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So is energy strategic or not?

by Jerome a Paris Thu Aug 30th, 2007 at 05:28:02 AM EST

Russian energy faces EU barriers

In a confidential working paper, the Commission suggests a series of measures to restrict foreign companies’ access to the EU’s energy sector, and in particular the gas and electricity transmission networks.


A separate internal Commission document about the implications of unbundling, seen by FT Deutschland, the Financial Times’ sister paper, says the EU could be “vulnerable to a strategy of third countries to dominate the EU markets not only in terms of supply but also by acquiring the networks”.

The document explicitly warns about situations “where investment is driven by other motives than economic ones”.


Attempts by the EU to restrict acquisitions by non-European companies are likely to be ­vexatious. The European Commission has set itself firmly against attempts by member states such as Spain and France to declare their energy industries strategic sectors that can be ­protected from foreign bidders. However, it seems likely that some form of protection for the energy sector will be ­implemented.

Of course, the argument will be that markets work only with players that follow the rules, so a distinction can be made between insiders and outsiders. But they won't get away from the fact that they are explicitly admitting that there can be non-economic considerations given in the management of the energy sector and energy networks. Because what they are claiming is that there can only be negative economic outcomes from such meddling, and no positive outcomes. Except that they seem to acknowledge that there would be a positive impact form Russia. So why don't we have a policy that allows us to have such strategic benefits from market meddling? How can our strategy be "let's have no strategy, and let (European) corporations decide what is best for us" if energy is deemed so sensitive?


The idea that decentralized renewable energy had a huge strategic value, as well as the economic benefit of keeping more money within the particular community, was proposed in the mid-70's.  Externalities such as these continue to get short shrift, as the governing class continues to live blindly.  I often stare blankly in amazement at how much we've ignored in the past three decades.

Nice catch, J.

"Life shrinks or expands in proportion to one's courage." - Anaďs Nin

by Crazy Horse on Thu Aug 30th, 2007 at 06:07:22 AM EST
The document explicitly warns about situations "where investment is driven by other motives than economic ones".

This in the middle of a document choke-full of non-economic motives?

How can these people be in charge?

Can the last politician to go out the revolving door please turn the lights off?

by Migeru (migeru at eurotrib dot com) on Thu Aug 30th, 2007 at 06:10:11 AM EST
As a follow up, the FT reports Russia's reaction today:

Moscow warns EU on `unfair' energy plan

The Kremlin on Thursday called on the European Union to stop worrying about the security of Russian energy supplies and said it would do everything legally possible to ensure Russian companies enjoyed fair access to downstream natural gas and electricity assets in Europe.


Mr Peskov said western reaction to Russian companies' foreign expansion had, on occasion, verged on the "near hysterical".

Viewed in a "sober and unemotional" light, Russia's record as a reliable energy supplier was impeccable, he said, adding that, "even at the height of the cold war, Russia did not once cut off energy supplies [to western Europe]".

Mr Peskov said: "Russia is as interested in supplying Europe as Europe is in receiving gas from us. We are mutually interdependent and that interdependence is a pillar of energy security."

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Aug 31st, 2007 at 06:07:20 AM EST

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