A Case for Mutual Dependencies

The transit country will always seek to expropriate the total rent arising from the pipeline. Shifts in bargaining power among the parties to the pipeline agreement affect the transit country’s ability to influence transit fees, depending on the factors that prompt these shifts. Bargaining, nevertheless, can be argued to be the only platform upon which a solution to the transit fee dispute puzzle can be developed. The essential requirement, therefore, is an institutional framework that obviates expropriation. This chapter investigates the aspects of mutual dependencies among the parties to the pipeline agreement that will mitigate the consequences seen when the bargaining principles are applied to the case studies. It identifies the context in which mutual dependency among the parties to the pipeline project is demonstrated with regard to transit country bargaining power (i.e. factors in the transit agreement that demonstrate such dependencies and factors outside the agreement that could also affect the bargaining power of the transit country).