Discussion points, EU-Russia institutional aspects Andrei V Belyi CEURUS, University of Tartu, Estonia CEPMLP, University of Dundee, UK EU-Russia interdependence Positive interdependence: • Increasing trade volumes • Mutual vulnerabilities to international markets (i.e. Eurozone crisis, internationalization of gas markets) • Best practice transfer (energy efficiency and renewable energy promotion) Ground for cooperation And institutional development Negative interdependence: • Mostly covering gas markets, following gas transit conflict and third energy package adoption • Competition for Ukraine especially since EnCT accession • Controversies surrounding the Energy Charter Ground for ‘deinstitutionalization’ Increased political risks Institutional responses: gas Energy Charter Still the most overarching legal framework But how to make it accepted by RF and other producing states? EU-Russia Energy Dialogue Political discourses are dominating over expert cooperation Gas Advisory Council focuses on ‘technical’ discussion, but political trust needed Facing gas markets EU to force markets even where the competition does not have a ground? Russia to rely over inefficient Gazprom? Main political concerns: EU RF • Main concern: Gazprom’s export monopoly and price indexation • Integration of Ukraine into EnCT also to reinforce transit security • ECT is not acceptable if transit issues are not clarified (incl dispute settlement); REIO clause is the key barrier • EU markets bring new uncertainties in capacity markets Going beyond negative interdependence ? EU RF • More flexible position on REIO ? • Less rigid attitude towards EnCT? • Need to face market realities (i.e. oil indexation is outdated) • Export monopoly: barrier and not a solution for the energy sector modernization? Concluding remarks Institutional responses are insufficient because negative interdependence prevails in gas EU’s market development brings new uncertainties for post-command economies, incling EnCT; REIO clause in ECT rather complicates the multilateralism Russia’s reliance on outdated institutional structures increases a distrust Is positive interdependence matter of long term political will?