Having been on the defensive in the past few years in the face of the eastward expansion of the European Union (EU) and NATO, Russia has taken an increasingly assertive approach in dealing with its western neighbors this year holding energy as its trump card.

A few anecdotes during the year are notable in the evolving relationship between the two powers in Europe: Russia's temporary halt of gas supplies to Ukraine at the beginning of the year; Russia's row with Georgia over alleged spying activities, which caused a stir within the EU; the murders of Russian journalist Anna Politkovskaya and ex-Russian agent Alexander Litvinenko; and the stalled process of negotiating a new EU-Russia partnership deal by the end of the year.

The year started with an abrupt stoppage of Russian gas supplies to Ukraine over a price dispute, triggering supply disruptions in several EU countries. The incident signaled a somewhat tactical shift in Russia's approach towards the EU, and was a precursor to the major developments in bilateral ties for the whole year.

The gas conflict prompted the 25-nation bloc to speed up its energy strategy review with energy security topping the agenda. EU leaders on various occasions reiterated the role of Russia as a strategic partner, and decided that engagement and cooperation with it are of paramount importance.

The EU is carefully seeking a balance between its increasing need for Russian energy supplies, and its criticism of Moscow over human rights and other ideological issues. But the divisions among its 25 members, over how to handle Russia, have not made the task any easier.

Interdependence

Commenting on EU-Russia relations in a speech in October, Benita Ferrero-Waldner, European Commissioner for External Relations, said "in many ways the entire EU-Russia relationship has been focused on energy."

"Ultimately, the equation is simple: we need Russia's energy, and Russia needs the enormous energy market Europe provides," she told a Russian academic audience, emphasizing "stability, predictability and reciprocity are in both our interests."

This view is shared by the Russian leadership. Russian President Vladimir Putin said after a dinner with EU leaders in October that in terms of energy ties, Russia has a greater dependence on the EU market than the EU on Russian energy supplies.

Sixty percent of Russia's oil exports and 50 percent of Russia's natural gas exports go to the EU, representing more than a quarter of total EU oil and gas consumption. Russia is also an important market for EU goods and services, with considerable potential for growth.
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In the foreign policy area, the EU also needs Russia on a lot of issues -- Iran, the Middle East, Kosovo and North Korea.

Energy has certainly dominated EU-Russia interactions this year. From January's Ukrainian gas crisis to October's dinner of EU and Russian leaders in the Finnish town of Lahti, energy has been almost omnipresent in both EU-Russia talks as well as meetings between Russia and single EU nations.

The EU is keen to persuade Russia to ratify an international energy charter, which regulates energy cooperation between Western and Eastern Europe, and would give foreign investors free access to Russia's oil and gas deposits and export pipelines.

But Russia objects to the charter, saying it would allow central Asian countries to benefit from free access to Russian transit pipelines, which could make their natural gas 50 percent cheaper than Russia's when it arrives in Europe.

Moscow would also like the charter to address the issue of nuclear power development, and recognize Russia as a supplier of nuclear energy.

While agreeing to join hands with the EU to promote energy efficiency at home, Moscow again declined to ratify the energy charter earlier this month during a meeting of Russian Energy Minister Viktor Khristenko with his EU counterparts.

Russia said the issue can be resolved through the new Russia-EU Partnership and Cooperation Agreement currently being discussed, which can include some of the charter provisions.

Negotiations on a new partnership deal was blocked by Poland at a Russia-EU summit held in Helsinki last month, with Warsaw insisting that Moscow first lift its ban on Polish meat products and ratify the energy charter.

The new agreement will replace the current accord, which expires at the end of next year. The all-encompassing framework deal is expected to encourage closer cooperation in the fields of energy, trade, justice, security, foreign policy, and education and research.

The EU, in particular the old EU members, which are home to big oil multinationals, has long hoped the new deal to grant EU better and secure access to Russia's vast oil and gas resources, and to include Russian commitments to secure energy supplies to the bloc.

The close scrutiny by Russian regulators, of the deals with Western energy firms this year, and the Russian oil giant Gazprom's decision in October to develop the huge Shtokman gas field without foreign partners, has made the EU feel the need of such an accord more urgently.

Poland's veto came despite two weeks of lobbying by the 24 other members of the EU. It once again highlighted the EU's delicate position while walking the tight rope of matters concerning Russia.

Divisions within EU

Different voices within the EU have been a norm in EU decision-making, but the situation is more complicated when Russia is involved.

While most of the older EU members, mindful of Russia's increasing economic and diplomatic leverage, put greater emphasis on engaging Russia, the new members in central and eastern Europe tend to be more vocal in their criticism of Russian policies and more unyielding in protecting their own interests.

These former Warsaw pact countries, once inside the EU and NATO, have been quick to take up new weapons to fight back perceived Russian influence and to pronounce their own identity within the Western bloc.

At the Lahti summit, new EU members insisted that the bloc focus more on human rights issues when having dinner with Putin, while older EU members preferred to tone down the rhetoric in return of Russia's pledges for better cooperation in energy and other areas.

In the case of the vetoed talks on the EU-Russia partnership deal, the Polish argument was that the old EU-15 must show "solidarity" with the new EU members, or risk seeing Russia bully certain EU countries as it has done with Poland.

But big EU member states, such as Britain, Germany and France, have not been very comfortable with the "new small brothers" making such noises. Some diplomats in Brussels say that the EU-Russia treaty should not be held hostage over vegetables and meat.

Continued squabbling weakened the EU's hand in dealing with Russia, but the difficulty to seek a common ground and maintain a consistent policy toward Russia, also underlines the extreme importance of Russia, when it comes to EU countries' external relations.?

Long-standing sores

Former foes in the Cold War era, Russia and the EU have long been at odds over a number of issues like the definition of democracy, the Chechnya war, human rights, and Russia's handling of issues concerning its former satellite states.

The murder in October of Anna Politkovskaya, a Russian investigative journalist and an open critic of the Kremlin, caused fresh concerns in the EU about Russia's perceived suppression of press freedom.

Brussels urged thorough investigations into the killing, while the Kremlin claimed it was a victim of politically motivated accusations.

The mistrust was only enhanced by the mysterious death, a month later, of Alexander Litvinenko, a former Soviet agent and a fierce critic of Moscow, who fled to Britain in 2000 and was granted asylum and eventually citizenship. He was investigating the death of Politkovskaya shortly before his death in London.

While a skeptical EU called for Russia's full cooperation in helping clear up the case, Putin called Litvinenko's death-bed letter, which accused the Russian president of ordering the murder, "political provocation" and suggested that it may have been written by anti-Kremlin forces after his death.

The Russia-Georgia row this autumn also underscored the complexity and subtlety of EU-Russia relations. Brussels expressed "grave concern" over Moscow's tough stance toward the Georgians but stopped short of any concrete actions to press for Georgian demands, much to the disappointment of Tbilisi.

The clash was triggered by Georgia's brief arrest of four Russian officers it accused of spying in September, which prompted Russia to impose a total blockade on its ex-Soviet neighbor. It also launched a crackdown on Georgian-run businesses and Georgians living in Russia, deporting hundreds of people it said were in the country illegally.

Georgia, which has long annoyed Russia by seeking closer ties with the EU and NATO, said the economic squeeze cost it billions and sought the EU's help.

But the EU, with upcoming energy talks in mind, said both countries have responsibilities and urged Georgia to refrain from any action that could heighten the tensions.

While the EU was careful not to provoke Russia in the particular case, it can very well act the other way next time, as historical mistrust and long-running deep rifts between the EU and Russia over democracy, rule of law and other issues are hard to patch up.

While both sides stress their interdependence and highlight the need for a strategic partnership, the two pursue different aims in doing so.

Russia hopes to reinvigorate its economy through comprehensive cooperation with its western neighbors and eventually re-establish itself as a major world power.

One of Russia's foreign policy priorities is to fully integrate into Europe and build "a greater Europe of Europeans," which could counterbalance the influence of the United States.

The EU, however, seeks to infiltrate Russia with Western values and the concept of Western style democracy, and gradually transform the country into a proper "democracy."

Brussels played a conspicuous role in the "color revolutions" in Russia's neighbors in recent years. One of the key objectives of the EU's current European neighborhood policy, an EU political integration package for nearby countries like Ukraine, is "to advance freedom and democracy" in these countries.

The EU makes no secret of its support to opposition parties and dissidents in ex-Soviet states, such as Belarus, where the present government has close ties with Moscow. It channeled large sums of funds to the so-called pro-democracy non-governmental organizations in these countries.

Such moves have repeatedly annoyed Moscow and sometimes become underlying triggers of bigger confrontations.

On Chechnya and other issues that Moscow sees as domestic, the EU's finger-pointing is also taken by Russia as unwelcome "interference" in its internal affairs.

Balance is the key word

During the past year, the EU and Russia have appeared to be more prepared to put frictions aside and focus more on their common interests and future cooperation.

Officials from both sides highlighted areas where the two are cooperating, such as industry, security, foreign policy and environment. The EU called Russia a key ally in security and other issues, while Putin referred to his country as "a natural member of the 'European family' in spirit, history and culture."

Putin also sought to allay EU fears about its dependence on Russian energy, saying those who warn of the danger of over-dependence are trying to fit EU-Russia relations into the obsolete mould of "friend or foe."

He said the persistent influence of such stereotypes could create fresh divisions in Europe and called for "a constructive approach in the EU."

"The past must not be used to divide us, because we cannot rewrite history," Putin stressed.

Despite the proclaimed strong political will, whether Russia and its EU partners could accommodate each others concerns and clinch a substantial cooperation pact next year remains to be seen.

But one thing is certain, the talks will be long and tortuous. So will the process be, of building a genuine and reliable EU-Russia strategic partnership, as is trumpeted by both sides.

(Xinhua News Agency December 13, 2006)