This is one of the conclusions of the first-ever 'Power Audit' on bilateral EU-Russia relations, conducted with the participation of national experts from 27 EU member states. The report is published today by the European Council on Foreign Relations (ECFR), a new think-tank and advocacy group. (Download report)

"Today, it is the Kremlin that sets the agenda for EU-Russia relations, and it does so in a manner that increasingly defies the rules of the game," says Joschka Fischer, former German foreign minister and ECFR's co-chair. "The reason for that is the disunity of the EU. This must change."

The EU's failure to agree on a common Russia policy has allowed the Kremlin to increase its leverage over the EU, through signing bilateral energy deals, playing the Kosovo card, asserting itself in the common neighbourhood, and dragging its feet on preventing nuclear proliferation. During the Putin years, Moscow had bilateral disputes with 11 EU countries, including the Litvinenko affair with the UK, the Polish meat ban, and trade disputes with the Netherlands.

"Russia is the most divisive issue in the EU since Donald Rumsfeld and the Iraq war," says Mark Leonard, ECFR's executive director and one of the report's authors. "But Russia's power is deceptive: the EU's combined economy is 15 times the size of Russia's, its military budget is seven times higher, and its population three times the size of Russia. If European countries unite around a common strategy, they will realise how powerful they really are."

The ECFR report says that EU governments are torn between two dominant approaches to Russia. One side sees Russia as a threat that needs to be managed with 'soft-containment', the other sees the country a potential partner that can be transformed through 'creeping integration' into the European system.

Within those, the analysis identifies five distinct categories of countries. Greece and Cyprus are referred to as 'trojan horses' whose governments often defend positions close to Russian interests, and who have been willing to veto common EU positions. The study reveals little-known facts such as Cyprus being the biggest official 'investor' in Russia, due to the amount of Russian capital which is saved there.

Germany, France, Italy and Spain are described as "strategic partners" - whose governments have built special bilateral relationships with Russia, which has sometimes cut against the grain of common EU objectives in areas such as energy and the EU Neighbourhood Policy.

Ten countries - Austria, Belgium, Bulgaria, Finland, Hungary, Luxembourg, Malta, Slovakia, Slovenia and Portugal - are labelled as 'friendly pragmatists' whose governments have a less close but still significant relationship with Russia, in which business interests come first. Their policy tends to follow pragmatic business interests, opting for a path of least resistance in political disputes. In Bulgaria, for instance, the government has strong economic links with the Russian company Lukoil, which generated more than 5% of Bulgaria's GDP and around 25% of its tax revenues in 2003.

ECFR identifies nine further countries - the Czech Republic, Denmark, Estonia, Ireland, Latvia, the Netherlands, Sweden, Romania and the United Kingdom - as 'frosty pragmatists'. While keeping business interests high on the agenda, the governments of these countries have not refrained from criticising Russia's human rights record and failings on democracy.

Finally, Poland and Lithuania are described as 'new Cold-warriors' who have developed an overtly hostile relationship with Moscow and are willing to use the veto to block EU negotiations with Russia.

The report argues that the five groups of the EU need to unite around a common approach - one that reflects the EU's long-term strategic interests. To reverse the 'asymmetric interdependence' that is currently in Russia's favour, the authors recommend for the European Union to:

- Push for the implementation of all international agreements and standards Russia has committed itself to, in order to further promote the rule of law;
- Make Russia's participation in G8 summits conditional on its commitment to the spirit and the letter of common agreements, with the threat of organizing more low-level meetings within the G7 format should Russia be uncooperative;
- Introduce the policy of 'principled bilateralism' where EU governments are expected to use bilateral links to serve common EU goals and introduce an early warning system to inform of impending energy deals or bilateral disputes;
- Make the EU Neighbourhood Policy more efficient to encourage participating countries to respect the rule of law and draw them further into the EU's orbit;
- Give the European Commission political backing to use competition policy to investigate energy deals; and authorise it to pre-approve major energy deals;
- Provide assistance to Turkey, Ukraine and Moldova in implementing the EU's energy acquis communautaire.

The full text of the report can be accessed on ECFR's website http://www.ecfr.eu.

NOTES TO EDITORS

1. The report entitled 'A Power Audit of EU Russia Relations', by Mark Leonard and Nicu Popescu, is published by the European Council on Foreign Relations on 7 November 2007. This report, like all ECFR publications, represents the views of the authors, not the collective position of ECFR or its founding members.
2. Mark Leonard is Executive Director of ECFR and author of "Why Europe will run the 21st Century". Nicu Popescu is a policy fellow at ECFR.
3. For interviews with the authors, please write to press@ecfr.eu, or call 4478 7677 5034.
4. Launched on 2 October 2007, the European Council on Foreign Relations is a new pan-European initiative for research and advocacy, co-chaired by Martti Ahtisaari, Joschka Fischer and Mabel van Oranje. With offices opening in seven EU capitals, its mission is to analyse the EU's foreign policy performance and to promote a more integrated EU foreign policy.
5. ECFR will hold its official launch conference in Berlin on 9 November. Speakers include Frank-Walter Steinmeier, Martti Ahtisaari, Emma Bonino, Joschka Fischer, Timothy Garton Ash, Ivan Krastev, Mart Laar, and Mabel van Oranje.