Karin Kneissl: ‘We Need a Conversation’

On 13–14 February, former Austrian Foreign Minister Karin Kneissl will give a course on the history of the oil market for HSE University students. In mid-December, she talked at HSE University on 'Energy Is the Name of the Game: Geopolitics and Economics of the Energy Markets from 1911 to 2023' and spoke to the HSE News Service. In her interview, she discussed European energy policies, the problems of neutrality, the crisis of trust, and her personal experiences as a public figure in global politics. She also announced her book Requiem for Europe, which is planned to be published with HSE.

The course will address global energy policy, international energy companies and institutions. Dr Kneissl will elaborate on the specifics of modern energy markets, including the race for commodities, geopolitics, demographics, technology and the declining role of international legal regulation.  

Problems of the EU’s Dependence on External Energy Resources

When we speak about the European Union and its dependence on Russian oil, gas and other imports, we have to distinguish from country to country. Germany is to a large extent reliant on cheap Russian gas, as it has been for the last 25–30 years. The same holds true for Austria, Northern Italy, parts of France. When it comes to natural gas, pipeline-transported natural gas is cheaper than vessel-transported liquified natural gas, because for it you need the terminals. And when we speak about these large energy terminals, we always have to bear in mind the geographic conditions that we have, for instance, at the Mediterranean coast in Europe. These coastlines are not made for huge terminals: you always have a competition between tourism and refineries, tourism and industry.

The problems are manifold and the reliance differs from country to country

Ireland and Portugal are not at all affected by the absence of Russian oil and gas. But, of course, Germany, Italy, Austria and other Central European EU members are very much affected. And some of them are landlocked countries: they cannot even think about sea terminals to replace pipeline gas. That's why Hungary also asked for an exemption in the current sanction package.

Karin Kneissl

Oleg Shishkov/ HSE University

Germany is the locomotive, the global champion in exports. Germany has been tremendously hit by the current situation. The Germans agreed on the coal embargo in March only under the condition that no other energy-related sanctions would be taken. And all of a sudden, they find themselves in a situation that nobody pushed them into. We remember Foreign Minister Baerbock saying in spring 2022: 'we will renounce on Russian energy for good'.

What is interesting about this boycott embargo is that for the first time in history, to my knowledge, it's from the demand side

It's the clients that put a sanction on their supplier. When we think back about oil crises in the past, in the 1970s or 2006–2009, it was on the supply side. Now, we decrease the supply in an artificial way. And market forces are at work. When you decrease the supply and the demand remains the same, the price goes up.

I am struck by the absence of basic knowledge of market economy by EU governments, with a few exceptions. The 'decision-takers' depend on what I call 'decision-shapers'. They depend on their staff who provides them with briefing notes, speaking points, and so on. They lack the understanding of the larger picture. Decision-takers are running for the votes, they have to handle a lot of different other fights. But decision-shapers should know better.

Scenarios for the Future: Recession and Armed Conflicts

No one of us can predict the future, but there are several scenarios in front of us. Let's assume there's now a global recession, which I think will be, unless China comes back to the world stage and acts again as the locomotive of the world economy as it did in 2009. That was also the time when China became more and more unhappy about the dollar as the reserve currency for commodity trade. That's when they started to present other ideas: dedollarisation has been discussed in different circles for some time, and now it has entered mainstream.

Lately, China has been out of the global economy because of its endless lockdown policies. It's difficult to predict whether we will see a big comeback of China or whether it will still be two steps forward one step back.

Karin Kneissl

Oleg Shishkov/ HSE University

Let's assume that scenario one is global recession, but China enters and the oil prices remain relatively high with China asking its part of global energy. Until the early 1990s, China could satisfy its domestic oil consumption with its domestic oil production. China produces around 3.5–4 million barrels a day of oil. That was enough for the Chinese consumption. As of 2015–16, China became number one importer. It replaced the US, which for decades was number one importer. Then, there was the shale revolution, which I prefer calling ‘the shale revolt’: it only changed the landscape for several years, but I don't think that it's a real revolution. The US turned into a supplier, but the US will not be able to keep its production share to the extent that has been the case for the last 5–6 years. It has to do with the exhaustion of the shale fields—'shale plays' as they call it. They also need it for their own domestic consumption.

But in such a stalemate situation, we will see relatively high prices. And that will cause problems for EU importers

Another scenario is an increased armed conflict. I'm thinking not only about the events in Ukraine, but also about the many simmering conflicts around the China Sea and Israel. I always kept saying that Israel is interested in status quo: they don't want to change everything, because they can very well live with the status quo when it comes to the Palestinian issue. But a rising Iran, a new situation with Türkiye—there's nothing to be excluded on that field. When you have more armed conflicts, there's more demand for oil, and there's more uncertainty.

These are just two scenarios. There are many, many subscenarios and others that we can watch, but I think that the utmost that we can expect now is a stalemate. I don't see a solution. Because who to talk to? What to talk about? Trust is broken, and I'm not the only one to say that.

Trust is gone, and without trust, there are no talks

And in this stalemate, we will have to manage somehow around. And to [do] that, you need to add what will happen on the social level. How can people cope with all of that? Margaret Thatcher said once upon a time that there's no such thing as society. I believe that a society is a very strong thing. A society makes a state move, it makes a country move, it brings up new ideas. It's impossible to predict. Since there's uncertainty, nobody knows how and where to invest. We are suffering from underinvestment—that's why the prices are always moving in all kinds of directions.

Neutrality in Question

In 1995, three neutral countries joined the European Union. That was Finland, Sweden, and Austria. In Austria, there was a big discussion: can you become an EU member and remain neutral? I always said, it's a bit schizophrenic. Because the moment you join a common foreign and security policy, you cannot any longer be neutral from a legal point of view. Today, Austria is carrying along the sanctions, saying that while we are neutral on a military point, we are not neutral from the political point of view. But Austria is also participating in this recent decision about training. And it's a fact that huge amounts of weaponry pass through Austria. You can contest the concept of neutrality when it comes to Austria.

Oleg Shishkov/ HSE University

Now we see two more EU members, Sweden and Finland, join NATO. It’s not yet finalised, but it's on track.

And there is the fourth important neutral state, which is not member of the EU. The Swiss were always very rigid about the concept of neutrality, and Switzerland was a member of specialised UN agencies, but had never been a fully-fledged member of the United Nations until 2002, when in a third referendum the majority of Swiss agreed to join the UN. And it's interesting, because Switzerland was not a member of the UN, even though Geneva hosted the UN. When the UN Security Council takes sanctions against Iran, Iraq, or North Korea, shall Switzerland as a neutral country go along? They make certain sidesteps when it comes to freezing and confiscation of Russian assets, but they go along with many other sanctions. It has led to certain reactions by Russian officials, saying that Geneva and Lausanne are no longer a neutral meeting place.

The concept of neutrality as it was in practice by three EU members—Austria, Finland, Sweden—is gone

It's interesting that there are other countries that now seem to us much more neutral. For example, Turkey is the second largest NATO member, it's definitely not neutral from a legal and political point of view. But it works as a mediator, facilitator, meeting point—people who can still go in-between and make technical arrangements and prisoners' exchange—it's Turkey, the Emirates, Saudi Arabia. It's Armenia to a certain extent, which, for example, has become a meeting point for academics.

Challenges of Foreign Policy Debate and Decision-Making

I've attended the EU’s Common Foreign and Security Policy council meetings. There, I realised something that saddened me. It's like when you are going to a class of 13–14-year-old distracted youngsters who don't pay attention to what is said in the meeting. Ministers enter, open up their devices, and take their talking points. Twenty-seven people repeat the same things on certain topics. Political debate takes place very rarely. And decisions are made elsewhere. I often took the floor and tried to get into eye contact. That was what I explained to students at the lecture earlier today.

When we do a simulated conference with students, I often act a bit like a gouvernante, because I tell them: address each other in a careful way, be polite, speak about the distinguished delegate, don't insult each other, be pragmatic, use proper language, keep eye contact, be brief

And in these EU Council meetings, we have lost a lot of manners. It's banal, but it's necessary before we even come to something. In the end, our papers are written in the commission, by political scientists: they are not historians, not geographers, not people from the real world. And the real world happens somewhere else.

Oleg Shishkov/ HSE University

A few days ago, I had a debate with some people. It always comes up from the Russian point of view, whether the United States is pushing the Europeans. I don't see the United States pushing so much. It's we, the European Union. I think a lot about Max Weber who wrote a major work on political sociology about the role of bureaucracy. And you know it in Russia: bureaucracy is suffocating the initiative.

There's a limit to decision-making in terms of parties to the decision. Empirical evidence gives you eight. The moment you have 10–12 people at the table, there's not anymore one unique conversation. And we need a conversation, we need to talk to each other. With BRICS, I know that they desire Argentina, Saudi Arabia, Iran, etc, but I’ll give them an unwanted advice: never go beyond ten or twelve people around the table. It’s the same story with Shanghai Cooperation Organisation, they are now nine. It's two-thirds of the world population, it's a big share of the world GDP, it's the most important energy producers and consumers. So, let's keep it like that.

The moment you go beyond a certain figure—and in the case of the European Union, we went beyond a certain figure a long time ago—it's unfeasible to discuss and to take decisions

Attitudes towards Russia: Changing Landscape

We need to talk with Russia, because geography is what you cannot change, it’s the constant factor of history. And history bounds us. We designed and signed the Sochi Dialogue back in 2019, and lots of hope was put into it. It was within the sanctions of 2014, but it was an institutionalised framework for cooperation in academic affairs, youth policy, sports, climate change, and arts. It's weird when you compare it to today’s situation.

2020 was the 100 years of Salzburg Festival. It's a big thing in Austria. For 2020, Russia was invited as the main guest. In Sochi in May 2019, Federal President of Austria handed over an official invitation to President Putin. Gazprom was ready to sponsor a lot of cultural events. Salzburg Festival is beautiful, but it's also a little planet of its own, with a certain elite that comes together to see and to be seen. In 2020, Russia coming as a star guest didn't happen because of the pandemic. Two years later, in summer 2022, Federal President Van der Bellen makes his speech at the opening of the festival. Usually, it is a ceremonial speech about arts. But President Van der Bellen said in it that anybody who is criticising the sanctions against Russia is a collaborator of the Putin regime. The speech was harsh, and there was a huge applause in the audience.

I mentioned that because it shows you this opportunistic mindset. I think this is something that is very destructive, because it's bizarre. Two years earlier, we all wanted to see Russia: please be a star guest, wonderful if you pay for it. And two years later, anybody who criticises the sanctions is a collaborator of the Putin regime.

Observing the atmosphere, knowing the room, it is typical Austrian opportunism

So far, I haven't spoken about Austria. When people ask me questions about Austria, I would always say that I don't want to comment about my country. But enough is enough. I have seen it ever since the 1990s. On the one hand, ‘Russian money is great’. There was all the Russian money that came to Vienna: real estate investments, company investments. And at the same time, I saw these people making fun of Russians: 'these Russians have no taste, who will teach them’; ‘it's so easy to sell to them, they will buy anything'. It was like a milking cow: you could get a Russian on board, get a Russian oligarch, get a Russian investor. It was a very opportunistic, utilitarian approach.

Now, everybody is put under pressure: you have to condemn Russia

I posted a picture of Moscow under snow, which is beautiful, and received comments like 'she is now in the centre of genocide'. These things don't come from stupid heads from some crazy parties, it's in the society. This is frightening and sad.

Polls show that in the public, there is at least a 50/50 percentage of those who support sanctions and those who don't. What I experienced as an individual was that nobody spoke out for me. There was not a single public person, a journalist, or a colleague who would speak out and say ‘leave her in peace’. I consider myself to a certain extent as a collateral damage of all that.

Karin Kneissl with HSE Vice Rector Victoria Panova

Oleg Shishkov/ HSE University

The atmosphere in Austria has a very strong anti-Russian sentiment. I think politics shouldn't be made on that topic now: we have other topics, such as purchasing power, unemployment, and so on. And this is not a fault of Russia. The sanctions are a certain element, but not the main element of what is happening.

Russia should not be the parameter for domestic politics

I quit Austria in 2020, long before the crisis escalation. I quit it because I had no more contract in my country. For one year, I didn't earn a penny. Luckily, I could start writing for the website of Russia Today and give my first courses at MGIMO. But it was not enough to make a living. I quit Austria physically because I didn't want to be attacked in the street as a 'Russian prostitute'. And that was the case already in summer 2020, I was being marginalised for ‘being with Russians’. I decided to move to Lebanon not completely by choice, but in Lebanon, I feel like I'm in a neutral place. Lebanon is not neutral, it would love to, but it will not be. I went to Lebanon because I speak the language.

I have been observing Russian businesspeople and students over the three decades and noticed that Russians, if you want to put them all in one basket, had very quickly learnt how to move across the globe. Austrians and Germans, especially when in the energy business, remained very provincial. It starts with learning a second or a third language, knowing good theatres and good places. And continues in moving across the globe for business affairs.

Publications: Past and Future

Back in 2012, I published a book called Fragmented World: What Remains of Globalisation (Die zersplitterte Welt: Was von der Globalisierung bleibt): it was in German, hasn’t been translated into English. In that book, I already developed ideas about renationalisation of the European Union. I spoke about Brexit, the rise of religious movements, and so on. People told me then that I was too negative. But I believed that it would de-globalise, become fragmented. People feel lost in this globalised world and they need something to stick to. I think my book is still valid to a certain extent.

And my next book, which I hope to make with HSE University, it's more of a big essay. Following my experience as a reader, who would read 300 pages? My more successful books have been those that are not beyond a hundred pages. If I'm very honest to myself, you can say a lot of things on 30–40 pages, and the rest is description, you just add more and more illustration. It will be called Requiem for Europe. In the synopsis, I want to explain what has happened to me, but I don’t' want to give a pathetic victim story. That's not my style, I don't see myself as a victim, I'm still an actor of my life.

But I have gone through it and that's why I say that lists have replaced laws. The rule of law is gone

And this came to me as a shock. I asked myself, where was the tipping point, when did it all start, when did it shift? Was it 2015, was it 2008? I've tried to find out. But lists have replaced laws, which are the fundamental core of Europe. Freedom of speech, equality in front of the law. The current situation reminds me of what I learnt at my law classes. In the 17^th–18^th centuries, we started with codification of law. Before that, we had confusion, there was uncertainty about which law applies. And we are back to that situation. We are back to a deep legal vacuum of uncertainty: which law applies? Expropriation happens easily nowadays. Europe was the beacon of enlightenment, everybody wanted to go there. For people in many regions, Europe is still the place to be, because of the citizen rights, freedom, and so on. And the other part is welfare state. This is also in decline. In class today, we discussed Europe as a notion: where is Europe? Geographically, we don't know. Is Armenia Europe? Is Russia Europe? For me, yes, they both are. I don't like this antagonism 'Russia and Europe'. No, it's Europe. I say I want to be here, because I'm happy to be back to Europe now when I'm here. It's also about Argentina—it's very European. It's maybe much more European than certain parts of Europe today. Europe as a notion, as a civilisation is something that billions cherish, that I also have always been grateful for, but it has ceased to exist.