The role of the energy factor in the formation and development of the EAEU

Ueldanov Salavat Raisovich Postgraduate student, Department of Political Science and Political Philosophy, The Diplomatic Academy of the Ministry of Foreign Affairs of Russia 53/2 Ostozhenka str., building 1, Moscow, 119021, Russia slvtu@mail.ru

Introduction

The processes of further development of the Eurasian Economic Union (EAEU) in the context of global challenges of our time are of particular importance today. By ensuring effective interaction of the economies of the member states on a multi-level basis, contributing to the deepening of economic ties and increasing the competitiveness of individual countries and the region as a whole, the EAEU acts not only as the basis for stable and sustainable economic development of the Eurasian region, but also as "one of the poles of the emerging multipolar world" ^[8].

For researchers of integration processes, the issues of studying the basics of integration, as well as the logic and mechanisms of its further development, analyzing the stability of an integration association under the influence of environmental factors are of priority.

In the context of studying the processes of evolution of the Eurasian Economic Union, in our opinion, the analysis of the interaction of states in the energy sector deserves special attention. This is a factor that influenced not only the formation of the integration association, but also has a significant impact on the course of modern processes of Eurasian integration.

In this article, the concept of "energy factor" includes the degree of resource security of states, the level of infrastructural development of their fuel and energy complexes (including technological, logistical and information infrastructure), interstate cooperation in order to implement energy policy and ensure energy security. These processes and phenomena play a significant role in shaping the system of relations between the countries of the Eurasian Economic Union. Their research makes it possible to assess the potential and capabilities of the EAEU, to predict possible scenarios of integration processes in the context of existing and emerging challenges of global energy.

The energy factor of the formation of Eurasian integration

The analysis of the reasons contributing to the formation of regional integration allows us to identify the fundamental expectations of the participants of the integration association regarding the results of interstate interaction. This is necessary in order to assess the further logic of development, the viability of the process in the context of its compliance with the basic interests laid down in the very basis of cooperation.

Obviously, these expectations presuppose, first of all, the implementation of the tasks of the internal development of the participating countries, the solution of the most pressing problems of the states and may differ significantly. 

The basis of the Eurasian integration model is economic cooperation. The theses of the President of Kazakhstan Nursultan Nazarbayev, who delivered a memorable lecture at the Lomonosov Moscow State University in 1994, were devoted to the need for economic cooperation between states as the foundation of Eurasian integration. "There is a need to move to a qualitatively new level of relations between our countries on the basis of a new interstate association formed on the principles of voluntariness and equality. The Eurasian Union could become such an association. It should be based on principles other than the CIS, because the basis of the new association should be supranational bodies designed to solve two key tasks: the formation of a single economic space and ensuring a joint defense policy," Nursultan Nazarbayev stressed in his speech.

And if the issues of defense and ensuring regional security formed the basis of the Collective Security Treaty Organization, then economic cooperation in order to increase the market competitiveness of states, their investment attractiveness, eliminate barriers and restrictions in trade, etc., has become a key goal of the Eurasian Economic Union.

The economic nature of Eurasian integration is manifested both in the wording of the Treaty on the Eurasian Economic Union signed in 2014 (in particular, in the section devoted to the principles and goals of the Union), and in the logic of building institutions of Eurasian integration, as well as in the nature of the development of modern integration processes.

The concept of a single economic space has formed a common understanding of priority areas of cooperation, which are reflected in the idea of forming common markets within the financial sector, transport and energy, industry and the agro-industrial complex, and trade.

 What is the role of the energy sector among those listed and how is this explained?

The emergence in the post-Soviet space of the integration model that exists today in the form of the EAEU was preceded by a number of different forms of cooperation between states. Such stages as the establishment of the Eurasian Economic Community (EurAsEC) in 2000-2001, its unification with the Central Asian Cooperation (CAC) in 2005, and the transformation into the Eurasian Economic Union in 2014 were accompanied by the active participation of Kazakhstan, Russia, and the Kyrgyz Republic in these processes. A separate area was interstate cooperation between the Russian Federation and the Republic of Belarus ("Treaty on the Establishment of the Community of Belarus and Russia", 1996; "Treaty on the Union of Belarus and Russia", 1997; "Declaration on the Further Unity of the Republic of Belarus and the Russian Federation", 1998), which resulted in the founding of the Union in 1999 states.

This composition of participants in the integration processes is to some extent explained by the historical realities that developed after the collapse of the USSR and related to the interests of states in the energy sector. Having significant oil and gas reserves, Kazakhstan could transit energy resources only through Russia, thus remaining dependent on Russian control over export supplies, carried out in the form of a tariff policy. The strengthening of bilateral ties between Russia and Belarus, which had a significant impact on the processes of Eurasian integration, was due in no small part to economic reasons, one of which was the high mutual integration of the fuel and energy complex of the two countries and the dependence of the Belarusian economy on Russian energy carriers ^[15]. The Kyrgyz Republic, which possessed insignificant oil and gas reserves with minimal production volumes, turned out to be heavily dependent on energy imports. A similar situation was observed in Armenia, which does not have oil and gas reserves, as well as refining capacities and joined the EAEU in 2014. The issue of energy stability was emphasized as one of the priorities in the National Security Strategy of the Republic of Armenia, while cooperation with Russia in this area was indicated as a condition for the effective operation of the energy sector ^[16].

Energy cooperation between states is becoming an integral part of the integration agenda within the framework of the creation of the Eurasian Customs Union, and joint international initiatives were revealed in the Declaration on Eurasian Economic Integration signed in 2011 ^[20].

Thus, the key conclusions that we can draw regarding the origins of the formation of the Eurasian Economic Union, which determine the very essence of the integration association and the logic of its further development, are as follows: a) the basis of Eurasian integration is based on the need for economic cooperation, which is of mutual interest to its participants; b) energy was objectively one of the most priority areas of economic cooperation in the post-Soviet space, including within the framework of Eurasian integration processes.

The energy potential of the EAEU in modern realities: balanced inequality

The conclusions about the leading role of the energy component in the logic of the formation and development of the EAEU integration processes are confirmed to a certain extent by statistics reflecting the modern energy potential of the EAEU and its place in the global market.

The EAEU has 20% of the world's natural gas and coal reserves, 7% of the world's oil reserves and provides 4.7% of the world's electricity generation ^[9].

The EAEU countries account for almost 16% of global natural gas production and more than 20% of its global exports (data for 2021, in 2022 this figure was 13.7% due to a significant decrease in Russian exports). The EAEU provides about 14% of the world's crude oil production and the operation of more than 7% of the world's refining capacities ^{[9; 19; 21]}.

The high resource, mining, processing and export potential of the EAEU, being an undeniable advantage of the integration association, at the same time has an important feature that must be taken into account when analyzing the processes of Eurasian integration. We are talking about the country distribution of these indicators within the integration association itself. Russia and Kazakhstan account for the bulk of the energy potential, and Russia to a much greater extent. In 2021, the Russian Federation provided almost 93% of total gas production and slightly less than 86% of oil production carried out by the EAEU countries, Kazakhstan accounted for slightly more than 7% of gas produced and 14% of oil, and the indicators of Belarus and Kyrgyzstan amounted to about 0.03% and 0.3%, respectively. Russia's share in the total gas exports of the EAEU to third countries amounted to 96.8%, the rest falls on the Republic of Kazakhstan. According to the distribution of the total oil exports of the EAEU, the situation is as follows: Russia – more than 75%, Kazakhstan – almost 25%, the share of the Republic of Belarus – 0,6%. ^{[12; 11]}.

The differences in resource potential between the members of the integration association underlie a number of urgent problems affecting the current state and prospects for the development of the EAEU. Moreover, as the analysis shows, it is precisely those problems that are caused by the energy imbalance within the Union that constitute a special category and present the greatest complexity, requiring a systematic approach to their solution.

One of these problems, logically caused by the "energy asymmetry" within the Union, is the differences in the strategic interests of the EAEU member states with regard to integration. The approval in 2021 by the decision of the Supreme Eurasian Economic Council of the "Strategic Directions for the development of Eurasian Economic Integration until 2025" was preceded by a long process of eliminating many disagreements and lively debates on a number of issues, the most significant of which concerned the energy sector, and contradictions on tariff formation in the field of gas transportation remained open even after the approval of the above Strategy ^{[13; 5; 4]}.

The differences in the views of the EAEU members on energy efficiency issues, as well as the development of traditional and alternative energy sources, are logically explicable. For States that are sufficiently provided with resources, the issues of energy efficiency of the economy and the development of renewable energy sources are not as relevant as for importing countries that seek to optimize energy consumption and diversify their sources of energy supply, including through renewable energy sources.

It can be assumed that there is some element of discussion, for example, between the opinion of the Director of the Energy Department of the Eurasian Economic Commission V.A. Zakrevsky on the need to intensify cooperation in the field of renewable energy sources" ^[2] and the more cautious position of the Minister of Energy of the Russian Federation N.G. Shulginov on this issue: "Some countries have realized the fallacy of their ambitious development policy Renewable energy sources and the need to invest in the development of traditional energy resources. It seems to me that we do not have coordination here between the development of technology and the movement towards a low-carbon future."^[18]

In fairness, it should be noted that the Treaty on the Eurasian Economic Union does not limit the ability of states to choose a priority direction for energy development. In other words, the EAEU members themselves determine the structure of their energy profile, taking into account the priorities of energy security and economic efficiency ^[1].  At the current stage, this approach, of course, eliminates the need to coordinate positions and eliminate contradictions between States on this issue. However, in the medium and long term, a situation is possible when the imbalance of the energy potential of the EAEU members, who have chosen their own (significantly different) ways of developing traditional and alternative energy sources, will only increase.

The factor of energy and resource imbalance, of course, cannot but affect the dynamics of the processes of formation of the common energy markets of the EAEU.

One of the key issues in the discussion of the common gas market is the tariff for pumping gas in the common market. "The gas-consuming member states (Armenia, Belarus, Kyrgyzstan) advocate that tariffs for gas transportation services in the common market do not exceed similar domestic tariffs for subjects of the domestic gas market. They are interested in ensuring that the cost of transportation is formed on transparent and non-discriminatory terms, creating equal competitive conditions for all participants in common markets. At the same time, the gas-producing member states (Russia and Kazakhstan) defend the preservation of their sovereignty in domestic markets, advocate the separate formation of tariffs for the domestic and common gas market," says V.A. Zakrevsky, emphasizing the principled nature of these issues that require "coordinated solutions at a high level" ^[1].

In general, according to researchers, in matters of tariff policy, energy pricing and other aspects of purely economic relations between countries, there are expectations of Russia's willingness to bear some of the costs of energy integration in order to provide benefits and preferences to other EAEU economies [20: 165]. This is facilitated by the historically formed and largely based on the Soviet past image of Russia as a political center of integration and an economic donor. To some extent, the practical implementation of this assumption is confirmed by statistics demonstrating the low economic effect of integration cooperation for Russia in the form of GDP growth rate in comparison with other EAEU members ^[7].

Another problem that is logically inherent in all models of regional integration is the understanding that economic difficulties in one country are expected to have negative consequences for other countries. In the case of the EAEU, this problem is aggravated by Russia's dominant position in the energy space, therefore, it will be the focus of attention of other countries: any downturn in the Russian economy, for example, as a result of sanctions pressure, can have a significant negative impact on the market as a whole.

The ideological basis of Eurasian integration to replace the energy one

There is a whole range of problematic issues of energy integration, which are also relevant. For example, regulatory and technical support for energy exchange trading, mechanisms for integration into the legal space of the EAEU of existing bilateral intergovernmental agreements between the members of the Union for the supply of energy resources. A distinctive feature of such issues is that they are largely the subject of "legal technique", explained by the peculiarities of regulatory legal regulation of the fuel and energy complex industries in each particular state. And they can be regulated by the efforts of states to harmonize and unify legislation within the framework of dialogue on the EAEU platforms. Let's call this category "problems of an organizational and technical nature": their settlement within the framework of the dialogue of the member states of the Union is not fundamentally difficult, they do not affect the strategic interests of states.

The problems we listed earlier, caused by energy inequality and the dominant position of individual states in the energy market, belong to a completely different category.

The underlying historical and natural-geographical factors (let's call them substantial) cannot be changed by the decision and will of the participants of the integration association. This means that proposals for their "technical settlement" in the form, for example, of amendments to the normative legal acts of the Union, in themselves are not their solution, representing only the subject of discussion. For example, in A.U. Nazarova's dissertation on the issues of international legal regulation of energy cooperation of the EAEU, the lack of principles of cooperation in the field of renewable energy and energy efficiency (mentioned above) is interpreted as a gap in legislation, after which it is concluded that it is necessary to supplement the EAEU Treaty with a clause enshrining the principles of energy efficiency and resource conservation, as well as signing a special Protocol on cooperation in the field of renewable energy sources of the Eurasian Economic Union as a separate annex to the Treaty on the EAEU ^[10].

Researchers at the Higher School of Economics and the University of Genoa, in their work on the problems of energy inequality in the EAEU countries, identify two groups of countries. The first category includes Russia and Kazakhstan, which have significant reserves of fossil fuels and generate 85% of the total energy resources of the Union. The countries from the second category - Belarus, Kyrgyzstan and Armenia, which do not have such significant resource potential, are interested in developing renewable energy (especially in Armenia). Having identified a different vector of interests (which we have already mentioned earlier in the category of the most difficult problems of Eurasian integration), the authors of the study conclude that amendments to the EAEU Treaty and stimulation of joint scientific research are necessary to expand partnership in the field of energy efficiency and alternative energy ^[17].

While not disputing the theoretical necessity of such forms and results of interaction, it should still be noted that practically amendments to the Treaty on the EAEU, joint scientific work on openly controversial areas are currently difficult to implement for the reasons outlined above.

To solve such problems and achieve consensus among the participants of the integration association, a new approach is needed related to a certain transformation of the EAEU, which would allow the members of the Union to eliminate contradictions and make decisions based on a long-term strategy and common values of the new order, not limited solely to calculating economic benefits.

In our opinion, the basis of such an approach in relation to the EAEU should be, first of all, the common strategic interests of the Union's members, recognized by the political will of its participants and framed in the form of the highest idea and values of the integration association. This can be considered as a form of the ideology of Eurasian integration, capable of ensuring the priority of common strategic goals over short-term, narrow-national interests of an exclusively economic nature.

This assumption correlates with the conclusions of S.Y. Glazyev, a member of the Board (Minister) for Integration and Macroeconomics of the Eurasian Economic Commission, and I.F. Kefeli, Director of the Center for Geopolitical Expertise of the Northwestern Institute of Management of the RANEPA under the President of the Russian Federation, reflected in an article devoted to the analysis of the formation of the ideology of Eurasian integration: "According to the Treaty on the EAEU dated May 29, 2014. Its goal is "striving for the formation of a single market for goods, services, capital and labor resources...", as well as "comprehensive modernization, cooperation and increasing the competitiveness of national economies in a global economy." These goals are purely instrumental and formal, having no ideological content. And the absence of an official ideology of the Union in modern conditions always means a libertarian ideology that automatically reflects the ideal of a money bag" ^[3].

The theses of Russian President Vladimir Putin, voiced by him at a meeting of the Supreme Eurasian Economic Council, were devoted to the need to form a broader common integration space, not limited only to economic aspects: "I would also like to outline a new and, as it seems, promising direction of our work: I would suggest adding to the well-known four freedoms (movement of goods, services The fifth is freedom of knowledge, which would be realized on the basis of common principles and standards of education, health care and public administration. This will contribute to the formation and development of a common cultural space and, if I may, a common Eurasian ideology" ^[6].

The beginning of the formation of such a common strategy should be a balanced, far-reaching political decision of the states, based on an assessment of the readiness of the members of the Union to think in terms of common interests, goals and values, to consider themselves as part of a single global project. A solution focused on long-term development, increasing the global competitiveness of the EAEU, and ensuring the economic security of its participants. A decision based on the willingness of the integration association to resist external pressure exerted on any of the participants by joint efforts, and not by leveling risks exclusively for its own economies.

Thus, the condition for the transformation of the EAEU at the present stage is a situation where: a) the further development of integration depends on solving problems in the economic sphere that served as the basis of the integration association and remains one of the priorities in the process of its functioning; b) these problems are caused by substantial (historical, natural and geographical) factors, change which are not possible by the will and agreements of the parties (for example, an imbalance of energy resources).

Of course, a special position among the factors of the EAEU transformation, the entry of the integration association to a new "level of thinking", is occupied by those global challenges and external pressure that the Union and its individual members are facing today, passing an unprecedented test of the stability of integration in modern conditions. But still, within the framework of the existing economic paradigm of the Union, the energy factor is also an important discussion area of the most pressing issues affecting the long–term interests of the EAEU states and having a significant impact not only on their economies, but also on the political system, including in the form of public expectations from the decisions taken. Constructive discussion of these issues is possible if there is a position formed by States regarding a common, ideologically backed and shared strategy. Otherwise, the dominant integration process will not be the outstripping socio-economic development due to the strengthening of industrial cooperation, the development and implementation of large-scale investment programs and projects, but the inevitable protracted discussions on the discussion of voluminous protocols of disagreement, in which the main arguments of the parties will proceed solely from a scrupulous economic calculation of each aspect discussed.

Conclusion

Having once been one of the main factors in the formation of Eurasian integration, today the energy sector largely determines the nature of the fundamental processes of its development. The high resource potential of the EAEU, the significant role of the fuel and energy complex in the economy of the Union's members, and the historically established mutual integration of relations in the field of energy and economic ties are the driving force of the integration process.

And at the same time, it is in the field of energy interaction that problems of a substantial nature manifest themselves: differences in the strategic interests of the participants in relation to the EAEU; insufficient consistency of positions regarding their own energy development (for example, prioritization of traditional and alternative energy sources); different and to some extent contradictory expectations from the emerging common energy markets; imbalance levels of responsibility for the overall stability of the integration association.

These problems are based on historical and natural–geographical factors, which, obviously, cannot be changed by the decision and will of the participants of the integration association. However, solving these problems depends not only on the dynamics of the Union's development, but also on its viability. And the mechanisms of economic calculation, even the most scrupulous calculation, are not enough here.

Thus, the energy factor seems to be one of the "catalysts" for the further transformation of the EAEU from a purely economic union into an integration association of a different level – backed by a common ideology and values.