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Benita Ferrero-Waldner

European Commissioner for External Relations and European Neighbourhood Policy

Energy Security and Foreign Policy

Foreign Policy Association, World Leadership Forum 2008
New York, 24 September 2008

I’d like to thank the Foreign Policy Association for the invitation to speak today. The European Commission knows and welcomes the contribution to debating international affairs which this organisation makes. In unstable times, this intellectual input is all the more valuable.

You have asked me to speak about the relationship between energy security and foreign policy. I’d like to do so, but putting energy into the broader context of security challenges for foreign policy today. With this summer’s events in Georgia, the subject matter couldn’t be more timely.

Ladies and Gentlemen,

You will remember the words of famous American philosopher Francis Fukuyama in the early 90s:

"What we may be witnessing is not just the end of the Cold War...but the end of history... That is... the universalization of Western liberal democracy as the final form of human government."

Well I would argue that the events of the last few weeks in the Caucasus – show that the “end of history” is not quite here yet, particularly in terms of the peaceful coexistence of neighboring states.

Some of you will also remember that later in the 1990s it became fashionable to talk about the “End of Foreign Policy”. According to the new theory, traditional divisions between Domestic and Foreign Policy were no longer valid as abroad, as a result of globalization, had become at home.

I would argue that that’s wrong too. If anything, the security threats which face us today mean that an understanding of the drivers and dynamics in the world and an ability to influence them are more relevant than ever.

It is nevertheless true that the scale and nature of some of these security threats have changed.

First, the development deficit/demographic explosion. World population is set to increase from 6.5bn in 2005 to 7.7bn in 2020 and continue rising apace. 38% of this growth is projected to be in Africa in urban areas. In other words - those places least able to cope. Food insecurity is likely to be one result. Migration, civil unrest, ideological extremism, and conflict could be others.

Second, the environment/climate change. UN research predicts continuing rapid degradation of ecosystems. This will severely affect water, health, food and security across the world. If the rest of the world consumed in the way we do – and the indications are that emerging economies like China and India are beginning to - then we’d need more than two planet earths to cope. And that doesn’t take into account population growth. Climate Change, as my recent report to the European Council with the High Representative showed, is not only a “green issue”. It will act as a “threat multiplier” aggravating all these risks.

Third, terrorism/proliferation. For much of the last century our security concerns were about expansionist state power, threatening its own citizens or neighbouring countries. Today, some of the greatest threats are likely to emerge from countries where state power is not too strong but too weak. Too weak, in particular, to tackle the phenomenon of terrorism, an extremism looking for simple truths exacerbated by today’s technological advances where networks can be connected at the drop of a hat, with the click of a mouse.

Fourth, international institutions remaining fit for purpose. Through globalisation our neighbour’s backyard is now ours. Credible fora for the collective resolution of problems, on the basis of agreed standards, are therefore fundamental to managing today’s threats. If, given the shifting balance of power - by 2020, China will be the 2nd and India the 6th largest economies in the world - existing institutions are to remain able to do so, they must adapt. And Europe must help them do so. That means a reformed UN, G8, World Bank and IMF which better reflect the world of the 21st century. In my personal view, it means that the IMF should switch its focus from dealing with monetary issues to global financial market challenges. In my personal view, it means a permanent seat for the European Union at some stage on the Security Council. And it means a Security Council which accepts new majority voting fast-track procedures for dealing with extreme humanitarian disasters requiring urgent response. Finally, it means improving the UN’s peacekeeping capabilities to ensure that we have the necessary forces and equipment not only to talk our talk, but to walk it.

So today’s security challenges not just for foreign policy - but for our collective human security - are indeed severe.

Which brings me back to Energy Security, which is of course linked to all these threats.. My generation – in Europe at least - never had to bother much about turning out the lights, heating our homes or driving our cars. But our children’s will. Today Europe imports around 50% of the energy it consumes. By 2030 this could be around 64%. There is nothing wrong with importing energy per se, provided that we are talking about open, transparent and competitive global markets. However, in today’s world, we are often not. Increasing our energy imports therefore calls for a full assessment of risks.

For Europe, the particular concern relates to gas imports. As gas is mainly transported in long-distance pipelines, supplies are vulnerable to disruption.

In oil, we also see growing resource nationalism and interference by the State in producer countries. In addition, with the rapidly growing demand from countries such as China and India, we see that the national oil companies are failing to match demand with investment in production capacity.

It clearly will be important to ensure a diversified range of fuels – including renewables to enhance Europe’s energy security over the next decade.

All of this means that Energy Security will continue to top European Council agendas.

That energy should be at the heart of the European political agenda is of course not new. The creation of the Coal and Steel Community sowed the seeds of the Union as we know it today. You may remember the opening words of the 1950 Schuman:

“World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it...”

So is Europe taking initiatives that are proportionate to the dangers it faces on energy today? Let history be the judge.

I believe we are at a crucial moment in the development of a European Common Energy Policy. The Commission will shortly be presenting its Second Strategic Energy Review. It is clear that we need to ensure that our internal market is fully integrated. Without this, we won’t have the bargaining power we need. We have already done considerable work to put in place, a range of policies which include: linking up Member State energy infrastructure, increasing oil stocks, improving energy efficiency, promoting renewables – our ambitious target for both is 20% by 2020, a different fuel mix including biofuels, new technologies for vehicles, clean coal and so on....

As so often in the history of European construction, the progress we can make is first and foremost a matter of political will. It is of course for the Commission, but also for EU Member States, to demonstrate that. And as in many other areas there is a direct link between the level of ambition of the EU's internal agenda and our credibility and effectiveness externally.

So what of our External action? The events in the Caucasus have brought home that the so-called "frozen conflicts" can directly affect our energy security. No surprise then that the European Council enjoined the Commission to review all energy security initiatives, in particular on diversification of sources and supply routes.

At present energy features as a key element in all our agreements with third countries, suppliers, consumers and transit countries. We are working hard to enhance our bilateral energy relations with key partners in the Caspian Basin, Central Asia, the Mediterranean and the Middle East.

Strengthening our energy partnership with Central Asia – which has great potential in oil and gas - is a top political priority for us. I have just come from the EU/Central Asia security forum in Paris. We are redoubling our efforts to make a reality of the long-discussed "southern corridor”.

Over the past couple of years we have signed MOUs on energy with four key energy partners, namely Ukraine, Azerbaijan, Kazakhstan and Turkmenistan. We have concluded agreements too with Morocco and Jordan and MOUs are ready for signature with Egypt and Iraq.

Last but not least, you would expect a word on Russia. The European Union had identified a new energy partnership with Russia - built on the principles of transparency, reciprocity and a level playing field for all energy operators - as a key external priority. Negotiations on a new agreement are currently on hold pending Russian compliance with the terms of the peace brokered by the European Union in Georgia. Whatever the coming months bring in the Caucasus, we know that Russia will remain a very significant partner for us. But we know also that Russia needs us. Our markets take around two thirds of Russian gas exports, and the revenues from our custom are vital to Russia's economic growth. Managing this interdependence will be an important challenge.

In closing, I’d like to return to your original question about the relationship between energy security and foreign policy. Is there one? Yes. And it is fundamental for consumers, suppliers and transit countries alike.

On this, as on all other security challenges I have mentioned today, Europe needs to work hand in hand with the United States. I ask you to support us and work with us. And that means, in the field of energy, understanding our need to work pragmatically with our partners.

I thank you for your attention.

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