The political economy of Euro - Mediterranean cooperation in the gas market: The role of domestic stakeholders and the European Commission

Abstract

The EU internal and external energy policy has triggered heated debate among policymakers, regulators, academia and industrial stakeholders over recent decades. This study illustrate how the pro-competitive EU led reform in the gas sector have been unsuccessful in shaping both the Internal gas market as well as the gas sector in the Euro- Mediterranean region. The gas sector in Europe is characterised by its inertia and relative backwardness, compared to the other energy sectors (electricity and renewable energy). Since the Russia-Ukraine gas disputes and recent gas discoveries in the East Mediterranean region, matters related to Euro- Mediterranean gas cooperation are back at the forefront of the energy agenda. The changing nature of the EU external energy policy in the Mediterranean region is analysed in this paper by looking at the influence that EU economic interests and approaches had on the southern neighbourhood. Here we show that the political economy of the gas industry requires the development of long-term relationship with exporting countries in the Mediterranean basin (and elsewhere), because of markets' incompleteness. The paper further explores the role that EU actions play as rule promoter to provide a valid template for the emerging regulatory framework in the region. Our study shows that, while the changing relationship with the southern neighbourhood can be described as part of the process of progressive securitization of energy matters, the model promoted with the Internal Energy Market (IEM), and endorsed by the EC also outside its borders, partially contradicts the reference model in the region, fails to provide a valid alternative template and therefore might negatively impact on energy security. Member States’ gas policies appear to have a greater traction compared to the EC, also in consideration of their vast and long-term economic commitments.