The Warsaw Institute Review qr. 1/2023 no.24

Dear Readers, Iam

giving you the first quarterly of The Warsaw Institute Review in this year. The theme of the last issues was definitely dominated by the war in Ukraine and global geoplitics. This magazine will be different.

At a time when Ukraine is fighting with Russian agression, we can not forget about impacts of this war on global security. Russia and its wealth in energy resources significantly influence the supply market and the energy policy of states. Numerous sanctions on Russian supplies of gas, coal and oil make countries begin to diversify their sources of supply and lean towards new directions. This case is undoubtedly the main theme of this issue.

In this issue, I present an assessment of the problems of the European Union's climate policy by Professor T. G. Groose. Additionally, you can read about the import of LNG power, the addition of Alaska and the struggle for influence in the Arctic, the vision of the future of using the source on batteries and electrification, as well as about the trade in Iranian oil. You will also learn about

The Warsaw Institute Review

© Copyright 2023

The Warsaw Institute Review Warsaw, Poland

Editor-in-Chief

Patrycja Sokołowska

patrycja.sokolowska@warsawinstitute.org

Translations

Aleksandra Iskra

Aleksandra Tomaszewska

DTP and Printing www.sindruk.pl

the current African crisis in the management of low resources.

I hope that these topics will a valuable reading for you. I wish you a pleasant reading,

Patrycja Sokołowska Editor-in-Chief The

Warsaw Institute Review

Publisher Warsaw Institute

Wilcza 9, 00-538 Warsaw, Poland

www.warsawinstitute.review www.warsawinstitute.org

The opinions given and the positions held in the materials published in the Warsaw Institute Review solely reflect the views of the authors and cannot be equated with the official position of the Ministry of Foreign Affairs of the Republic of Poland and Ministry of Culture and National Heritage of the Republic of Poland.

ISSN 2543-9839

ConTEnTs

20

EUROPE & EU CLIMATIC POLICY

Professor Tomasz

Grzegorz Grosse

A Double Mistake

NORTH AMERICA, ALASKA&THE ARCTIC

Katja-Elisabeth

Herrmann Eufracio

From Alaska to Asia and Beyond

MIDDLE EAST

Kinga szurc

Iran's Oil and Its Biggest Consumers

EUROPE & EU CLIMATIC POLICY

Prof. T.G. Groose

A Double Mistake

EUROPE & EU CLIMATIC POLICY

Barnabás Heincz

Could Batteries Power Central Europe's Future?

NORTH AMERICA, ALASKA&THE ARCTIC

Katja-Elisabeth Herrmann

Eufracio

From Alaska to Asia and Beyond

20 23

MIDDLE EAST

Kinga szurc

Iran's Oil and Its Biggest Consumers

AFRICA

szymon Polewka

Grand Ethiopian Renaissance

Dam: Africa's Crisis in Managing Limited Resources

A DoUBlE MIsTAKE

Tomasz Grzegorz Grosse, Professor

T HE EU’ S CLIMATE POLICY IS AN E x AMPLE OF FAILED

g EOECONOMICS AND DEFECTI v E

g EOCULTURE .

Geoeconomics stands for the use of economic instruments including the EU climate transition––to produce beneficial geopolitical results. Geoculture1 is a set of ideas, values, and norms that are inherently linked to geopolitics. Both expose how the EU’s new green policy is dysfunctional for many EU nations, including Poland.

According to geoeconomic principles, the skillful use of economic tools is vital to attain geopolitical goals. Economic processes are channeled to accumulate capital and distribute wealth to a particular political community, also to boost its strategic importance. Any economic policy that consequently impoverishes some communities is erroneous from an election perspective and for geopolitical potential. An inaccurate geoeconomic strategy occurs when one actor excessively depends on another for resources or acquires foreign-made technologies instead of providing long-term benefits to domestic businesses. In an extreme example of flawed geoeconomics, states help build the

1 T.G. Grosse (2023) Geokultura, czyli o związkach geopolityki z kulturą. Kraków, in print.

geopolitical potential of their competitors yet to the detriment of domestic firms. Depreciating the competitiveness of domestic businesses and thus undermining their export opportunities also sets a negative example. Security is a field closely linked to geoeconomics. Its major objective is to sustain economic processes so as not to become overly dependent on foreign-made resources or technologies.

Alexander Hamilton, one of America’s Founding Fathers, claimed that the state should first and foremost sustain branches to render the United States, independent of foreign nations, for military and other essential supplies including resources and energy. “Not only the wealth; but the independence and security of a Country, appear to be materially connected with the

prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavor to possess within itself all the essentials of national supply,” he wrote.2

From that standpoint, the EU’s climate policy is crucial for both the economy and geopolitics. Its importance stretches EU-wide, for all EU nations, including Poland. A major failure was that the EU rendered its climate transition overly reliant on Russian-sourced energy. Natural gas that Germany imported from Russia via two strings of the Nord Stream gas pipeline was believed to attain the EU’s climate policy goals, at least for some time, in what became a symbol of Germany’s energy policy failures. Consequently,

© Source: Getty Images/iStockphoto

2 The Works of Alexander Hamilton, Volume IV, New York – London 1904, pp. 135–136.

an energy crisis broke out in 2021, followed by huge inflation and an array of economic and social problems, including impoverishment and challenges faced by financial services. They must have reduced Europe’s potential in the global race, at least in short term.

A positive outcome of the Russian invasion of Ukraine was that the European Union cut all energy ties with Moscow. Nonetheless, EU officials did not take a lesson from the mistakes they had made while purchasing Russian energy resources. Climate transition plans, however, make EU states dependent on Chinese technologies and resources, including rare-earth elements and resources for electrification such as batteries and electric vehicles. China is the undisputed leader in solar-power technology within the EU market. In a time of increasing competition worldwide, being overly reliant on foreign resources and technologies could produce negative results as the Russian example has shown. While the EU’s Green Deal was in full steam in 2023, the European Commission began work on the Net-Zero Industry Act proposal to bolster domestic production in clean energy shifts. The proposal aims to ensure that at least 40 percent of the bloc’s demand for clean tech is made domestically by 2030. 3

Poland’s path towards climate neutrality will be more costly than elsewhere in the bloc. According to estimates, the country will spend €240 billion on climate transition by 2030,

more than twice the EU average.4 Other estimates say Poland might spend €527 billion to reach its climate transition goals by 2030 while the gap between its ETS allowances and EU funds on the one hand and the government spending might reach at least €300 billion 5 . Researchers claim that EU funds account for 5 percent of Poland’s energy transition costs 6 so the remainder will be paid in government spending that includes taxpayers’ money. As a result, rising energy costs might lead to impoverishment and reduced competitiveness.

Security is yet another challenge. New EU climate regulations order Polish coal mines to stop operations past 2027. Importantly, Poland is home to vast hard coal reserves. Consequently, the source of transition fuel is curbed until nuclear power plants are built and proper renewable energy infrastructure is installed. Therefore, Poland is compelled to import resources while putting at risk energy and food security. Such a policy is irresponsible, notably in terms of energy prices and related transition costs. In line with the EU’s climate policy, Poland will have to import most of the necessary technologies, which makes the country a ready market for manufacturers from Western Europe and outside. From the geoeconomic standpoint, this is

4 D. Ciepiela, Koszt transformacji energetycznej Polski do 2030 r. to 240 mld euro, wnp.pl, https://www.wnp. pl/energetyka/koszt-transformacji-energetycznejpolski-do-2030-r-to-240-mld-euro,401110.html. DOA: December 27, 2022.

3 G. Leali, V. Jack, Defiant France to continue push for ‘all’ nuclear tech in EU Net-Zero Industry Act, Politico (March 16, 2023). https://www.politico. eu/article/defiant-france-to-continue-push-for-allnuclear-tech-in-eu-net-zero-industry-act/. DOA: March 27, 2023.

5 R. Bojanowicz, Rachunek za Fit for 55. Jakie koszty poniesie polska gospodarka? Forsal.pl (January 11, 2022).https://forsal.pl/swiat/unia-europejska/ artykuly/8330293,fit-for-55-koszty-dla-polskiwplyw-na-gospodarke-bank-pekao.html. DOA: February 27, 2022.

6 W. Mielczarski, Koszty transformacji energetycznej w Polsce (ANALIZA) (February 7, 2022), biznesalert. pl, https://biznesalert.pl/mielczarski-kosztytransformacji-energetycznej-w-polsce-analiza/ DOA: February 27, 2022.

a strategic mistake. In his 1939 book on international relations, Edward Hallett Carr, a father of historical realism, argued that competition to gain control of foreign markets was a major feature of imperialism in the 19th century. “Powerful countries found their ‘natural’ markets in areas where their political interests lay and where their political influence could be most readily asserted. Central and South-Eastern Europe were Germany’s `natural’ markets.” 7 Thus, the EU-enforced climate transition could reinforce Poland’s geoeconomic dependence on Western Europe, notably Germany.

A feature of the EU-wide geoeconomics is that it brings France and Germany the bloc’s top decision-makers into an internal competition rather than those with the EU’s biggest competitors globally 8 Specifically, it is more attractive for them to address the markets within the EU and seek to gain an advantage globally rather than to build the bloc’s strategic capacity vis-a-vis the world’s economic giants. It is difficult to talk about efforts to build the EU’s potential while climate transition painfully affects households and businesses, including food production, while states are struggling to contain the energy crisis and the Russian war in Ukraine. The EU burdens its nations while idly looking at its competitors, including China, that do not overwhelm their businesses and people. China has also pledged to expand coal mines and coal power plants by 2030. Beijing is now a top supplier of critical raw materials and technologies to the EU. The more onesided decision EU states take within

7 E.H. Carr (2021) The Twenty Years’ Crisis: 19191939, Kraków, p. 175.

8 Cf. T.G. Grosse (2020) Wprowadzenie, [In:] Paliwo dla dominacji. Warszawa, pp. 7–83.

the bloc, the more favorable this is for China.

In 2022 and 2023, new EU rules defining energy transition intensified a long-running disagreement between France and Germany to become a tech leader in Europe. France has bet on nuclear for climate transition, also to produce hydrogen. Germany and its allies threatened to block that legislation, seeking to promote other methods of producing hydrogen and boosting gas imports from outside the EU, used for transition. France in the past has been reluctant to a gas pipeline project that could link Spain and Germany. Meanwhile, Paris is ready to “fight” Germany’s automotive industry. Germany spared no effort to allow the sale of vehicles that burn fuels made from renewable energy after 2035. The collision course Germany and France had been put on raised the ire of other EU nations. Some diplomats claim that Germany and France “are playing by different rules than the other member states.” 9 Both states align EU policies with their interests while seeking to compromise the strategic advantage of other EU countries. “This approach threatens not just the climate agenda, but the entire EU decision-making process upon which the stability of the bloc depends.”10

The main shortcoming of how the EU’s climate transition policy is run is that it does not comprise local realities

9 Cf. G. Gavin, V. Jack, France drops pink atomic bomb on EU green energy talks, Politico, March 30, 2023, https://www.politico.eu/article/france-pinkatomic-bomb-eu-green-energy-deal/. DOA: March 30, 2023.

10 Cf. Ch. Cooper, K. Mathiesen, Nuclear car crash: Bickering between Berlin and Paris threatens EU’s green ambitions, Politico (March 24, 2023). https:// www.politico.eu/article/olaf-scholz-emmanuelmacron-germany-france-nuclear-combustionengine-cars-berlin-paris-eu-green-energy-climate/. DOA: March 27, 2023.

alongside incurred costs and security challenges. Instead, the EU imposes top-down regulations that foster the development of some business sectors also through EU funds, public aid, and banking investments while obstructing that of other fields. The decisions are made by the bloc’s biggest members and Brussels’ most powerful lobbyists.

From a geoeconomic perspective, climate policy is thus erroneous. It is no different for geoculture, where both culture and geopolitics intertwine. Ideas could first inspire and motivate and then leverage geopolitical advantage. It could yet end up in strategic failure if ideological matters overlap economic issues, including the cost-benefit balance. Unfortunately, EU climate policy is overly tainted with ideology. It generates extra costs for the bloc’s most vulnerable or peripheral members. Shifting the burden of climate transition has its mostly financial constraints for societies and state budgets and thus cannot last long.

Excessive costs could prompt the ire of EU nations. This was the case when the Polish authorities did not respect the decisions of the Court of Justice of the EU regarding the closure of the Turów mine. In late March 2023, Poland’s Climate and Environment Minister said she would not allow the EU-wide methane directive to close coal mines throughout Poland.11 “As long as Poland has not reached nuclear power capacity, we are not able to phase out coal-generated energy, and we are now updating our system to welcome new sources of energy,” she said.12 The

11 300polityka (March 30, 2023). http://300polityka. pl/live/2023/03/30/moskwa-nie-dopuscimy-dotego-zeby-dyrektywa-metanowa-byla-przyczynazamykania-kopalni/ DOA: March 30, 2023.

12 Moskwa: Tak długo, jak nie pojawi się atom,

Polish government will be committed to its long-term agreements with the mining trade union so its compliance with EU laws is no longer a priority, she added. Respecting local realities is vital in efforts toward climate transition.

Further objections against EU regulations can be expected if those appear either too costly or jeopardize energy security. This, however, would leave the whole bloc vulnerable. Other EU nations might also follow suit in disregarding EU regularity authorities. This is all the more likely as financial repercussions of the bloc’s climate agenda might strain state budgets, societies, and industries in Western Europe, a core area for EU decisionmaking processes. A wave of social discontent with the EU’s climate agenda is seen in the German tech business and Dutch agriculture. The rising cost of gasoline and diesel fuel had also sparked protests in France.

Climate policy has thus its limits. It is challenging to mobilize societies in favor of energy transition throughout Europe in a time of successive crises. The cost of living crisis might prompt a wave of social unrest and thus comprise governments around Europe. Amid the protracted war in Ukraine and ongoing economic challenges, this might eventually compromise the EU’s climate agenda or even the bloc’s integration processes.

Tomasz Grzegorz Grosse May 2023

nie będziemy mogli wycofywać mocy węglowych, 300polityka (April 3, 2023). http://300polityka.pl/ live/2023/04/03/moskwa-tak-dlugo-jak-nie-pojawisie-atom-nie-bedziemy-mogli-wycofywac-mocyweglowych/. DOA: April 4, 2023.

CoUlD BATTERIEs PoWER CEnTRAl EURoPE's FUTURE?

Barnabás Heincz

In a recent interview about the situation in Taiwan, Emmanuel Macron stated that Europe is “becoming a vassal” but could “become the third power” in the world order if given “a few years to do it.1” While the French president’s words have sparked diplomatic outrage, they serve as a necessary wake-up call. In recent decades, Europe has been forced into a subservient role in many areas, and if the continent is to survive and prosper, it needs to think for itself and become a third power in many aspects. The energy

1 Ébredj, Európa? – Macron lassan tényleg a kontinens vezetőjévé válik (Mandiner) https:// mandiner.hu/cikk/20230410_europa_emmanuel_ macron

sector is the main area where this must happen, as Europe cannot exchange significant dependence on Russia for significant dependence on America, and the continent must establish strategic autonomy within its alliance system as soon as possible.

Regarding the energy sector, there are several ongoing transformations, with one of the most significant being electrification. The scientific and political elites are looking towards the electrifying our everyday activities, and electromobility is an indispensable aspect of this model. Surprisingly, Europe is not doing poorly in the field of electromobility. The continent’s

car manufacturers keep announcing new models that are at the top of their class in terms of both performance and quality. However, the COVID-19 pandemic and Russian aggression have shown that producing something is not enough. Instead, it is necessary to have significant capacity in all production areas because supply chains are vulnerable and can bring whole industries to their knees.

The strategic autonomy of European electromobility lies in battery production. In 2022, China accounted for 77% of global battery manufacturing capacity, followed by Poland with 6%. Hungary is in fourth place with 3%, while regional powers such as France, Japan and South Korea are at 1%. Central Europe has a total installed production capacity of 9%, which is significant at the global level, but still far from sufficient. Reducing China’s global share is in Europe’s interest and is a pledge of its strategic autonomy 2

According to conservative estimates, global demand for batteries will increase tenfold between 2020 and 2030, leading to a highly competitive market. The Central European region may emerge as the winner in this race, with Hungary predicted to become the fourth largest battery producer in the world by 2027, followed by Poland in sixth place. This

2 Europe runs on Polish lithium-ion batteries (PSPA) https://t.co/pa0lf0fE94

© Source: GREEN MOUNTAIN POWER

Hungary’s economy is capitalizing on the potential of battery manufacturing from the Far East, contributing not only to the energy sector but also to other areas of the economy.

could also result in a decline in China’s global to 69%.

While Western investors dominate the battery industry in Poland (Northvolt, Mercedes-Benz, Johnson Matthey), Hungary is open to Eastern investors such as CATL, Samsung, and SK Innovation. The Hungarian approach is to diversify the market with investors from the Far East, mainly South Korean and Chinese, and to combine it with the demand from German car manufacturers in the country3. The Hungarian car industry accounted for 18% of GDP in 2019 and, for a long time, it was questionable what model the Hungarian automotive industry could adapt to the challenges of electromobility4 . Battery production appears to be the answer. For instance, BMW has built a car plant in Debrecen, and China’s CATL will invest $7.3 billion in the city. Additionally, South Korea’s SK Innovation is investing $2.3 billion in developments alongside existing factories, and Samsung’s factory is already operational 5 .

Hungary’s economy is capitalizing on the potential of battery manufacturing from the Far East, contributing not only to the energy sector but also to other areas of the economy. Despite economic difficulties, Hungary broke its investment record in 2022, with 48% of investment coming from the East led by South Korea and 42% from the West6 . Electromobility investments from

3 Europe runs on Polish lithium-ion batteries (PSPA) https://t.co/pa0lf0fE94

4 IMF: Szlovákia és Magyarország a legkiszolgáltatottabb az autóiparnak (növekedés. hu) https://novekedes.hu/elemzesek/imf-szlovakiaes-magyarorszag-a-legkiszolgaltatottabb-azautoiparnak

5 The road to the future – The battery plants set to be built in Hungary (Hype&Hyper No. 7. / 2023.)

6 Szijjártó Péter: a keleti és nyugati gazdaság találkozási pontja az elektromosautó-ipar (Infostart

the Far East also have spin-offs from which the whole region can benefit, not only economically but also in terms of innovation and collaboration. In the broader energy field, there is no energy security in Central Europe without Azerbaijan, Turkey, or Kazakhstan. Suppliers from the East are always needed to counterbalance the monopoly situation coming from the Western markets and to achieve a state of equilibrium. This chance has not been given with Russia’s energy dependence, and the awakening has had a shocking effect on the economies and public opinion of European states.

Battery production capacity in Central Europe is expected to maintain its strong global position in the years to come, and Hungarian-Polish cooperation in this area must play a key role. Western investors in Poland and investors from the Far East in Hungary can bring market know-how and strategic cooperation that the whole region should take advantage of. The countries in Central Europe play a major role in Europe’s strategic autonomy, and this will be no different in the energy sector. The innovation, research and development associated with electromobility should be brought into the economic orbit of both Warsaw and Budapest so that society can benefit in the long term and reduce the economic disparities with Western Europe.

Barnabás Heincz

May 2023

/ MTI) https://infostart.hu/gazdasag/2022/12/28/ szijjarto-peter-a-keleti-es-nyugati-gazdasagtalalkozasi-pontja-az-elektromosauto-ipar

FRoM AlAsKA To AsIA AnD BEyonD

Katja-Elisabeth Herrmann Eufracio

On March 13, the Biden administration approved the controversial Willow Project in Alaska. ConocoPhillips’ massive Willow oil drilling project in Alaska’s North Slope was originally approved by the Trump administration in 2020. The Biden administration ultimately reduced the project from five to three drilling sites.

In early April, the U.S. Department of Energy approved exports of liquefied natural gas (LNG) from a facility planned for Alaska to Asia. The approval came on the same day that U.S. climate envoy John Kerry commented, “There will be no rolling back on the clean energy transition” in Sapporo, Japan, during a meeting with G-7

representatives. While all other countries strive to reduce greenhouse gas emissions, the Alaska project could increase greenhouse gas emissions from fossil fuels by 30%1

The approval of Alaska Gasline Development Corp’s (AGDC) exports of LNG will be destined for countries with which the United States does not have a free trade agreement (they have free trade agreements in force with only 20 countries). Thus, LNG exports are mainly destined for countries in Asia, reaching up to 20 million metric tons of fracked gas annually in

1 Timothy Gardner. “Biden Admin Approves Exports from Alaska LNG Project” Reuters (April 14, 2023) Accessed April 17, 2023.

20302. Contrary to popular arguments, the U.S. Department of Energy has recently found “that exporting natural gas from the North Slope of Alaska would not increase greenhouse gas emissions at all3.”

Last year, the U.S. became the world’s major LNG exporter, averaging 6.5 billion cubic feet (Bcf/d) per day on an annual basis4. The Arctic region is central to U.S. energy independence and national security. Therefore, the Willow Project, which is expected to produce 576 million barrels of oil over 30 years,”5and the planned LNG gas

2 Ella Nilsen. “The Willow Project has been approved. Here’s what to know about the controversial oil-drilling venture” CNN (March 14, 2023) Accessed April 15, 2023.

3 U.S. Department of Energy “ALASKA LNG PROJECT - Final Supplemental Environmental Impact Statement” National Energy Technology Laboratory Report (January 2023) Accessed April 15, 2023.

4 U.S. Energy Information Administration “Asia became the main export destination for growing U.S. LNG exports in 2020” (March 15, 2021) https://www. eia.gov/todayinenergy/detail.php?id=47136

5 The Bureau of Land Management estimates that Willow could produce 576 million barrels of oil over 30 years.; Timothy Puko. “What is Willow? How an Alaska oil project could affect the environment.”

pipeline is expected to set the U.S. in direct competition with Russia in the energy sector. Therefore, the Alaska energy outlook would set the United States in competition with Russia to ship natural gas from the Arctic to Asia.

Speaking about the elephant in the room, if the United States were to export LNG gas to Asia, particularly to China, the growing dependence between these two countries is bewildering the scope of strategic competition. Chinese interest in the Arctic region will magnify, and at the same time, China’s dependency on American LNG imports will grow, fostering a dynamic of enhanced interdependence.

B ET w EEN ECONOMIC g ROw TH , COMPETITION , AND EN v IRONMENTAL DOOM

The U.S. faces a challenging situation. During the presidential campaign in 2020, Biden vowed to end new oil and gas drilling on public lands and waters,

Washington Post (April 3, 2023) Accessed April 15, 2023.

but today, the panorama looks different. Data shows “the Biden administration approved 3,557 permits for oil and gas drilling on public lands in its first year, far outpacing the Trump administration’s first-year total of 2,658.”6 Therefore, Alaska’s petroleumrich North Slope contradicts President Joe Biden’s pledges to reduce carbon emissions and move to clean energy.

After conducting an environmental review, the federal government said the Alaska LNG project would provide economic and international security benefits. Despite the promising 1.5 degrees Celsius-aligned policies within the International Energy Agency (IEA) report published in 2021, no reverse action is expected to take place soon against the project.

Against this backdrop, climate change acts as a conflict and risk multiplier in the region. On the one hand, the environmental incentives have driven the U.S. to consider alternative natural gas and oil sources. On the other hand, increasing drilling risks in unstable melting quadrants face environmental opposition to the risks and system impacts on the biosphere. The environmental risks and strategies target the U.S. into conflict on both sides: from environmental activists to the right and from competitors in the Arctic, including China and Russia to the left.

T HE E UROPEAN U NION ’S T URN TO THE A RCTIC

The EU’s engagement in the Arctic has both an environmental and geopolitical impetus as well. The EU’s involvement in the Arctic raises the banner of the EU Green Deal without disregarding security and resource competition. Three

6 Taylor McKinnon. “New Data: Biden’s First Year Drilling Permitting Stomps Trump’s By 34%” Centre for Biological Diversity (January 21, 2022).

EU member states (Denmark, Finland, and Sweden) are member states of the Arctic Council.

Against this backdrop, a key example is Italy’s Arctic presence linked to strong participation in Russia’s energy projects. Many Italian companies, such as “ENI, Saipem, and Nuovo Pignone, participate in developing the Arctic-LNG 2 and Yamal LNG projects to produce liquefied gas in northern Siberia.” 7

Russia plans to open production in December of 2023, one of the three LNG-2 projects in its Artic lines. The new facility will become the world’s largest LNG facility constructed by NOVATEK, Russia’s largest natural gas producer. In light of the war in Ukraine and the EU sanctions, the project had to undergo fundamental technology and design changes. Confidently overcoming EU sanctions, NOVATEK project director Timofey Sazonov confirms plans to open production in December of 20238 .

Against this backdrop, pressure from Western sanctions for its invasion of Ukraine increased the U.S. LNG exports to Europe after Moscow cut gas pipeline shipments to the continent 9. However, unlike pipeline gas, Russian LNG is not subjected to EU sanctions, leading to increased LNG imports from 16 bcm to 22 bcm10 to the continent.

7 Arianna Muro Pes, “Far but not so far: Italy’s Role and Interests in the Arctic” The Arctic Institute (November 10, 2022).

8 Malte Humpert.“Novatek Confident It will Complete Arctic LNG 2 on Schedule Despite Western Sanctions” (December 16, 2022) Accessed April 15, 2023.

9 Timothy Gardner. “Biden Admin Approves Exports from Alaska LNG Project” Reuters (April 14, 2023) Accessed April 17, 2023.

10 Abnett Kate.“EU countries seek legal option to stop Russian LNG imports” Reuters (March 28, 2023)

source: https://www.politico.com/news/magazine/2022/12/17/climate-change-arctic-00071169

M ILITARISATION OF THE A RCTIC

Beyond commercial interests, the territorial expansion into the Arctic is materializing with the advancement of defense and security concerns that were long dormant since the collapse of the Soviet Union. In response to Russia’s aggression, the seven other Arctic states provisionally suspended their participation in the Arctic Council, isolating Russia. Against this backdrop, it is yet to be seen how China will take advantage of this situation.

Russian dominance of the Arctic includes civilian and military infrastructure across the Arctic, threatening the economic development and national security of the seven other nations that form the Arctic Council. In the same manner, NATO’s increasing presence in the Arctic is viewed by

Russia as a source of threat encroaching on its economic interests, particularly concerning oil and gas.

Finland joining NATO as the 31st member signifies the possible return of great power competition in the Arctic11 However, four Arctic experts say it “would take the West at least ten years to catch up with Russia’s military in the region.”12 NATO’s 2022 Cold Response exercise was the largest military drill in the Arctic since the Cold War. The Cold Response is a longstanding and noncombative practice typically held every four years, recently coordinated by Norway. The northern country has a growing interest in the region after a

11

12 Reuter “Arctic Security” https://www.reuters.com/ graphics/ARCTIC-SECURITY/zgvobmblrpd/

Saxena Abhishek. “The Return of Great Power Competition to the Arctic” (October 22, 2020).

Official source: https://alaska-lng.com/

recent event in Svalbard (Norwegian Arctic archipelago).

Norway’s standing tracking of Russia’s newly upgraded nuclear submarine fleet in the region allegedly resulted in severing an undersea telecommunications cable connecting the Arctic archipelago to mainland Norway and the rest of Europe. Although the investigation still continues, it is yet to be determined which entity committed the action. To set this in perspective, without a backup plan, “the damage would have severed internet to the world’s largest satellite relay, one that connects the National Oceanic and Atmospheric Administration (NOAA), NASA and other government agencies from around the world to real-time space

surveillance.”13 Therefore, beyond environmental concerns, the Northern region is to evolve into a strategic front that will play out in both energy and conventional security.

Finally, China’s growing influence has also extended to the Arctic region investing “over $90 billion above the Arctic Circle in infrastructure, assets, or other projects. Investments are largely in the energy and minerals sectors.”14 Xi Jinping’s administration officially acknowledged the strategic importance of the Arctic region, seeing Russia as a

13 Kenneth Rosen, “A Battle for the Arctic Is Underway. And the U.S. Is Already Behind.” Politico (December 17, 2022).

14 Foreign Affairs Committee, “China Regional Snapshot: Arctic” October 25, 2022. Accessed April 15, 2023.

The WilloW Projec T

gateway to the Arctic. From this perspective, the Chinese course of action can take a central stage now that Russia is isolated from the Arctic Council and the Chinese-Finnish cooperation intensifies in advancing the Polar Silk Road.

Discussing a Chinese Arctic policy further highlights the Arctic’s growing

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“Alaska LNG Project” https://alaska-lng.com/ Accessed April 15, 2023.

Ciolan Ionela. “The EU’s geopolitical awakening in the Arctic” European Policy Centre (April 11, 2023) Accessed April 15, 2023. Accessed April 15, 2023. https://www.epc.eu/en/publications/

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Foreign Affairs Committee, “China Regional Snapshot: Arctic” October 25, 2022. Accessed April 15, 2023. https://foreignaffairs.house.gov/ china-regional-snapshot-arctic/#:~:text=The%20 PRC%20has%20invested%20over,the%20 energy%20and%20minerals%20sectors

Gardner Timothy. “Biden Admin Approves Exports from Alaska LNG Project” Reuters (April 14, 2023) Accessed April 17, 2023. https://gcaptain. com/biden-admin-approves-exports-alaska-lngproject/

Humpert Malte.“Novatek Confident It will Complete Arctic LNG 2 on Schedule Despite Western Sanctions” (December 16, 2022) Accessed April 15, 2023. https://www.highnorthnews.com/ en/novatek-confident-it-will-complete-arctic-lng2-schedule-despite-western-sanctions

Nilsen Ella. “The Willow Project has been approved. Here’s what to know about the controversial oil-drilling venture” CNN (March 14, 2023) Accessed April 15, 2023. https://www. cnn.com/2023/03/14/politics/willow-project-oilalaska-explained-climate/index.html

McKinnon Taylor. “New Data: Biden’s First Year Drilling Permitting Stomps Trump’s By 34%”

importance for strategic competition. The Arctic has become the new chessboard where Great Powers continue to acquire new assets and mobilize their resources to secure strategic ground in the Arctic.

Centre for Biological Diversity (January 21, 2022)

https://biologicaldiversity.org/w/news/pressreleases/new-data-biden-slays-trumps-first-yeardrilling-permitting-by-34-2022-01-21/

Muro Pes Arianna, “Far but not so far: Italy’s Role and Interests in the Arctic” The Arctic Institute (November 10, 2022). https://www. thearcticinstitute.org/italy-role-interests-arctic/

Puko Timothy. “What is Willow? How an Alaska oil project could affect the environment.”

Washington Post (April 3, 2023) Accessed April 15, 2023. https://www.washingtonpost.com/ climate-environment/2023/03/17/willow-projectalaska-oil-drilling-explained/ Reuter “Arctic Security” https://www.reuters. com/graphics/ARCTIC-SECURITY/zgvobmblrpd/

Rosen Kenneth, “A Battle for the Arctic Is Underway. And the U.S. Is Already Behind.”

Politico (December 17, 2022) https://www.politico. com/news/magazine/2022/12/17/climate-changearctic-00071169

U.S. Department of Energy “ALASKA LNG PROJECT - Final Supplemental Environmental Impact Statement” National Energy Technology Laboratory Report (January 2023) Accessed April 15, 2023. https://www.energy.gov/sites/default/ files/2023-01/final-seis-0512-s1-alaska-lngvolume-2-2023-01.pdf

U.S. Energy Information Administration “Asia became the main export destination for growing U.S. LNG exports in 2020” (March 15, 2021) https://www.eia.gov/todayinenergy/detail. php?id=47136

Saxena Abhishek. “The Return of Great Power Competition to the Arctic” (October 22, 2020) Accessed April 15, 2023. https://www. thearcticinstitute.org/return-great-powercompetition-arctic/

Katja-Elisabeth Herrmann Eufracio May 2023

IRAn's oIl AnD ITs BIGGEsT ConsUMERs

Kinga Szurc

Iran was the fifth-largest crude oil producer in OPEC in 2021 and the third-largest natural gas producer in the world. At the end of 2021, Iran accounted for 24 percent of oil reserves in the Middle East. As Iran is a member of OPEC, it is exempt from the production cuts under the OPEC+ agreement. Petroleum exports are a significant source of government revenue in Iran. As of 2022, total crude oil distillation in Iran was more than 2.4 million barrels per day while Iran’s government plans to increase the country’s refining capacity to 3.5 million barrels per day

by 2026. Although Iran has proposed several projects that are in various stages of planning and development, international sanctions on Iran have hindered some of the investment needed to complete these facilities within the next few years1

Iran has a vast potential in renewable energy sources, submitted mainly by private investors. The Iranian Energy Ministry and the Renewable Energy

1 “EXECUTIVE SUMMARY”, U.S. Energy Information Administration, era.gov, https://www. eia.gov/international/analysis/country/IRN. DOA: March 26, 2023.

and Energy Efficiency Organization (SATBA) signed a memorandum of understanding with unspecified private investors to implement the plan and announced their intention to allocate around IRR30 trillion ($71.4 million) in the next budget law to move forward with the first projects 2 .

Tehran‘s oil exports have been limited since former U.S. President Donald Trump in 2018 exited a 2015 nuclear accord and reimposed sanctions aimed at curbing oil exports and the associated revenue to Iran‘s government. In 2022, though, the country‘s oil exports reached a record high.

2 E.Bellini, “Iran wants to deploy 10 GW of renewables over the next four years”, pvmagazine. com, https://www.pv-magazine.com/2022/01/03/ iran-wants-to-deploy-10-gw-of-renewables-overthe-next-four-years/. DOA: March 27, 2023.

China is Iran‘s biggest customer. To evade sanctions, most of Iran‘s crude exports to China are rebranded as crude from other countries, according to analysts including FGE. Iran in the past has said documents were forged to hide the origin of Iranian cargoes. In addition, Iran last year expanded its role in Venezuela, also under U.S. sanctions, sending supplies of light oil for refining and diluents to produce exportable crude grades 3 .

Due to economic sanctions and inflation, the Iranian government has boosted oil sales to China at a highly discounted price. Iranian oil reaches the Chinese market through a camouflaged system of delivery. “The Iranian regime

3 A. Lawler, B. Sharafedin, C. Aizhu, Iranian oil exports end 2022 at a high, despite no nuclear deal, reuters.com, https://www.reuters.com/business/ energy/iranian-oil-exports-end-2022-high-despi-nonuclear-deal-2023-01-15/. DOA: March 28, 2023.

© Source: Fatemeh Bahrami/AA/picture Alliance

is now very experienced in bypassing sanctions that it is also doing it for Venezuela or even Russia,” according to Mahdi Ghodsi, an economist at the Vienna Institute for International Economic Studies. Iran’s oil production reportedly hit a 30-year low in 2020 because of intensified U.S. sanctions as well as the economic impact of the global COVID-19 pandemic. “Iran‘s oil revenues fell from $100 billion to $8 billion a year after the U.S. withdrew from the Joint Comprehensive Plan of Action, also known as the Iran nuclear deal,” said Umud Shokri, an analyst of global energy affairs.

“Iran offers steep discounts for its oil — likely even steeper than a year ago given the new competition with Russian crude — to persuade Chinese refiners to accept the risk of dealing with sanctioned Iranian entities,” said Henry Rome, a specialist on Iran sanctions and economy with the Washington Institute for Near East Policy. To camouflage transactions with Iran, China uses a barter trading system in which oil is exchanged for Chinese products including medicine, light machinery, and food items.4

Tankers in Iran‘s “ghost fleet” also have switched to carrying Russian oil. They easily disguise their ownership

4 4 A.

Dawi, „Iran Boosts Cheap Oil Sale to China

Despite Sanctions“, Voa news.com, https://www. voanews.com/a/iran-boosts-cheap-oil-sale-to-chinadespi-sanctions-/6935635.html. DOA: April 2, 2023.

and movements to facilitate breaches of sanctions and trade oil. Russia offers higher rates to tanker operations to protect its oil revenues. 5

Iran‘s representative to OPEC has predicted that the oil price may soar as demand in China rises. The International Energy Agency said nearly half of the forecast rise in oil consumption this year would come from China. 6

“China is trying to translate its economic power into political power,” Nasser Hadian, a professor of political science at the University of Tehran, told The Iran Primer.“Iran is very important as a source of energy, but also as a provider of the security in the region. In the future, Iran and China are going to be very closely interdependent,” he added.

President Raisi hosted Chinese Defense Minister Wei Fenghe to improve strategic defense cooperation. The two countries reportedly agreed to collaborate on military strategy and engage in joint military drills and training. Consequently, there is something more in addition to oil that brings China and Iran together.7

Kinga szurc May 2023

5 Ch. Cook, D. Sheppard, „Iran‘s ’ghost fleet’ switches into Russian oil“, Financial time.com, https:// www.ft.com/content/955389bf-d01b-4acb-bd15b764425a8a18. DOA: April 2, 2023.

6 A. Dawi, “Iran Boosts Cheap Oil Sale to China Despite Sanctions”, Voa news.com, https://www. voanews.com/a/iran-boosts-cheap-oil-sale-to-chinadespi-sanctions-/6935635.html. DOA: April 2, 2023.

7 “Iran’s Increasing Reliance on China”, Iran primer. using.org, https://iranprimer.usip.org/blog/2019/ sep/11/irans-increasing-reliance-china. DOA: April 2, 2023.

“China is trying to translate its economic power into political power”.

GRA n D ETHIoPIA n R E nAIssA nCE DAM: A FRICA's CRIsIs I n M A nAGI nG lIMITED R E soURCE s

Szymon Polewka

Since the beginning of human history, water has been an essential element for the growth and sustenance of civilizations. The Nile River, a testament to the life-giving properties of water, beats numerous records, including traversing eight countries, flowing through all African climate zones, and ranking as one of the world's two largest watercourses. Moreover, the Nile Basin encompasses 10% of the African continent and is home to approximately 300 million people. Originating in Rwanda, Uganda, and Kenya, the Pharaohs' River flows 6,650 kilometers before reaching the Mediterranean Sea via the world's largest delta.

As Herodotus, the ancient historian, once wrote, "Egypt is the gift of the Nile." It was along this vital river's banks that one of the most extraordinary civilizations, Ancient Egypt, emerged. Drawing from the Nile's waters, the civilization laid the groundwork for human development and produced some of the most remarkable engineering achievements in history, such as the pyramids, the Faiyum irrigation systems, and the Library of Alexandria.

Today, the river is the center of yet another remarkable engineering project. However, instead of uniting the neighboring peoples, the undertaking has become a source of conflict. In 2011,

the Ethiopian government unveiled a $4.8 billion plan to construct the Grand Ethiopian Renaissance Dam, a project aimed at helping Ethiopia address its 21st-century challenges. The modernday Abyssinia is home to 108 million people and has one of the world's highest natural growth rates at 2.34% per year. Despite relative internal stability within the region, the country still lags significantly behind the rest of the world.

The dam is intended to solve the issues related to energy production and the increasing water scarcity. The Grand Renaissance Dam is set to be the largest of its kind in Africa and the seventhlargest in the world. Upon completion, the reservoir is planned to have a capacity of 74 billion cubic meters and stretch for 243 kilometers. The power station will house two turbines, with a combined output of 6,000 MW. The facility is projected to generate 16,153 GWh annually, which would account for 28.6% of the country's energy consumption. The proximity of countries such as Sudan, South Sudan, and Kenya means that in the future, this energy could be used as a political leverage over less affluent neighbors. It is worth noting that Addis Ababa has secured the support of Sudan, South Sudan, and Kenya, as these countries hope to benefit economically from access to affordable renewable energy.

Egypt, the country most reliant on the Nile's waters, views the dam's construction with increasing apprehension. Annual precipitation in the land of the Pharaohs scarcely exceeds a few dozen millimeters, making the water flowing from the upper reaches of the Nile virtually the only source of Egypt's water resources, apart from its dwindling groundwater reserves. Nearly the entire population of

98 million resides along the Nile and its delta, which account for less than 3% of Egypt's total land area.

Only the land adjacent to the Nile can yield crops, which, in a country where 24% of the population relies on agriculture and fishing for their livelihood, often leads to crises. Moreover, future projections for Egypt are not optimistic. By 2050, the population is expected to increase to 160 million, and with the country's diminishing resources, this trend could prove catastrophic. Signs of unsustainable development are already evident.

The growing anger and chaos within society became evident in 2011 when a drought and subsequent rise in food prices sparked anti-government protests. These events, within a broader context, were part of the Arab Spring. It is no coincidence that in March 2011, as Egypt

Grand Ethiopian Renaissance Dam: Africa's Crisis in Managing Limited Resources

was engulfed in a popular revolution, Ethiopia decided to announce its Grand Ethiopian Renaissance Dam project to the world. Despite the tense situation within Egypt, the dam's construction ignited immense controversy.

The Ethiopian dam poses a colossal threat to Egypt, which faces a water deficit of approximately 10 billion kiloliters. Cairo fears that the dam could become Ethiopia's instrument for exerting political influence over countries downstream of the river. The Blue Nile, the longest and most waterrich tributary, contributes up to 70% (some sources suggest 85%) of the Nile's freshwater. Any interruption in the Blue Nile's flow could result in a massive catastrophe in Sudan and, particularly, Egypt. It is estimated that if Egypt loses 1 billion kiloliters of freshwater, 2,000 acres of land could dry up, and 2.5 million people could lose their means of survival.

During the rule of Mohamed Morsi, a plan was even conceived for Egypt to invade Ethiopia. Morsi himself originated from the Muslim Brotherhood and was an advocate of decisive action. In June 2013, he declared that "Egypt will defend every drop of the Nile with its blood." This declaration reverberated throughout the region. It was met with strong opposition from Sudan, which, like Poland, is caught between two opposing forces. Following this statement, Sudan sided with Ethiopia, and the threat of a regional cold war loomed.

In 2014, a military coup took place, resulting in Abdel Fattah el-Sisi becoming president. At that point, negotiations began between Cairo, Khartoum, and Addis Ababa to resolve the crisis. The main subject of debate was the timeframe in which the reservoir should be filled. At Egypt's request, a report was published that emphasized

© Source: Hailefida/Wikipedia (CC BY-SA 4.0)

that if the dam were filled within a three-year period, Egypt would lose 30 billion kiloliters of water. This scenario would practically reduce the Nile to a narrow stream, so shallow that one could cross it on foot. To minimize losses, Egypt insisted that the filling process of the reservoir should last fifteen years. This demand, however, was unacceptable to Ethiopia, which wanted to open the dam as soon as possible to reap its benefits. The negotiations were broken off by Egypt in December 2017. The breakdown of negotiations meant that Ethiopia no longer had to adhere to any constraints related to filling the reservoir. Since then, there has been a significant risk of conflict in the region.

In this instance, history has come full circle, highlighting the significance of effective Nile water resource management for the region. Egypt has previously faced conflict due to dam construction. In 1952, the Aswan High Dam served as a symbol of the emerging Egyptian nationalism. In need of funds to construct the dam, Gamal Abdel Nasser chose to nationalize the Suez

Canal. This decision ignited the Suez Crisis, which ultimately led to military intervention by France, the United Kingdom, and Israel in 1956. Fortunately for Egypt, international mediation by the United States and the Soviet Union resolved the crisis in the country's favor.

Regrettably, Egypt is focusing on maximizing its gains from the crisis caused by the construction of an even larger dam, rather than drawing upon the lessons of its own history. It is vital for the land of the Pharaohs to overcome their dependence on the life-sustaining Nile River. Even if the Grand Ethiopian Renaissance Dam issue can be peacefully resolved, there is still the potential for other countries to seek harnessing the tremendous power concealed within the Nile's currents. Consequently, this conflict should foster deeper regional collaboration instead of division, as the challenges confronting the Nile nations extend well beyond individual national interests.

szymon Polewka

May 2023

R EFERENCES

Ethiopia to start filling GERD in July despite lack of agreement with Egypt, Sudan, Ahram Online, http://english.ahram.org.eg/ NewsContent/1/64/369120/Egypt/Politics-/ Ethiopia-to-start-filling-GERD-in-July-despite-lac. aspx.

Hagos T., Ethiopia: GERD Increases Generation Capacity, The Ethiopian Herald , https://allafrica.com/stories/201702280364.html.

Mutahi B., Egypt-Ethiopia row: The trouble over a giant Nile dam, BBC News, Nairobi, https://www.bbc.com/news/world-africa-50328647.

Why is the Grand Ethiopian Renaissance Dam contentious?, The Economist, https://www. economist.com/the-economist-explains/2021/02/11/ why-is-the-grand-ethiopian-renaissance-damcontentious?utm_medium=cpc.adword.pd&utm_so urce=google&ppccampaignID=18151738051&ppc adID=&utm_campaign=a.22brand_pmax&utm_ content=conversion.direct-response.anonymou s&gclid=Cj0KCQjwocShBhCOARIsAFVYq0go Jy85_BmqoRlTIKeGFeArcO0WSZd8AgkMGHPo_ M8Ovcm7zRAT-YoaAhxqEALw_wcB&gclsrc=aw.ds.

Wossenu A., Dessu S., The Grand Ethiopian Renaissance Dam on the Blue Nile, Springer Geography

PROF. TOMAS z gR z Eg OR z gROOSE

Tomasz G. Grosse is a sociologist, political scientist and historian. He is a professor at the University of Warsaw. Head of Department of European Union Policies at the Institute of European Studies. He specializes in the analysis of economic policies in the EU and the Member States, as well as in public management, geo-economics, Europeanisation, EU theoretical thoughts. He recently published: “Postcrises Europe” (The Polish Institute of International Affairs) “Searching geoeconomics in Europe” (Polish Academy of Science, 2014) and edited the books: “European Union Policies at the Time of Crisis” (Scholar 2016) and “The Aspects of a Crisis” (with M. Cichocki, Natolin European Centre 2016).

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K ATjA E LISABETH H ERRMANN E UFRACIO

Katja-Elisabeth works as a research fellow at the Warsaw Institute. She has a background in Transatlantic Affairs from the College of Europe (Warsaw, Poland) and the Fletcher School of Law and Diplomacy at Tufts University. Additionally, KatjaElisabeth holds a BA in International Relations and International Organizations which she combined with a degree in International and European Law from the University of Groningen. During her undergraduate studies, her main focus explored the nexus between technology and law in the European Union. She has recently been awarded the Squire Patton Boggs Foundation public policy fellowship in 2022. As part of her work under the fellowship program, her research is devoted to relevant topics of transatlantic affairs interest from a legal and political perspective.

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K IN g A Sz URC

A graduate of BA studies in the field of International Security and Diplomacy, and currently a student of National Security at MA studies at the War Studies University. In June 2021, defended her thesis entitled: “US Government Negotiations with the Afghan Taliban in 2001-2020”. The undertaken topic is related to her interests, which are the sciences related to terrorism, secret services, the Middle East and South Asia. She also belongs to two university research groups – “Forces and Special Services” and “Students of National Security”.

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Sz YMON P OLE w KA

Szymon Polewka is a student of international relations at the Jagiellonian University in Kraków, specializing in the history of international relations, the Eurasian region, DACHL countries, intercultural relations, and the energy sector. He is currently on a scholarship at the University of Bremen. He has gained experience organizing the 2020 Economic Forum in Karpacz and numerous youth and student associations, such as AIESEC or Koło Naukowe Wyzwań Zielonego Ładu.

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BARNABáS H EINC z

Hungarian journalist and public relations specialist, the deputy editor-in-chief of Hype&Hyper magazine, Hungarian coordinator for The New York Times. He is working in the Budapest based Mathias Corvinus Collegium as a junior researcher and in the Waclaw Felczak Institute of Polish-Hungarian Cooperation.

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