Energy Diplomacy

0
237

Neorealist theorists consider the aim of a State is to ensure its security, especially energy security. Energy security can be observed from several perspectives and has long been treated as a matter of pure geopolitics. The principal viewpoints in International Relations (IR) have come from the neoliberal and neorealist perspectives. Drawing upon International affair (IA) theories, Neorealist theorists stress that states act according to their structural power in international relations. A State’s geo politics is a very relevant aspect in the sphere of oil and gas diplomacy. The increasing prices of oil, gas and coal are affecting the living standards and placing the small Indian Ocean islands under financial strain. 

The strategy on oil and gas has continuously influenced foreign relations .The geographical location of the Indian Ocean islands of Mauritius, Seychelles, Sri Lanka, Maldives and Réunion has traditionally represented a strategically significant point in the Indian Ocean region. Hence, energy is given high priority in the national development agendas of these islands that have economies that are entwined with social, economic and environmental challenges. Deficiency in oil renders these nations dependent on energy and further increases their vulnerability to oil price volatility. 

Thus, increasing energy self-sufficiency will permit these five Indian Ocean Region (IOR) islands to be increasingly flexible in their foreign policies. In the emerging renewable energy era, these small islands still suffer large deficits in energy access that requires urgent attention. Success in addressing energy-related challenges for these nations and their development partners is fundamental to the broader sustainable development agendas of small islands.  Energy aid does appear to be supporting a shift towards cleaner renewable energy. The power dynamics connected to oil and natural gas will be much different from that of renewable energy.

These energy trends, exhibited by increasing energy demands by these five island nations may also encourage oil exporting States to diversify their energy supplies .Generally, nations in asymmetrical relationships are susceptible to external pressure and more constrained in their foreign policy preferences. 

Coping with challenges

Sri Lanka’s economic situation is challenging with shortages of basic needs including cooking gas and fuel. The South Asian Island’s daily fuel demand continues to rise while the economic crisis is seeing long queues of motorists outside gas stations waiting for hours and sometimes even days to obtain scant supplies of petrol and cooking gas. It will take some time to resolve
Sri Lanka’s fuel shortage. Of Sri Lanka’s annual import expenditure, 20 per cent is allocated for oil imports. 

In 2019 alone, around US$ 3.6 billion was spent on oil imports. This year, the hike in global oil prices has forced Sri Lanka to spend more on oil imports. Since the pandemic, the Nation is facing a severe foreign exchange crisis with massive reductions in earnings from tourism and remittances. Crude oil alone will not fulfil Sri Lanka’s energy requirement, it will require further refined petroleum products as well. Currently, the state-owned Ceylon Petroleum Corporation (CPC) imports and distributes fuel for electricity generation and other sectors. The country’s electricity market is dominated by the household and industrial sectors.  Of Sri Lanka’s energy supply 43 per cent continues to depend on imported petroleum products. 

Much of the country’s hydropower has been developed for electricity generation in large power plants by the State-owned utility. The demand for energy may undergo changes with the increasing use of natural gas. With the shortage in the supply of gas, the demand for electricity and kerosene has increased. An important role in reducing energy poverty in Sri Lanka is played by Liquefied Petroleum Gas (LPG). The State imports crude oil from the Middle East and refined products from other areas including Singapore.  Sri Lanka’s increasing energy demand will make the country more and more dependent on fossil fuels. Since oil and gas has turned into a significant matter in diplomacy, the current crisis with spiraling oil and gas prices has economic and geopolitical dimensions that need to be taken into consideration.

Challenges for the Maldives

The geographic spread of the Maldivian islands necessitates the electrification of each island with its own diesel-powered mini-grid system.  The power sector continues to depend on fossil fuels even with the transformation to renewable energy. Diesel is the main fuel imported for electricity generation with over 4.3 million barrels imported in 2019.  Given the dependency on fossil fuels, the changing oil prices in the world market impacts the country negatively.  In addition, petrol is crucial for sustainable development in the small island of Maldives. The increasing prices of food and fuel are making daily life tougher for many Maldivians.  Opportunities for scaling up the renewable energy sector across the Maldives are immense as it can provide the government with budgetary relief.

Mauritius and Seychelles

The energy requirements of Mauritius are met from petroleum products and coal. Of the country’s total primary energy requirements, 86 per cent is met by imported fossil fuels.  Mauritius has encouraged financing and the development of power plant projects through international competitive bidding and joint ventures between the local private sector and international companies.   In 2020, two-thirds of Mauritius’ electricity was generated from non-renewable sources. Almost 39 per cent power generation came from coal.  Mauritius, which is largely relying on the importation of fossil fuels, has an urgent need to reduce this dependency.  Its energy policy encourages the use of renewable and clean energy to reduce the country’s dependence on fossil fuels.

Seychelles, an archipelago of 115 islands off East Africa in the Indian Ocean is almost entirely dependent on oil for energy including for the production of electricity.   While oil accounts for 26 per cent of Seychelles’ imports, the country is almost entirely dependent on petroleum for its energy requirements. One major challenge for the Indian Ocean Commission (IOC) member States is gaining access to the energy essential for their economic development. 

Réunion

Réunion, a French department and European Overseas Region is still heavily dependent on imported fossil fuels for its energy needs. Nevertheless, they employ a progressive renewable energy development policy that promotes accelerated development of renewable energy products in the region to reduce dependence on fossil fuel exports. Réunion aims to generate 100 per cent of its electricity from renewable energy sources by 2030. 

Sustainable energy future

In sum, for small islands such as Maldives, Mauritius, Réunion, Seychelles and Sri Lanka energy self-sufficiency can be seen as a noteworthy game changer in international relations and energy geopolitics.  Under the banner of economic diplomacy, the need for energy security has long driven the relations of the five Indian Ocean islands with economies of energy-producing countries. Furthermore, significant dependence on imported oil for meeting energy needs has profound effects on the economic development of these nations.  

About the Author:

 Dr. Srimal Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O.P. Jindal Doctoral Fellowship and SAU Scholarship under the South Asian Association for Regional Cooperation (SAARC) umbrella. As a Lecturer he focuses on comparative politics of Small Island Developing States (SIDS). Dr. Fernando is an academic specialist in International Relations and an adviser on New Regional Diplomacy. He has received accolades such as the 2018/2019 ‘Best Journalist of the Year’ in South Africa (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union.

By Dr. Srimal Fernando