Strategic bargaining and pipeline politics: Confronting the credible commitment problem in Eurasian energy transit

Adam Stulberg

Review of International Political Economy, 2012, vol. 19, issue 5, 808-836

Abstract: The resurgence of Russia's energy diplomacy animates debate among realists, who regard pipelines as instruments of competitive resource nationalism, and their critics, who treat them either as mechanisms for strengthening cooperation or reflecting ‘obsolescing bargains’ that empower transit states upon construction and operation. Yet, this debate conspicuously overlooks the variable record of the arbitrary disruption of Eurasian energy transit. This article addresses these oversights by explicating pipeline politics as an international ‘credible commitment’ problem. It focuses specifically on the different incentives among producer, consumer and transit states and on how insights into the economic and institutional dimensions of bargaining shape the value, risks and capacity of the parties to forge and uphold pipeline agreements. Accordingly, arbitrary disruption is more likely under conditions in which the primary stakeholders are not preoccupied by recouping returns on investment and face incentives to gamble on new terms, as well as operate within opaque national regulatory settings. Credible commitments to uphold cross-border transit arrangements are more likely when the opposite conditions obtain. These claims are probed in comparative cases of arbitrary interruption of Soviet legacy pipelines and curious ‘non-events’ in Eurasian oil and gas transit.

Date: 2012
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DOI: 10.1080/09692290.2011.603662

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