The Disintegration of the Concept of Sovereignty and the Energy Sector in the Europe

Abstract

The concept of sovereignty in international law addresses the principle that a sovereign state, through its ruler or government has the right to determine and enforce the laws which it believes are appropriate for its own territory, and that it has the further right to protect its interests at an international level, whether those interests be from a trade or security perspective. However, the concept of sovereignty operates within a broader framework of international law, part of which is the rule of law in international affairs. This involves the existence of a comprehensive system of law which provides predictability as to the legal consequences of conduct, and the effective and impartial application of the law. This then relies upon the ‘adoption’ of a form of sociality, which implies that sovereign states will act in a manner which maximises optimal co-operation between regimes and/or governmental structures. The European Union (EU) has sought, by virtue of the notion of legislative networks to dissolve the concept of individual state sovereignty, thus weakening the ability of sovereign states to determine that which is most appropriate to its own territory, and seeking the imposition of policies and laws which arguably reflect common interests, such as the development of the energy sector. However, the recent global financial and economic crises have highlighted that economic co-operation is far more fragile and problematic than previously thought, and this combined with the fact that energy sources are largely located in sovereign states not part of the EU, some of which have a high ranking of political risk, arguably poses a new and real problem. This chapter argues that the concept of sovereignty is central to sustainable energy policy development in the EU. Accordingly there will be an examination of the concept of sovereignty, its relationship with political risk, and this will be followed by an econometric analysis by using country risk oil industry stock market data and related political risk indicators. The reader should note that this paper is primarily written from a legal perspective, so the language and concepts as used throughout is reflective of this perspective. Furthermore, inclusion of the econometric analysis is illustrative of the notion that the energy sector is highly influenced by the actions of sovereign states and by the political risk attached to those actions.