Russia still wielding its power over eastern Europe

Energy supply issue may prevent former Soviet states forging closer links with EU

As political leaders gathered for dinner in the chilly Lithuanian capital of Vilnius yesterday evening, the joke circulating among officials was whether Russia would cut off gas supply to this corner of the Baltics, a region almost entirely dependent on Russia for energy.

Following Ukraine's withdrawal from negotiations with the European Union, the relationship between Europe and Russia has emerged as the real story of the Eastern Partnership Summit.

Ukraine's prime minister Mykola Azarov told its parliament this week that the decision was a question of "economic sovereignty", complaining the EU had failed to offer adequate compensation for the loss of trade that would arise from the closure of Russian markets if it signed the deal.

Others suspect the real reason is a combination of political clientelism, genuine fear of cuts to energy supply, and money, with rumours that Russia offered €20 billion in "liquidity" to the highly-indebted country if Ukraine called off talks with Brussels. Lithuanian president Dalia Grybauskaite pulled no punches yesterday, accusing the Ukrainian government of looking for "easy money" and accusing Russia of "uncivilised behaviour".


Russian disaffection
Lithuania itself is feeling the force of Russian disaffection. The small Baltic state, which borders Belarus, has defiantly put its desire to bring its European neighbours closer to Europe at the heart of its presidency of the Council of the European Union. The country, which was the first Soviet state to declare independence, is currently building a liquified natural gas (LNG) terminal off its coast in a bid to wean its way off Russian gas.

Uneasy relationship
With Russia controlling much of the country's pipes and virtually all of its gas supply, the country paid about 15 times more for energy than the EU average last year, according to the European Commission. Russia has ratcheted up the pressure on the small Baltic state in recent months, banning Lithuanian milk imports on health concerns and increasing border controls between Lithuania and the tiny Russian state of Kaliningrad.

It is a picture replicated across neighbouring states, with Russia banning everything from Moldovan wine to Ukrainian confectionary, as it uses the power of economic sanctions to expresses political disapproval of the perceived tilt towards the West.

The relationship between the European Union and Russia is an uneasy one. Relations between the two are officially governed by a “partnership and co-operation agreement”. Significantly, Russia is Europe’s third-largest trading partner, with EU exports to Russia topping €123 billion last year.

The real tie, however, is energy. Russia is the largest exporter of oil and gas to the EU, supplying about 30 per cent of the bloc’s gas supplies. Despite developments in shale gas, renewable energy and LNG plants, most alternatives are deemed too expensive or too contentious to mark a significant change in the make-up of Europe’s energy supply.

Developments such as Germany's decision to shun nuclear energy have also increased pressure on resources. Despite the EU's likely continued dependence on Russia for energy, Brussels has been trying to tackle Europe's over-reliance on Russian resources. Focus has been turning to energy sources in central Asia and the Caspian Sea region, with projects like the trans-Adriatic pipeline sanctioned earlier this year.

Liberalise energy markets
The European Commission has threatened anti-trust action against the state-controlled Russian energy giant Gazprom, and the EU's "third energy package" aims to liberalise energy markets by decoupling supply from infrastructure, inciting strong resistance from Moscow.

Ukraine's decision to withdraw from negotiations has raised questions about the EU's commitment to the Eastern Partnership process and the bloc's naivety regarding the political realities underpinning further

Six years after the first Eastern Partnership summit, there are still significant differences between member states on what the scale and depth of the relationship between the EU and its eastern neighbours should be. Deep-seated corruption and abysmal human rights practices in many of the Eastern Partnership countries, including Moldova and Georgia which will today "initial" agreements with the European Union, make further integration highly unlikely, with some suspecting that many of these countries are fostering links with Europe solely to leverage power against Russia.

The fact that many of the political elites running post-Soviet states are believed to have strong, and ultimately dubious, links to Russia, may ultimately sway the final decision on closer links, which after all is a political decision.

Defenders of the EU’s strategy argue the promise of deeper ties with the European Union may help to improve political transparency and human rights in these countries: in exchange for visa and trade liberalisation, association agreements require countries to approximate vast sections of their national legislation to EU norms.

Whether the six former Soviet republics perceive access to the single market as a more valuable prospect than continued inter-dependence with Russia will shape the politics of this region for many years to come.