The EU and Russia as Energy Trading Partners : Friends or Foes?

January 2009 brought a stark reminder of the perils of European dependence on Russian natural gas. A cutoff of supplies connected in part to a pricing dispute between Russia and Ukraine, the crucial transit country for much of Russia’s gas, left millions of Europeans without heat and forced factories to close. The crisis not only underscored the challenges of managing European relations with Russia, a country whose geopolitical reach rises and falls to some extent with the price of oil and gas. It also highlighted the difficulty for the EU to break its dependence on a single energy supplier, one whose willingness and ability to provide sufficient gas over time is uncertain. The paper looks at Russia’s rise as an energy power, analyzing its control of supplies and delivery systems and its investments in energy infrastructure across the EU, as well as questions about the potential of its production. The paper also examines the EU’s difficulties in forging a common policy on energy supply and recommends a strategy of both integration and diversification. It recommends that the EU seek new sources of energy from non-Russian suppliers