The evolution of the foreign policy in the energy strategy of the Russian Federation

Khadzhi Aleksandr Sergeevich Postgraduate student; Department of International Relations; Diplomatic Academy of the Ministry of Foreign Affairs of the Russian Federation 53/2 Ostozhenka Street, Moscow, 119021, Russia haji.sasha@gmail.com

Introduction

The preparation of the Energy Strategy of the Russian Federation for the period up to 2050 is currently being finalized. The need to extend the strategic planning horizon in the field of energy policy has been repeatedly raised and recently re-emphasized by President of the Russian Federation Vladimir Putin.

The Head of State stressed that the new version of the document should take into account changes in the energy sector, and the priorities of the Strategy should take into account such issues as expanding the gasification program in the country's regions, as well as ensuring an adequate supply of petroleum products on the domestic fuel market (TASS, https://tass.ru/ekonomika/14380293 (accessed 12/01/2024).

The Energy Strategy of the Russian Federation (in its current version for the period up to 2035) is a fundamental document defining the goals and objectives of the long-term development of Russia's energy sector, priorities and directions, as well as the main mechanisms of state regulation. In the current version, the document was approved by the Government of the Russian Federation in 2020 and is a direct continuation of the Energy Strategy for the Period up to 2030, adopted in 2009.

The adaptation of Russian energy policy to modern realities, where global trends and trends are rapidly changing, has always been difficult. Especially considering the constant pressure from the collective West, which, after the collapse of the USSR, defined itself as a hegemon with the right to dictate terms to other countries.

The beginning of strategic planning

The Russian Federation inherited from the USSR a huge raw material and scientific and technical base, the proper use of which would effectively overcome the deep economic crisis and give impetus to further sustainable socio-economic development of the country.

In the early 1990s, the Ministry of Fuel and Energy of the Russian Federation launched work on the development of a strategic document in the energy sector, which was complicated by the lack of a clear understanding of national development priorities in the economy, and was accompanied by extreme uncertainty and turbulence of socio-political and economic processes ^[1-3].

On September 10, 1992, at a meeting of the Government of the Russian Federation, the "Concept of Russia's Energy Policy in the New Economic Conditions" was adopted, which became the first comprehensive document that, albeit sometimes in extremely general and cautious formulations, outlined the directions of the industry's evolution ^{[4, pp.260-337]}.

The document largely repeated the "USSR Energy Program" and proposed planned and directive measures to strengthen state control over the energy sector and form a "controlled energy market" ^[2-3].

Taking into account the specific conditions for the preparation of this document, priority was given to emergency relief and overcoming crisis phenomena in the Russian economy and energy sector. However, the international aspect of the industry's development could not stand aside and found its place, albeit not of primary importance.

The foreign policy aspect of Russia's energy policy, according to the accepted Concept, is expressed in two directions: relations with the countries of the post-Soviet space and with countries outside the territory of the former USSR.

Energy relations with the states of the post-Soviet space should be based on mutually beneficial principles and may contain barter bases: "[...] on the supply of fuel and electricity in exchange for food, consumer goods, equipment and other material and technical resources" ^{[4, p. 322]}.

It is also important to develop a coordinated energy policy, the main principles of which will be scientific and technical cooperation, coordination in relations with other states, joint development of deposits, coordinated pricing policy, ensuring unhindered transit of energy resources, as well as administrative issues.

In terms of relations with other states, the key principle is to receive significant foreign exchange earnings, which are extremely necessary in times of crisis and are the key to the recovery and further development of the country's economy.

Great importance is attached to the issue of attracting foreign investment in order to comprehensively modernize the existing scientific and technical base, as well as for the construction of new fuel and energy complex facilities. Scientific and technical cooperation with the countries of the "far abroad" is noted in the key of reducing the time needed to develop promising, highly efficient and environmentally friendly technologies and fuels.

At the same time, the authors note the need to reform the regulatory framework that allows foreign capital to make a profit.

The foreign policy aspect of the 1992 document is far from being given the most attention. At that time, the primary task was to create an impulse to overcome the ongoing crisis after the collapse of the USSR by mobilizing the energy industry and defining its main development directions. The international direction only continues the general line, and in fact the main task of the energy industry outside is to make a profit to support the country's economy. In this regard, it is noteworthy that the document was criticized at the development stage. "The Concept does not include ways to integrate the country's energy sector into the global system, and there are no mechanisms to attract and protect foreign investment" (Conclusion of the Expert Council under the President of the Russian Federation, URL: https://yeltsin.ru/archive/paperwork/10542 /?ysclid=m3flgqayr6372720349 (accessed 11/22/2024).

The principles of foreign energy policy do not take into account the growing competition in global markets after the collapse of the USSR, the specifics of prices and the state of global energy markets. The division of countries into post-Soviet and other countries (without taking into account regional specifics) also looks very rough.

Nevertheless, the uncertainty of the socio-political situation in the country in the early 1990s fully explains this general approach to foreign energy policy. At the same time, the Concept has become the normative strategic basis on which more and more new principles of shaping Russian energy policy will be applied over time.

Energy strategy until 2010

The first strategic planning document where the phrase "energy strategy" appeared was the Decree of the Government of the Russian Federation No. 1006 dated October 13, 1995 "On the Energy Strategy of Russia" ^{[4, pp. 390-476]}.

The draft Strategy was developed on the basis of the 1992 Concept by an Interdepartmental Commission headed by the Minister of Fuel and Energy of the Russian Federation, Yu.K. Shafranik, which included representatives of line ministries, as well as scientists and specialists from leading research institutes and organizations ^[3].

The basis for the new document was Decree of the President of the Russian Federation No. 472 dated 05/07/1995 "On the main directions of energy policy and structural restructuring of the fuel and energy complex of the Russian Federation for the period up to 2010", which outlined the priorities of the country's foreign energy policy quite generally: mutually beneficial cooperation with the CIS countries, Russia's entry into new markets and development resources of foreign countries, as well as the creation of conditions for fulfilling the obligations assumed by the country.

Russia's first Energy Strategy was approved in 1995 in an unstable political and economic environment. Foreign economic cooperation was supposed to be the main one for the development of the country's fuel and energy complex, as well as the key to socio-economic growth ^{[4, pp. 439-445]}.

In the provisions of the Strategy, "energy diplomacy" was mentioned for the first time as an instrument of foreign policy in the energy sector. As noted, energy and its aspects are becoming increasingly important in the foreign policy of countries, which means that Russia should pay more attention to these issues when building its foreign policy.

A huge step has been taken in setting development priorities compared to the provisions proposed in the Concept. First, it was noted that there was a need to improve the contractual framework, which would include a system of guarantees for payments and foreign investments. Secondly, great importance is attached to the transition from primary energy exports (oil and gas) to high-value-added goods (petrochemical products). Thirdly, the export of energy resources should contribute to the integration of the Russian economy into the global one, based on the economic feasibility of any project (thus, the fight against the "squandering of Russia's natural resources" is proclaimed) ^{[4, p. 440]}.

In relations with foreign countries, the Strategy is based on the Concept of dividing them into CIS countries and others, where European countries stand out in particular. Relations with the post-Soviet space are called priority and involve comprehensive cooperation in the development of integration processes in the energy sector, joint implementation of projects and improvement of payment systems.

A definitely new provision is "carrying out a complex of works and technical measures to reduce the energy dependence of certain regions of Russia on neighboring countries," which generally well characterizes the difficult situation in the domestic energy market of Russia in the mid-1990s.

Mutually beneficial cooperation remains a priority in relations with other countries, involving attracting investments for the development of the domestic fuel and energy sector. At the same time, it is emphasized that the guideline of energy diplomacy in relations with far abroad should be a change in Russia's status from "exclusively as the largest supplier of energy raw materials in the international community" ^{[4, p. 445]}.

The Strategy developed in the mid-90s was an important step for Russia, which began its path of integration into the international energy market. In the context of the deep crisis of the post-Soviet Union, it was necessary to identify key priorities for energy development, especially in foreign policy, given the growing interest of other countries in the young Russian state and its resources.

Energy Strategy until 2020

A new version of the Strategy was adopted in 2003. (Decree of the Government of the Russian Federation dated 28.08.2003 No. 1234-r "On the Energy Strategy of Russia for the period up to 2020". Relevant ministries, various departments and, for the first time, enterprises of the fuel and energy complex were also involved in the development of the document, which eventually presented 6 different options for the future Strategy ^[5].

The preparation of the new document halfway before the date set in the previous version is due to the failure to comply with the provisions of the previous version, as well as a number of important foreign economic prerequisites: there has been a transformation in the global energy markets, which is especially noticeable in terms of pricing of oil, gas and petrochemical products. High volatility and competition with global players necessitated new protective mechanisms and measures to support domestic producers ^[6].

The foreign policy aspect of the 2003 revision became even more explicit and complex, which distinguished the document from the previous ones. The emphasis on export potential and the importance of foreign exchange earnings for Russia was still maintained. However, its value was qualitatively revised – now it was supposed to increase the export of energy resources, but with a number of conditions.

The defined goals of foreign energy policy have become clearer and contain an eye on the global conjuncture.:

1) Russia must strengthen its position on world markets, as well as ensure the maximum realization of export opportunities, including by increasing the competitiveness of goods and services of the domestic fuel and energy sector.;

2) A non-discriminatory regime should be established in foreign economic activity, as well as the access of Russian fuel and energy companies to foreign markets.;

3) It is necessary to promote further attraction of foreign investments.

A fundamentally new point appears in this version of the Strategy, reflecting the nature of the entire future energy policy in the next 20 years: Russia is actively involved in ensuring international energy security as one of the world's largest producers, exporters and consumers of energy resources.

It is also important that energy is recognized as one of the basic elements of Russian diplomacy: the state plans to support and protect the interests of Russian companies, as well as implement the provisions of the Strategy by forming a foreign policy line.

The export of energy resources is recognized as the main direction of foreign policy in the energy sector, however, additional attention is focused on the need for:

· diversification of the export portfolio by increasing the share of high-value-added goods;

· diversification of sales markets, expansion of the geography of activities of Russian fuel and energy companies;

· The formation of an efficient energy transportation infrastructure and the development of international energy transport systems.

Regarding the geography of foreign energy policy, the new version of the Strategy is based on the prospects for developing relations with partners in the Asia-Pacific region, taking into account the further strengthening of cooperation and building a constructive energy dialogue with traditional partners in Europe and the post-Soviet countries.

The Middle East, South America and Africa are recognized as being of interest as potential consumers and importers of fuel and energy sector technologies. This qualitatively distinguishes the ES-2020 from previous strategic documents in the field of energy policy: there is a transition from dividing countries into "post-Soviet and other" macro-regions.

The new formalization of energy policy correlates with the complex changes in the country since the beginning of the first presidential term of Vladimir Vladimirovich Putin. Russia is emerging with clearly defined national interests and key areas of development, as well as deep transformations in the public administration system with the centralization of power and the alienation of corporate-oligarchic structures.

Speaking in March 2000 as Acting Chairman of the Government of the Russian Federation at a meeting with representatives of major energy companies, Putin outlined priorities for the development of the fuel and energy complex.: The fuel and energy sector was supposed to turn from a "stability factor" into a "growth factor" of the country's economy, and the energy sector itself needs to be put in order. Speaking about foreign energy policy, Putin paid special attention to the need for diplomatic support for Russian companies, the development of the energy transportation system and the search for new partnerships based on Russia's geostrategic interests. (Speech at the All-Russian Meeting on the development of the fuel and Energy complex URL: http://www.kremlin.ru/events/president/transcripts/21184 (accessed 05.12.2024).

In this context, the new version of the Strategy has brought the priorities and directions of the industry's development to a new level. In the ES 2020, Russia is recognized not just as an exporting country, but as an important subject of the architecture of international energy security. At the same time, energy is now not just a part of the state's economy, where foreign exchange profits are provided through the export of resources, but one of the key elements of the emerging geopolitical line of the state.: "Russia's firm position in global energy markets will not only ensure stable income from exports of fuel and energy products, but also significantly strengthen the country's economic and political positions in the world."

The energy factor is becoming increasingly important in Russia's foreign policy toolkit. Foreign energy policy tends to effectively adapt to the realities "on the ground." In the early 2000s, regular Russia-EU meetings began to be held in order to achieve key interests: maintaining and increasing the sales market, expanding investment cooperation, and addressing pressing issues of transport and energy security. In the post-Soviet space, formats of interaction at the level of intergovernmental commissions are beginning to play an increasingly important role. And the prospects for relations with the countries of the Asia-Pacific region are largely based on the growing rates of industrial development and consumption growth ^[7]. Strengthening cooperation with Asian countries should also contribute to the economic development of the Far East and Siberia, regions that are in dire need of foreign investment, especially with regard to the modernization and expansion of energy infrastructure facilities. The symbiotic effect of integrated cooperation in the energy sector will contribute to strengthening regional energy security and create new growth points ^[8].

Energy Strategy until 2030

The 2009 revision of the Strategy was created in the context of increasing competition in global energy markets and the global financial crisis (Decree of the Government of the Russian Federation dated November 13, 2009 No. 1715-r "On the Energy Strategy of Russia for the period up to 2030").

Preparations for the revision of priorities began in advance: at the end of 2006, in accordance with Order No. 413 of the Ministry of Industry and Energy of the Russian Federation dated December 21, 2006, an Interdepartmental Working Group was formed to clarify the provisions of the Strategy and extend it for 10 years, until 2030 ^[9].

The new document rightly highlights the instability of global energy markets and the volatility of energy prices as a key external challenge for the Russian energy industry. The global financial crisis of 2008, which caused enormous damage to the main economies of the world, showed a high level of instability in the financial systems of exporting countries and a significant dependence on the market conditions of energy importing countries ^[7].

At the same time, the specification of foreign policy challenges that have a negative impact on the country's energy sector and its energy security has become new for the Strategy as a document. In addition to the aforementioned reduction in prices and reduced demand for energy resources due to the global crisis, much attention is being paid to: the lack of diversification of the export portfolio and sales markets (once again), but more importantly, the politicization of energy relations and the continued dependence of Russian exports on transit countries.

In an attempt to ensure the continuity of energy supplies in practice, Russia pays great attention to maintaining and maintaining relations with those players who directly affect the continuity of such. The Russian-Ukrainian and Russian-Belarusian energy crises, which have become a real threat to the stable gas supply of Eastern European countries (primarily) and other states, are a real and extremely illustrative example of the use of transit status as a weapon and instrument of pressure. ^{[10, pp. 111-114]}

Another important problem is the growing competition with other major energy actors, in particular, the United States and China, which is typical for the Central Asian region. Therefore, the Russian authorities strongly encourage the participation of large Russian fuel and energy companies in projects for the exploration, production and processing of oil and gas raw materials, especially in such a promising and resource-rich region as the Caspian Sea ^[11].

The document recognizes the diplomatic support of Russian fuel and energy companies, which, as noted, are not present at a high enough level in foreign markets, as an important foreign policy area. On the other hand, achievements in the implementation of large-scale infrastructure projects to diversify supplies are mentioned as a positive example: Blue Stream, Yamal–Europe, Nord Stream, South Stream, East Siberia - Pacific Ocean, etc.

In order to adapt to the unstable situation, the priorities already noted in the past are being reconfirmed.:

· diversification of the export portfolio with a focus on high-value-added products (products of deep processing of energy raw materials);

· introduction of new high technologies;

· increasing the competitiveness of Russian fuel and energy sector goods and services;

· increasing market presence, developing infrastructure in foreign countries and diversifying the geography of supplies;

· ensuring effective working conditions for fuel and energy companies in foreign markets and expanding their presence there.

The trend towards renewable energy sources was already mentioned in the ES 2020, however, in the previous version of the document, the emphasis was on creating the regulatory framework necessary for the development of this area in the structure of the national energy balance.

The 2030 version of the Strategy already defines specific goals for the development of renewable energy sources at the national level, but more importantly, Russia's desire to integrate into the global renewable energy market is determined, with a subsequent increase in the country's share due to the existing potential and scientific and technical developments in the field of renewable energy sources.

In terms of relations with consumer countries of fuel and energy complex products, the Strategy still assumes the preservation of key market positions in Europe and the CIS in the geography of supplies, however, it also predicts a multiple increase in the eastern direction to almost 1/4 of the share of exports of liquid hydrocarbons and gas by 2030.

The foreign policy part of the Energy Strategy until 2030 is an important element of the development of the state's strategic line in the energy sector. The formulated provisions and priorities partially adjust with the 2003 document and do not carry fundamentally new directions, however, they are adjusted and made appropriate to the current situation (as far as possible).

Energy Strategy until 2035

The development of the updated Strategy was significantly delayed: the projects were ready already in 2014, but the adoption of the final document was delayed for 6 years (Decree of the Government of the Russian Federation dated June 9, 2020 No. 1523-r "On the Energy Strategy of the Russian Federation for the period up to 2035").

A fundamental change in the foreign policy climate played a major role here: when forming the previous version of the Strategy, relations with the United States and Europe were not expected to deteriorate dramatically, the outbreak of a prolonged crisis in Eastern Ukraine, the introduction of a significant number of sanctions against Russia, including those directed against fuel and energy projects, as well as a significant drop in energy prices ^[12].

The rapidly occurring events, which then stretched until 2020. By the time the new document was adopted, in general, characterized the key "feature" of this strategic state document – it never took into account force majeure circumstances: "The main problem of the Energy Strategy is not even in the constant changes, but in the essence of this document. Now it is a mixture of search and regulatory forecast. [...] The problem of this type of forecasting (approx. search engine) is the inability to foresee the appearance of "black swans" ("Russia's energy strategy will not keep up with reality" URL: https://eurasia.expert/energostrategiya-rf-ne-ugonitsya-za-realnostyu / (accessed 02.11.2024).. The lack of in-depth analysis of the external environment and dynamic processes is one of the key drawbacks of the strategic external planning of the industry. In this regard, it is quite possible to adopt the approaches used by Russia's main competitors in the global energy market: the EU, the USA, Japan and others ^[13].

However, it is necessary to make a remark that within the framework of the energy policy management system, in addition to the Energy Strategy, there are documents such as General Development Schemes. These documents are intended for a limited number of people, but they contain more detailed provisions on the development of the country's fuel and energy complex.

This cannot but cause some criticism, expressed in the lack of a comprehensive analysis in the Strategy itself, rather than other, "more local" documents, relations with key partners, little attention paid to addressing key issues of energy efficiency improvement (especially with regard to renewable energy and similar trends), solving problems of isolation from scientific and technical achievements of competing countries (typical for hydrogen energy) and other issues ^[14].

However, after a long period of adaptation of the document to the current realities in world politics and economics, the Energy Strategy until 2035 clarified energy priorities in foreign policy.

In revision 2020, Russia is striving to adapt to the new global energy environment, taking into account both internal economic needs and external challenges, such as increased competition in foreign markets, climate change, the transition to low-carbon technologies and global geopolitical changes.

A key change in the global energy market is a significant increase in the production and consumption of fuel and energy complex products in the Asia-Pacific region and Africa, as well as a certain drop in the corresponding indicators in Europe. It is noteworthy that it was the sanctions pressure exerted by the collective West that had the opposite effect: instead of isolation, a significant impetus was given to the development of the eastern vector of Russia's energy foreign policy. By the time the new Strategy was adopted, Russia had already formed offers for mutually beneficial cooperation for Asian consumers: firstly, the already mentioned increase in consumption of raw materials, especially in China and India, secondly, the limited capabilities of other exporting countries, and thirdly, the extensive logistical capabilities of Russian fuel and energy companies, their desire to expand infrastructure and an increase in the volume of manufactured products. ^[15]

The ES-2035 is characterized by a more restrained forecast of the development of both the domestic market and the situation in the international arena: in particular, the forecast for the development of the global economy and energy has been changed, which more fully takes into account the transformation of global energy markets in the post-crisis period, a decrease in energy demand, as well as a shift in demand for developing countries. Other influencing factors include the emergence of new manufacturing companies, the growing demand for unconventional resources, and the growing trend of renewable energy ("Russia's Energy Strategy for the Period up to 2035 (Main Provisions), Analytical Center under the Government of the Russian Federation URL: https://ac.gov.ru/files/content/1578/11-02-14-energostrategy-2035-pdf.pdf?ysclid=m3h2is09nm407609380 (accessed 03.11.2024).

In defining the priorities of foreign energy policy and explaining them, ES-2035 proved to be more restrained than previous versions: improving efficiency, participating in the global energy agenda, as well as developing a system to support exports of fuel and energy sector products and services.

The tools for implementing the above priorities, in general, remain similar to previous documents, but still contain a number of "innovations" (which are still a logical continuation of the already established sets of measures):

· development of multilateral cooperation (cooperation through international organizations in the field of fuel and energy: Organization of Petroleum Exporting Countries, Forum of Gas Exporting Countries, etc.);

· Establishment of the Institute of Energy Attache;

· assistance to fuel and energy companies in acquiring assets abroad.

The Strategy until 2035 harmoniously continues the long-term evolution of state strategic planning for the development of the industry and, although it does not propose fundamentally new priorities for energy development, it quite justifiably notes general trends and directions of development. It is distinctive that the geopolitical and geo-economic changes have justified a more restrained nature, as already noted, of determining the prospects in the global energy sector for Russia.

Conclusion

The evolution of the foreign policy aspect in the versions of Russia's Energy Strategy is characterized by its continuity, which consists in defining tools for adapting to the realities of global energy markets.

Moreover, the authors of the Strategies do not hide the inheritance of principles from previous documents: the versions developed already in the 21st century differ little in the priorities of foreign energy policy, only partially adapting them to the current international situation and the state of global energy markets.

The key factors are always the diversification of the export portfolio (which is directly related to the comprehensive development of the fuel and energy sector itself, the production of new products, as well as ways to transport them to consumers), ensuring access of Russian fuel and energy companies to world markets and their integration into the global energy system (including through support in obtaining contracts or concluding agreements on production, or the supply of energy resources), diversification of the geography of supplies (taking into account the pace of economic growth and increasing demand for energy resources in the countries of the Global South), ensuring Russia's scientific and technical superiority in goods and services of the fuel and energy complex.

It is worth noting, however, that the formulation of policy priorities, initially characterized by extremely general and very cautious formulations related to a lack of understanding of the situation on world markets and a greater focus on domestic development, has been characterized over time by a more precise texture.

As a problem typical for all versions of the Strategy, it is worth highlighting the possibly rapidly losing relevance for certain provisions voiced in the texts of the documents. If it concerns the domestic development of the fuel and energy sector, this is most often related to financial and economic indicators, but internationally, especially for ES-2030, it is closely related to the description of the current situation and potential forecasting of events in world politics and economics.

The issue of including forecasting of the already mentioned "black swans" remains open to this day: whether a comprehensive strategic planning document should take into account possible single events that can radically change the situation in a certain case.