Power in the global economy: states versus firms? An analysis of Eurasian pipeline projects

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This thesis aims to explore the political dynamics between governments and multinational corporations in the case of transnational pipeline projects. Two cases are compared: the successful Baku-Tbilisi-Ceyhan (BTC) pipeline running from Azerbaijan via Georgia to Turkey, and the conflictuous pipelines between Russia and Ukraine. The oil flow through the BTC pipeline has been uninterrupted since its inception, while the gas flow through the Russian pipelines was halted on several occasions. By looking for the reasons behind the success and the failure in the two cases it becomes possible to see how these projects of cooperation are set up and whether governments or companies are chief responsible for their creation and continuation. In the field of international relations this topic has received relatively little attention so far, particularly by state-centric perspectives that consider the economic realm ‘low politics’. The energy sector was chosen specifically because it includes some of the world’s largest corporations, which have been rather secluded from analysis by political scientists. This thesis applies and thus tests two theories in a paired comparison case study of transnational pipeline projects. Neoliberalism follows a more state-centric approach on the basis of which cooperation in the form of transnational projects is considered dependent on the governmental relation between states, which in turn is based on interdependency, hegemony and iteration. The business oriented global value chain theory (GVC) postulates in contrast that lead firms are able by issuing credible commitments to initiate and sustain cooperation. As will be shown, the GVC theory is better able to explain the difference in outcome. The presence of a dominating lead firm proved to be a decisive factor, yet its ability to extend credible commitments was only of minor importance. The variables put forward by neoliberalism did not have much explanatory value. Overall, the research shows how companies have become one of the defining features of the modern global economy.
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