Cold east wind is blow for EU

Relations between the EU and Russia are testy right now, partly due to Moscow's growing self-confidence, Jamie Smyth reports …

Relations between the EU and Russia are testy right now, partly due to Moscow's growing self-confidence, Jamie Smythreports as the two meet for their biannual summit

When German chancellor Angela Merkel meets president Vladimir Putin today at a picturesque health resort in central Russia she will hope its clean air and natural beauty can help soothe EU-Russia relations.

At the start of Germany's six-month EU presidency in January, hopes were high in Berlin that the 19th EU-Russia summit could reinvigorate a crucial partnership between the two blocs that spans energy, trade and world affairs.

Instead, a succession of trade disputes, human rights concerns and clashes over energy policy and missile defence in Europe mean both sides will agree nothing of any note at the summit. A last-minute dash to Moscow by German foreign minister Frank-Walter Steinmeier this week did little to dissipate what EU trade commissioner Peter Mandelson has described as a "level of misunderstanding or even mistrust" not reached since the end of the cold war.

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So what's gone wrong in relations between Europe and Russia? Many EU diplomats blame Moscow's growing assertiveness on the world stage for the sharp deterioration in relations with the west.

They cite a firebrand speech that Putin gave in February to G8 leaders in Munich in which he charged the US with a "hyper-use of force" and "disdain for the basic principles of international law". The rhetoric has got tougher since ethnic Russians protested in Estonia last week over the removal of a statue commemorating the Red Army's defeat of the Nazis.

"The message from Moscow is clear: the time for the west to decide an issue and expect Russia to rubber-stamp it is over," a senior European diplomat said this week.

Across a panoply of economic and strategic issues Moscow is digging in its heels and causing the EU a serious headache. The Poles are bristling at a 17-month ban on Polish meats imposed by Moscow.

In Lithuania, a critical oil pipeline to the Mazeikiu Nafta refinery has been shut by Russia for "repairs" for almost a year.

Even a deal to end tariffs on EU airlines flying over Siberia, which was due to be signed today, has developed "technical difficulties" and been put into a holding pattern.

"Problems are emerging due to a rise in Russian self-confidence in international affairs, even arrogance, which has been boosted by its energy wealth," says Michael Emerson, analyst on EU-Russia relations at the Centre for European Policy Studies.

High energy prices have transformed Russia's finances, enabling it to amass gold and foreign exchange reserves worth $356 billion (€264 billion). This enabled the Kremlin to lift currency controls on the rouble last year, further boosting its international credibility.

Russian energy is critical for the EU. Moscow supplies a quarter of Europe's gas and oil and could, in theory, turn the lights out across Europe by closing its pipelines.

This threat was poignantly illustrated in January 2006 when EU gas imports were briefly interrupted due to a dispute between Ukraine and Russia. The subsequent power cuts in several EU states provoked a dramatic shift in policy in Brussels, which is seeking to reduce Europe's reliance on Russian energy and to invest in Russia's energy sector.

The policy has produced only mixed results. A decade-long campaign to get Russia to ratify a 1994 energy charter that would offer European firms free transit on its pipeline network is still no closer to success. Moscow also recently outmanoeuvred the EU by signing a pipeline deal with Turkmenistan and Kazakhstan that will transport their gas into Russia's network of pipelines to Europe.

The EU had been seeking to build its own pipeline under the Caspian Sea to bypass Russia.

EU-Russia relations have also been complicated by tensions between Russia and the former satellite states of the USSR that joined the EU in 2004.

Russia's ambassador to the EU, Vladimir Chizhov, complained this week that Poland, Estonia and Lithuania were in thrall to "phantom pains of the past, historic grievances against the Soviet Union and the Russian empire of the 19th century". He urged the EU not to give in to the rhetoric, saying "when EU solidarity eclipses objectivity that is bad".

EU diplomats believe Russia has failed to grasp the import of the 2004 enlargement, which gives each member state a place at the EU table. This has resulted in Poland wielding its veto to prevent talks starting on a comprehensive new EU-Russia partnership agreement covering everything from human rights to energy.

Russia has also lost friends in Europe with German chancellor Gerhard Schröder and French president Jacques Chirac both stepping down. Merkel has pursued a more pragmatic line with Russia since taking office, chiding it at times for human rights violations while pursuing partnership on energy and foreign relations.

Improved EU relations with Russia are vital, particularly with the future status of Kosovo likely to be decided within weeks. A Russian veto at the UN security council could plunge Kosovo and neighbouring states into a spiral of ethnic violence.

This is one reason that Merkel shrugged off calls from some EU members to cancel the summit. Whether she can revitalise EU-Russia relations is another matter. With parliamentary and presidential elections due in Russia this year and next, anti-western feeling may prove a useful vote winner in an increasingly nationalist Russia.