej in Collins 2010:3).
‘Security is a condition, like health or status, which defies easy definition
and analysis’ (Morgan 1999:2).
Buzan five major sectors of factors that affect security of human
collectivities: military security; political security; economic security;
societal security; environmental security (Buzan 1991). In his later work
with Hansen he distinguishes three epistemologically differing –
subjective, objective and discursive conceptions of security (Buzan
2009).
This work itself employs predominantly traditional
understanding of security. Security of the traditional referent
object – state remains to be the research focus in this work.
Additionally, security is mainly perceived in terms of external
military threats in relation to territorial boundaries. However,
in contrary to the traditional interpretations, economic
security will be emphasized in its own right as well. The
author argues that security is achievable through cooperative
policies, confidence and trust-building actions rather than use
of coercion and military power exercise.
Foreign Policy
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Classical definition by Walter Carlsnaes: foreign policy is a
sum of ‘those actions which, expressed in the form of
explicitly stated goals, commitments and/or directives, and
pursued by governmental representatives acting on behalf
of their sovereign communities, are directed towards
objectives, conditions and actors—both governmental and
non-governmental—which they want to affect and which
lie beyond their territorial legitimacy’ (Carlsnaes 2002:
335).
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Broader definition by Christopher Hill: foreign policy is ‘the
sum of official external relations conducted by an
independent actor (usually a state) in international
relations’ (Hill 2003:3).
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By Hudson: Foreign policy is ‘the strategy or approach
chosen by the national government to achieve its goals in
its relations with external entities’ (Hudson 2008:12).
Energy
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This thesis means conventional energy resources – oil and gas
resources that Azerbaijan holds when refers to energy. In terms
of energy security concept, there is not an unequivocally
accepted definition of energy security which challenges the
perspectives for international dialogue and cooperation for a
more secure energy order.
Various interpretations of energy security can be slightly split into
two branches: economic (more liberal approach stressing the
market) and political understanding (emphasizing state’s role
and national interest).
The most assented explanations of both approaches:
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“Energy security is assurance of the ability to access energy resources
required for the continued development of national power”, more
specifically “it is the provision of affordable, reliable, diverse, and ample
supplies of oil and gas (and their future equivalents) and adequate
infrastructure to deliver these supplies to market” (Kalicki and Goldwyn et al
2005:9)
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Energy security is “the uninterrupted physical availability [of energy supplies]
at a price which is affordable, while respecting environmental concerns” (IEA)
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“The EU’s long-term strategy for energy supply security must be geared to
ensuring, for the well-being of its citizens and the proper functioning of the
economy, the uninterrupted physical availability of energy products on the
market, at a price which is affordable for all consumers (private and
industrial), while respecting environmental concerns and looking towards
sustainable development” (Seliverstov 2009:3)
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“[Energy security] is described as the assured delivery of adequate supplies
of affordable energy to meet a state’s vital requirements, even in times of
international crisis or conflict” (Klare 2008:484)
I define energy security for a producer country – Azerbaijan as:
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security of supplies for domestic market
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security of demand and markets for the resources abroad
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provision of prices high enough to promote economic development
at home, low enough not to suspend growth in the key consuming
economies
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availability of export infrastructure and safety of transit routes
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minimal reliance on a single customer (or a group of customers) and
on a single transit route/country
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development of a image of a reliable supplier in the eyes of
customers
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efficient usage of high energy revenues
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diminishing dependence on
the energy sector through
development of non-energy domains of domestic economy
The thesis will utilize two mainstream theories – realism and
liberalism since they are key for understanding motives and
prospective of competition or cooperation for energy resources. As
to the case of Azerbaijan, as I argue that the incumbent government
is more keen to the realist policies, mainly in its attempts to change
the regional balance of power through the use of energy as a
foreign policy tool, however, it also attaches to the liberal stance in
facilitating regional cooperation among friends, developing relations
with the EU, and avoiding open disputes with the powerful
neighbours – Russia and Iran. This can be partly explained with the
country’s economic and military weaknesses, and domestic
challenges such as weak record of democratic reforms, state-level
corruption, non-transparent use of energy revenues, and so forth.
Despite inclination to the realism in the governing circles and
relevance of realist picture of the political relations, it is more
beneficial to pursue liberal policies and facilitate cooperation for the
reaching solutions in a number of regional problems.
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security is freedom from military threats and coercion by other
states in international system
States the most important, rational, unitary actors
Due to lack of international authority over the states to impose
rules and monitor compliance with agreements states- anarchy
states feel insecure in an self-help system characterized by
competition and war
Energy demand growth in consumer economies among which are
the major powers and decline in their domestic production;
finiteness of conventional energy resources and their diminishing
supplies; decrease in a number of new discoveries and warnings
on ‘peak oil’ increase tensions among states
Energy politics is power politics and energy is a source of power
There are serious restraints on cooperation among states and
conflicts for energy will be inescapable reality
Waltz:
‘The possibility that [control over energy] may be used by
some states to weaken or destroy others does, however, make
it difficult for them to break out of the competitive system’
(Waltz quoted in Glaser, C. L., “Realism” in Contemporary
Security Studies, 2010:20)
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the current form of Azerbaijan’s energy relations is more a result
of realpolitic understanding of international relations by the
states involved in the region
Energy being a material capability and a source of power is the
only available tool for the security-seeking Azerbaijan to survive
in a slef-help environment
Energy is used to draw attention of the Western powers to the
region and balance Russian and Iranian presence with their
engagement
the main-transport pipeline for Azerbaijani oil was built through
Georgia and Turkey to Mediterranean port bypassing Russia
(depriving Moscow from one of its most applied tools – control
over flow of energy out of the Caspian) and Iran (isolating Iran
from realisation of regional energy projects and preventing
increase in oil volumes transported through the unstable Persian
Gulf and congested Hormuz strait)
Armenia has been isolated from all energy projects in the region
with the participation of Azerbaijan (depriving Armenia of
perspective revenues and undermining its regional role)
Azerbaijan pursued balancing policy against the “greedy states” in
the region: internal and external balancing
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although there is anarchy international politics does not have to a
realistic system full of conflicts, war and violence
growing economic interdependence among nations in the energy
field accelerated by globalisation
Consumers are dependent on imported supplies, while producers
are interested in ensuring demand, markets and flow of high
revenues
Consumers are champions of technology and financial resources,
while exporters are in need of investments and innovative
technology for development of hydrocarbon resources
major powers are interested in safeguarding the normal
operation of the world energy market and preventing volatility;
providing political and economic stability in key producer regions
and preventing supply interruptions, attacks to energy
infrastructure; securing vital energy transit routes
Cooperation and security are feasible and achievable in the
following areas:
R&D technologies
 information exchange
 developing precise statistical data
 diminishing loss of energy in domestic use
 decreasing the side-effects of high energy consumption on
environment
 advancement of the role of renewable sources of energy
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Interaction in these areas leads to advanced mutual
understanding and common interests in eschewing conflicts
and sustaining peace. Since violence brings about high costs,
volatile markets, risks and insecurity for all parties.
Although Azerbaijan’s regional relations have been realistic, it does not
have to continue to be so
 “room” for cooperation is being broadened with the development of
energy projects in the region
 The regional affairs have been realistically governed for last twenty years,
but this has not brought any progress to the solution of Azerbaijan’s key
foreign policy challenges
 Competition and renewed violent crashes war will destroy everything
accomplished with hard efforts in last two decades
 The self-interested rational ‘Westerners’ cannot afford risking massive
investments in Azerbaijan’s oil sector
 Military clashes cause market volatilities, impede access to markets and
capital, thus the war may well alienate foreign investors and their
advocators from Baku
 Energy trade relations has brought about interdependence
 Interdependence leads to mutual understanding and common interests
with the Western powers that serve to facilitate cooperative actions
between Azerbaijan and the EU/US in particular, and increase absolute
gains of all parties involved
Hence, energy can promote peace and cooperation both at home and
abroad with growing interdependence, vital economic, political and social
changes, increased attention of world powers and international institutions
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What role does energy play in providing national security of
Azerbaijan? Points to consider:
 Drawing the West into the regional game with Russia and
Iran - energy as a tool to draw wider attention to the
regional conflicts
 Providing foreign aid particularly in the defence sector
 Military build-up due to high energy incomes
 Growing regional power and stronger stance against
Armenia
 Prompting more active and deeper engagement of the US
and the EU in the conflict solution in the region
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Energy as a cause of a foreign policy problem: the legal
status of the Caspian Sea. How has energy
affected/mitigated a dispute over energy fields with
Turkmenistan and facilitated cooperation of five littoral
states?
Energy as a cause of political leverage: Azerbaijan – Georgia
relations?
Energy as a cause of interdependence: Azerbaijan –EU
energy relations? Trasn-Caspian pipeline as a catalyst of
competition or of dispute solution in the Caspian?

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