Stability: a decisive factor for ensuring energy security in North Africa and the EU

By on October 1, 2016

Growing tensions with Russia have created a rift between the EU and what has traditionally been its most important energy suppliers. After Russia’s annexation of Crimea, its ongoing shadow war in eastern Ukraine, and its military brinkmanship against the Union’s Baltic member states, EU-Russian relations have reached their lowest point since the Cold War. Europe has responded in kind by flexing its Common Foreign and Security Policy (CFSP) through the imposition of a series of crippling economic sanctions. However, the glaring weakness in this strategy is Europe’s considerable dependence on Russian gas imports, which reduces the EU’s leverage vis-à-vis Russia. Looking to patch this chink in its armor and to find a more reliable source of energy when the future of relations with Russia appear uncertain, Europe now looks south to energy-rich North Africa. However, North Africa’s potential as an energy partner is nevertheless constrained by a tumultuous political and economic situation that has persisted since the beginning of the Arab Spring. If the EU is to develop its energy relations in North Africa, it has an interest in helping to stabilize the security situation in these countries.

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The EU disposes of only few domestic energy reserves, with most consumption satisfied by imports. When the Ukraine crisis began in 2014, 53.5% of the EU’s domestic energy needs were imported. Despite decreasing energy consumption overall (a result of greater energy efficiency as well as economic stagnation) concerns over energy supply security persist. Indeed, energy import dependency rates are especially pronounced when it comes to oil (88.2%) and gas (67.4%). This energy insecurity is accentuated by Europe’s increasing dependence on relatively few suppliers: Russia, followed by Norway, is by far the EU’s largest suppliers of oil, gas and coal; a fact that has already proven to be problematic in the past, with energy supplies from Russia becoming uncertain during the disruption of that country’s gas exports to Ukraine in 2006 and 2009. Therefore, the EU is seeking to diversify energy supplier countries and routes. To this end, it released an Energy Security Strategy in 2014 and is following ambitious plans to create an EU-wide Energy Union, aiming at securing energy supplies from sustainable and reliable sources at competitive prices. This also implies setting up strategic energy partnerships with potential new suppliers such as the Mediterranean.[1] In this context, the EU is trying to intensify energy relations by developing an international energy approach under which all its Member States would speak with one voice in external energy issues.

Cheap oil reveals unsustainability of Northern African energy systems

Despite its outstanding energy resources – comprised of both fossil fuels and renewables – North African countries provided only 4.2% and 14.4% of the EU’s oil and gas needs in 2014.[2] Though the EU has long recognized the region’s potential, past efforts at building a fruitful energy relationship have been disappointing. Contrary to its dealings with Russia, the EU’s energy relations with North Africa however occur mainly at the bilateral level, taking place between individual EU Member States and Northern African countries. The few multilateral initiatives that have taken place, including the Mediterranean Solar Plan (MSP) and the DESERTEC project, have only shown limited success so far. To address these shortcomings, the EU, via the Union for the Mediterranean (UfM), set up the Euro-Mediterranean Platforms on gas, the regional electricity market, and renewables and energy efficiency in 2015. For now, though, only the first two platforms have come online.[3]

Another challenge that is likely to impact the future of the EU’s dealings with the region is the sharp decline in oil prices, which has been a blessing for energy-importing countries like Tunisia and Morocco but a nightmare for major energy exporters like Algeria and Libya, where oil and gas revenues declined respectively by 41%[4] and 81%[5] between 2014 and 2015.[6] Although both countries together still had an overall energy trade surplus of around 74 billion USD in 2014 (59 billion USD for Algeria[7] and 15 billion USD for Libya)[8], they have been continuously struggling with falling oil and gas revenues, and consequently with decreasing GDP growth, ever since.

Oil prices: the straw to break the camel’s back?

The fall in oil prices brings new risks to a region that is still recovering from a difficult political transition and whose political stability depends highly on energy security. The connection between a prosperous economy and social stability is obvious; one must look no further than the Arab Spring to see how widespread unemployment coupled with poor governance can bring about protest, revolution, and even civil war. However, there is also another, more direct link between energy and stability, rooted in export governments’ ability to leverage cheap energy in exchange for social stability. Algeria, for example, managed to put an end to a ten-year civil war in 2002, partly through a social pact that involved cheap energy in exchange for tolerance of an authoritarian regime. This same social contract helped President Bouteflika to minimize the influence of the Arab Spring ten years later, making him the only leader in the region to remain in power with minimal political reform.[9] However, this is merely a band-aid solution for years of political unrest, and an unsustainable one at that considering the impact that declining energy revenues have had on Algeria’s economy. Bouteflika’s old age and ailing health make real and lasting solutions a serious priority in order to avoid a renewal of conflict that could cripple the energy giant’s exports.

Regional energy output before and after the Arab Spring

senza-titolo

Source: Own graphic, based on data from the IEA.

 

Indeed, as the graphic above shows, the Arab Spring and the Libyan Civil War that ensued, led to an almost complete halt in energy production in that country, as well as to a slowdown in Algeria.

This is not to say that only large-scale manifestations of social unrest like revolution or civil war are capable of damaging a country’s energy exports. Terrorist groups like Al-Qaeda in the Islamic Maghreb (AQIM), which have a growing presence in the region, have also begun targeting local energy infrastructure in order to destabilize the economy.

In January 2013, an Al-Qaeda affiliate attacked a natural gas facility located in In Amenas in the East of Algeria, killing several hostages.[10] A more recent incident in March 2016 involved terrorists launching rockets at the In Salah natural gas plant, showing that attacks against the energy sector continue to threaten that country.[11] In addition to the obvious material and human damages to energy installations, this kind of instability also threatens to drive out the foreign investment needed to maintain the region’s crumbling energy infrastructure, and could even threaten the EU’s own energy security by reducing the investment inflows needed to fund the Trans-Saharan Gas Pipeline which, once completed, is supposed to transport gas from Nigeria to Europe, passing through Algeria.[12]

However, compared to its neighbor Libya, Algeria was generally spared from terrorist attacks against energy facilities. Indeed, Al-Qaeda’s rival, the Islamic State has even managed to carve a sizeable piece of territory out of Libya, placing the world’s most active terrorist group in the heart of the region and prolonging a conflict which has already damaged the country’s energy output as it has led to blockages of several major oil terminals which together have a combined capacity of 860,000 barrels per day. In fact, the Ras Lanuf, Es Sidra and Zuetina terminal were blockaded in December 2014 and only reopened in July 2016 after negotiations involving the UN.[13] However, attacks are ongoing, with different groups claiming control over oil-exporting facilities.

Finally, Egypt too is battling a sizeable insurgency in the Sinai Peninsula, which has been claimed as a province of the Islamic State. Today, terrorist attacks occur at their highest rate since the 1990s.[14] The link to Egypt’s energy sector is clear, with natural gas exports (to Jordan and Israel) having been repeatedly limited by sabotage attacks against pipelines, including a bombing against a natural gas pipeline in North Sinai in March 2014.[15]

Recommendations

In this paper, we have seen not only the EU’s urgent need to diversify its energy sources through improved energy relations with North Africa, but also the political and security-related challenges that will need to be dealt with in order to make that region a reliable energy partner at a time when Russia’s long-term viability as a primary energy source is looking less than certain. Helping to reduce the vulnerability of fragile exporting states to price fluctuations, partly through a renewable energy programme that would help these countries to better exploit their high solar and wind potential, would be a welcome first step. In the short-term, this would allow these countries to continue to maintain social stability through the guarantee of inexpensive energy to their citizens. Of course, this is no substitute for deep and meaningful economic and political reform, which should be a priority for the region as a whole in the long term.

The EU must also renew its push for a genuine multilateral cooperation framework with the North African countries, which would help to foster greater regional cooperation in a part of the world where multilateralism has traditionally been avoided, for example through the promotion of electricity interconnections. This would allow Europe’s southern neighbors to bargain as a block, helping to reduce the perception that the energy initiative is a neo-colonial attempt (which was the case for the MSP and DESERTEC) to exploit the region’s resources with little return for the Arab countries involved. Above all, the EU should seek a mutually beneficial strategy that provides Europe with the energy security it needs while giving North African countries a jump-start on renewable energies, greater resistance to oil price fluctuations, and greater access to Europe’s lucrative energy market.

In this context, tackling social unrest through the promotion of improved governance and economic stability – basically through economic diversification, which is positively related to political security – should be a key objective in the EU’s dealings with the region as well in order to avoid future unrest that could trigger large-scale migration flows, as is currently happening with the migration crisis. This approach can go hand-in-hand with the EU’s objectives of creating a stable energy market in the region, as social unrest (be it in the form of peaceful protest, small-scale terrorism, or armed conflict) can have a disastrous impact on energy output.

[1] European Commission.

[2] Eurostat.

[3] European Commission.

[4] EIA.

[5] EIA.

[6] In the case of Egypt, the fall of the oil price has had both positive and negative impacts. Positive, cause as a net oil importer just as Morocco, the decline in oil prices has reduced the country’s costs for energy subsidies and negative, cause a lot of Egyptians work in the oil sector and Egypt exports a lot of commodities towards the Arab oil producing countries like Saudi Arabia.

[7] OEC.

[8] OEC.

[9] Carnegie Endowment.

[10] BBC.

[11] BBC.

[12] Africa Center.

[13] Oilprice.

[14] CFR.

[15] TOGY.


Author: Britta Daum
Britta is a doctoral candidate at the Technical University of Darmstadt. Her research focuses on European external energy policy towards North Africa. She holds a Master’s degree in Geopolitics and International Relations from Sciences Po, as well as a Bachelor’s degree in Business Administration from the University of Mannheim. In her Master thesis she dealt with the internal debate on the shale gas development in the US and its impact on the national American interest in the Arabian Peninsula.
Britta first discovered her passion for environmental and energy concerns whilst working on the concept of Sustainable Development at the United Nations Economic Commission for Europe in Geneva. During her work as a research assistant at the Jacques Delors Institute in Paris she later specialized in European energy and climate policies. Another field of research interest is the European Neighborhood Policy.
 

Author: Emmett Strickland
Emmett’s primary research areas include the European Neighbourhood, terrorism, and international security, an interest he obtained while pursuing his bachelor’s degree in linguistics at the University of North Carolina at Chapel Hill. He also holds an MA in political science, which he earned in a joint programme between UNC and Sciences Po Paris. In the past, he has worked at the Embassy of Afghanistan in Washington, the Jacques Delors Institute in Paris, and the National Democratic Institute in Albania..
 

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