RUSSIA AND THE EUROPEAN UNION:

THE SOURCES AND LIMITS 

OF “SPECIAL RELATIONSHIPS”

Cynthia A. Roberts

February 2007

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supported in part by grants from the Gender Equity Project and 

Presidential Travel Award Program at Hunter College and from 

the City University of New York (PSC-CUNY) Research Award 

Program.

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iii

FOREWORD

The topic of Russo-European Union (EU) relations 

is one of the most important security issues in 

Europe and Russia because this relationship will help 

determine the security situation throughout Eastern 

and Central Europe well into the future. The course of 

this relationship also will influence in large measure 

the extent to which Russia moves toward realizing 

its historic European vocation and its proclaimed 

ambition to become a democracy. On the other side, the 

relationship will influence significantly the capability 

of the EU to function effectively as a union of European 

states, possibly including Russia, and other European 

members of the Commonwealth of Independent States 

like Ukraine, Belarus, and Georgia.

Admittedly this relationship is in a rather precarious 

state. But it is essential that policymakers and analysts 

understand what the problems are that have impeded 

Russia’s integration with Europe if we and they are 

to overcome these obstacles. Therefore, this superb 

analysis by Dr. Cynthia Roberts is highly important to 

any effective understanding of both Russia’s and the 

EU’s future trajectory.

This monograph is part of a series of publications 

on aspects of Russian defense and foreign policy that 

derived from a conference entitled “The U.S. and 

Russia: Regional Security Issues and Interests.” It 

was cosponsored by the Strategic Studies Institute; 

the Ellison Center for Russian, East European, 

and Central Asian Studies at the Jackson School of 

International Studies at the University of Washington; 

the Pacific Northwest Center for Global Security; and 

the Institute for Global and Regional Security Studies. 
iv

The conference and this series represent a part of SSI’s 

efforts to provide expert analysis of some of the most 

urgent challenges to security in today’s world.

DOUGLAS C. LOVELACE, JR.

Director

Strategic Studies Institute 
v

BIOGRAPHICAL SKETCH OF THE AUTHOR

CYNTHIA A. ROBERTS is an Associate Professor of 

Political Science at Hunter College, City University of 

New York, and also an Adjunct Associate Professor 

at the School of International and Public Affairs at 

Columbia University. In 2007, she was also appointed 

a Senior Associate of the Saltzman Institute of War and 

Peace Studies at Columbia. Previously, Dr. Roberts was 

Director of the Russian Area Studies Graduate Program 

at Hunter. Dr. Roberts has served as a consultant to 

various departments of the U.S. government, including 

the Lawrence Livermore Laboratory, Department 

of Energy and is currently a member of the John J. 

McCloy Roundtable on Setting the National Security 

Agenda at the Council on Foreign Relations in New 

York and on the international board of trustees of the 

Centre for European Security in Moscow. Her articles 

on Russian affairs and international security problems 

have appeared in such journals as Comparative Politics, 

Survival, Europe-Asia Studies, The Washington Quarterly, 

Journal of Cold War Studies, Technology Review and 

others, as well as in books on these subjects. Dr. Roberts 

currently is revising a book on “Prelude to Catastrophe: 

Soviet Security Policy between the World Wars,” which 

was accepted for inclusion in the series “Studies of the 

Harriman Institute,” Columbia University. Her other 

book project concerns Russia’s relationships with the 

North Atlantic Treaty Organization, the EU, and the 

G-8. Dr. Roberts received her Ph.D. in Political Science 

and the Certificate of the Harriman Institute, both from 

Columbia University.

vii

SUMMARY

More than 15 years after the collapse of the Soviet 

Union and two decades after the last Soviet President, 

Mikhail Gorbachev, raised hopes that Russia would 

liberalize and join a common European home, 

Moscow again resorts to authoritarian means amid the 

continuing absence of a mutual agenda for Russia’s 

integration into Western institutions. Since the end 

of the Cold War, Russia and the West have averted 

renewed confrontation but managed only to craft a 

series of half-formed, suboptimal partnerships—with 

the European Union (EU), the North Atlantic Treaty 

Organization (NATO), and the Group of 71

—in which 

Russia is neither anchored by democratic rules nor 

fully excluded by Western institutions. These “special 

relationships,” which have been often turbulent, are 

now seriously strained by Russia’s stronger geopolitical 

position, boosted by sustained high economic growth 

and market power in energy, and newly-emboldened 

rulers, who seek to renegotiate terms. 

Why did “special relationships” materialize 

between Russia and the dominant Euro-Atlantic 

institutions instead of a Concert of Europe, a Cold 

Peace, full integration into Western institutions, direct 

confrontation, or a different outcome? How durable is 

the present, second best equilibrium? Which factors 

would increase the prospects for a mutually-beneficial 

agenda for integration? What are the risks that a 

more authoritarian and nationalist Russia will grow 

defiant and revanchist over its unfavorable terms of 

engagement, leading not to closer cooperation but a 

reemergence of two Europes, one led by the EU and 

NATO as the core and the other centered on Russia, 
viii

relegated to the periphery and tempted to act as a 

spoiler and a closer ally of rogue regimes in Eurasia 

and elsewhere?

This monograph, which focuses on Russia and the 

EU, explains why such special relationships tend to 

produce shallow collaboration, symbolic summitry, and 

costly standoffs. It underscores the bargaining problems 

which block closer cooperation in areas of mutual 

interest, from managing energy interdependence, 

instability in the Balkans, and nuclear proliferation in 

the Middle East, to negotiating a new partnership and 

cooperation agreement. The ongoing disputes are over 

terms, not just enforcement, and rooted in asymmetries 

in power, uncertainty about the distributional costs 

and benefits of engagement, and mistrust generated 

by Russia’s continued unwillingness or inability to 

lock-in the liberal domestic structures necessary to 

make credible commitments or converge to European 

norms. 

Domestic interests and political veto players 

further work against deep cooperation. Russia’s autocrats and dominant elites who gain phenomenal 

wealth from their positions of power have a stake in 

a nontransparent, illiberal Russian state and eschew 

international agreements requiring strict conditionality 

and accountability. Russia even has shown its willingness to cut the flow of energy supplies to two key 

transit states, Ukraine and Belarus, over price disputes, 

notwithstanding the disruptions to its EU customers 

farther west. For its part, the EU often is unable to 

impose discipline on the national politics and domestic 

interests of 27 member states, making it easier for 

Moscow to cut myopic, bilateral deals such as the 

German-Russian energy cartel which is building a gas 

pipeline under the Baltic Sea, bypassing Ukraine and 
ix

Poland, which depend heavily on Russia for energy. 

Warsaw, in turn, has been willing to use its EU veto 

to block the start of negotiations on a new EU-Russia 

partnership and cooperation treaty, underscoring 

political and economic disputes with Moscow. For both 

the Europeans and Russians, mistrust persists, and both 

sides are profoundly ambivalent about the desirability 

of deepening their relationship. Thus, it remains to be 

seen whether Russia’s special relationships with the EU 

and other Euro-Atlantic institutions will succumb to the 

negative pressures or persist in their present imperfect 

form for lack of a realistic, superior alternative.

ENDNOTE

1. The “Group of 7” (G-7) industrialized democratic powers 

was subsequently renamed the “Group of 8” (G-8) to include 

Russia in its political but not its core economic deliberations. When 

Russia was invited by President Bill Clinton to become a regular 

participant, then Treasury Secretary Robert Rubin made it clear 

that the G-7 would have to reconstitute itself to do its important 

financial business outside of the new G-8 process. 

1

RUSSIA AND THE EUROPEAN UNION:

THE SOURCES AND LIMITS 

OF “SPECIAL RELATIONSHIPS”

The foremost unresolved challenge for European 

security at the beginning of the 21st century is how best 

to engage a Russia that is not a member of the leading 

international and Euro-Atlantic institutions composed 

of market democracies, notably the North Atlantic 

Treaty Organization (NATO) and the European Union 

(EU), and is lurching back towards authoritarian rule. 

For the past 2 decades, according to a prominent 

specialist, the “central foreign policy agenda” for 

both Russia and the West, starting with Mikhail 

Gorbachev’s wish for a “common European home,” 

was Russia’s integration into Western institutions. In 

this view, recent developments signal “a dangerous 

drift” backwards, away from the mutually-agreed 

“strategic agenda of integration.”1

 A careful study 

of the record, however, reveals an all around lack of 

commitment to full integration from the outset and an 

absence of consensus about how to structure post-Cold 

War relations. Nor is there evidence of a feared “onesided courtship,” where much weight is put on Western 

efforts to cooperate but “not on Russia engaging the 

West.”2

 Claims that an economically resurgent Russia 

now wants to strike out entirely on its own and has 

lost all interest in joining Western clubs similarly are 

overblown.3

Neither fully excluded nor embraced, Russia has 

been relegated to the awkward position of having 

“special relationships” with NATO and the EU, much 

like its initial interaction with the “Group of 7” (G7) industrialized powers, subsequently renamed the 
2

“Group of 8” (G-8) to include Russia in its political 

but not its core economic deliberations. Notably these 

are international institutions in which the Russian 

Federation did not inherit outright membership from 

the Union of Soviet Socialist Republics (USSR) (such 

as its permanent seat on the United Nations [UN] 

Security Council) or to date has been unable to qualify 

for membership, such as the World Trade Organization 

(WTO).

Although an improvement over Cold War tensions 

and the “peaceful coexistence” that prevailed during 

a time of nuclear and ideological confrontation, such 

“special relationships” hardly form the basis of an 

ideal post-Cold War settlement. They are nothing 

like the special relationship between Britain and the 

United States whose close ties derive as much from 

common values as common interests. Yet 15 years after 

the collapse of the Soviet Union, these relationships 

are the foundation stones for a suboptimal, East-West 

equilibrium of partial integration. The United States 

and its European allies in Western institutions such 

as NATO and the EU promote stability by involving 

Russia in a mixture of symbolic and substantive 

cooperative endeavors, while creating a structure 

in which Russia is allowed to participate only as a 

subordinate nonmember. A partially reformed Russia, 

in essence, has been partially integrated into a Western 

hierarchy, and with respect to top tier organizations, 

can claim equal membership only in the G-8, now a 

club long on summitry and short on substance.4

 Despite 

alternating talk of closer strategic partnership and 

punishing Moscow for its antidemocratic behavior, 

both Russia and the West have a stake in perpetuating 

“special relationships” because no superior alternative 

is feasible. Russia’s situation thus contrasts unfavorably 
3

with more adaptable and less prestige conscious 

Central and East European countries that have made 

successful transitions to market democracies and 

joined the EU, NATO, and other Western institutions 

in the last decade.

These “special relationships” are now strained by 

the revival of Russia’s power and newly self-confident 

government which seeks to renegotiate terms. Since 

2005, Moscow has signaled a willingness to use its 

market power in energy to advance Russia’s influence 

in the post-Soviet space and dealings with the West. 

Russia’s sustained economic growth rates of about 

6 percent since 1999 and soaring energy prices have 

boosted Moscow’s coffers and geopolitical ambitions 

dramatically while transforming Europe’s 1990s 

distribution of power. Influential elites have resurrected 

the idea of strengthening the commonwealth of postSoviet states, with the expectation, however fanciful, 

that Moscow can create a counter power center and 

leverage its “union” to craft a more “equal partnership” 

with Brussels and its Western partners. Although 

frustrated by lack of progress and European and 

American obstinacy, Moscow has not abandoned the 

goal of upgrading its status or ruled out the possibility 

of full membership in one or more of the West’s premier 

clubs. A persistent contradiction, however, is that 

Russia remains averse to commit to new bargains that 

involve conditionality (with the exception of WTO), a 

sine qua non for Europe and the United States which are 

more skeptical than ever about Russia’s potential for 

integration.

The problem with partial integration is that it favors 

shallow cooperation and is prone to crises, underscoring 

continued competition and persistent uncertainty, 

mistrust, and a values gap between Russia and the 
4

West. Since the end of the Cold War, Russia and the 

West have averted renewed confrontation, checking 

crises over NATO expansion, Kosovo and the Orange 

Revolution, and gas crisis in Ukraine, while containing 

competitive impulses in the former Soviet space and 

elsewhere. Although avoiding the worst outcomes, 

they also have failed to achieve the ideal of a liberal 

democratic and market-driven Russia integrated into 

the Western community and its leading international 

institutions. There is a risk that an emboldened, energyrich, more authoritarian Russia will grow defiant and 

revanchist over its unfavorable terms of engagement, 

leading not to a deepening of cooperation but instead 

to the reemergence of two Europes, one led by the 

EU and NATO as the core and the other centered on 

Russia, relegated to the periphery and tempted to 

act as a spoiler and a closer ally of rogues and rising 

authoritarian states.

What explains why a “special relationship” materialized between Russia and the dominant EuroAtlantic institutions instead of a Concert of Europe, a 

Cold Peace, full integration into Western institutions, 

or a different outcome? How durable is the present 

partial integration equilibrium? What changes would 

be necessary to increase the prospects for Russia’s 

integration into an undivided, democratic Europe?

This monograph, which focuses on the sources 

and limits of the post-Cold War relationship between 

Russia and the European Union, is one part of a larger 

study on Russia’s “special relationships” with NATO, 

the EU, and G-8. In contrast to most works on this topic, 

it draws insights from the social science literature on 

bargaining problems to explain the constrained scope 

of interaction between Russia and the EU. I argue that 

three main factors underpin this special relationship 
5

and the larger partial integration equilibrium while 

undercutting prospects for more and less optimal 

alternative outcomes. They are asymmetries in the 

relationship, commitment problems, and ambiguous 

stakes in deeper cooperation resulting in part from 

distributional issues.

• First, fundamental asymmetries define the 

relationship in which Russia is a large, relatively 

self-sufficient exporter of energy and other raw 

materials, but its economy is small in relation to 

the EU. As the stronger side, the EU is able to 

hold out for its preferred bargain in which Russia 

transforms, adopts universal and European 

values and norms, and achieves integration 

without membership. Failing this, Brussels 

will agree only to shallow or narrowly focused 

interim agreements with the added veneer of 

high-level summitry and international prestige. 

These arrangements are considered preferable to 

no agreement which could provoke a backlash 

from a critical energy supplier or, even worse, a 

return to confrontation. Moscow objects to EU’s 

agenda-setting power and seeks to redistribute 

gains by fostering greater dependency on 

Russian gas and by circumventing Brussels in 

favor of bilateral interactions with European 

capitals.

• Second, Russia’s absence of strong democratic 

institutions and rule of law to hold both 

economic oligarchs and the state accountable, 

coupled with uncertainty about future 

outcomes, means it is impossible for Moscow 

to make credible commitments to uphold 

international or domestic bargains. Brussels 

requires convergence to European norms and 
6

rule of law as a prerequisite for implementing a 

deep EU-Russia partnership. Russia’s essential 

predicament is that it will be difficult to escape 

its partial reform trap and lock-in a liberal 

political and economic transformation without 

the discipline and incentives of Western 

integration, but Europe (and the United States) 

is unwilling to deepen cooperation before Russia 

democratizes.5

• Third, both sides have ambiguous stakes in 

deeper cooperation in the foreseeable future. 

Europeans are preoccupied with recent and 

planned enlargements as well as deepening and 

broadening the scope of their own interactions 

within the limits of public acceptance. Russia’s 

fate is of long-term concern, but because even 

energy involves mutual dependencies, it is 

not a pressing priority and might eventually 

resolve itself through gradual convergence to 

European norms. For their part, Russians are 

profoundly ambivalent about integration with 

a Europe which insists on imposing it values. 

Besides concerns about sovereignty are the 

preferences and interests of dominant leaders 

and elites who have a stake in a nontransparent 

powerful Russian state. Moscow prefers equal 

partnership without conditions to special 

relationships or exclusion, but to date has been 

unable to secure this outcome despite a “Russia 

first” tendency among Europe’s great powers. 

Moreover, the Russian government recognizes 

no contradiction in simultaneously pursuing 

European integration and an economic 

community within the Commonwealth of 

Independent States (CIS) with Russia as the 
7

central force, as well as partnerships with rising 

powers in Asia.

The monograph begins by tracing the sources 

of special relationships to bargaining dynamics 

influenced by asymmetries in power, objectives, and 

domestic political pressures. Next, it turns to consider 

a more optimal outcome as demonstrated by the EU 

integration model and the difficulties in extending this 

approach to post-communist countries now outside the 

accession process. The second half of the monograph 

highlights the substantive aspects of the EU-Russia 

relationship, underscoring the practical implications of 

conflicting goals, the sources of Russia’s commitment 

problems and ambivalence about integration.

The Roots of Special Relationships: 

Bargaining Problems.

Russia and Europe have a mutual stake in deeper 

cooperation. The EU is Russia’s most important 

trading partner—remarkably three times larger than 

trade with other post-Soviet (non-EU) states—and the 

administration of President Vladimir Putin, which 

seeks rapid economic modernization and growth, has 

upgraded the place of the EU in Russian priorities. 

Europeans differ broadly in their attitudes towards 

Russia, but the EU recognizes that Russia presents 

“the most important, the most urgent, and the most 

challenging task that the EU faces at the beginning 

of the 21st century.”6

 Besides depending heavily on 

Russian oil and gas supplies, the EU with recent and 

future enlargements will share borders or be in close 

proximity to Russia from the Arctic Circle to the 

Black Sea, an area fraught with tensions and crises. 
8

Perhaps as much to convince themselves, the two 

sides periodically reaffirm a “commitment to ensure 

that EU enlargement will bring the EU and Russia 

closer together in a Europe without dividing lines” for 

durable, peaceful engagement.7

At one level, the European approach appears 

to follow the multidimensional functionalist and 

institutional logic of gradually and indirectly reintegrating Russia into Europe and a stable post-Cold War 

order.8 But what are the driving forces of Europe’s 

long-term, incremental strategy—the pressures of 

interdependence and normative convergence or a 

preference to limit liabilities and a deliberate reluctance 

to institutionalize closer ties? This monograph argues 

that the latter contention better explains the record. 

Russians are embracing illiberal attitudes9 and moving 

closer to the authoritarian model of a one-party state in 

lieu of converging on Western or European norms of 

democracy and human rights.10 Moreover, economic 

interaction is not spilling over into political and 

security integration. Lacking secure property rights 

and rule of law, Russian politics is preoccupied with 

the distribution and redistribution of property. Gaining 

political power is the surest means to capturing the 

state’s resources and phenomenal wealth. The resulting 

competition and corruption militates against the 

consolidation of a repressive authoritarian regime, but 

it also affects foreign policy, for instance by favoring 

outcomes that keep oil prices high, such as prolonging 

the nuclear stand-off with Iran.

Institutionalist and liberal expectations that Russia 

would develop markets and democratic institutions 

rapidly and squarely choose modernization and 

integration into the interdependent, democratic community of nations foundered on the many obstacles 
9

to successful transitions in post-communist countries 

and the former Soviet Union, in particular.11 Theorists 

who predict that the development of shared values 

leads to deep cooperation and harmonious relations 

similarly overestimated the degree to which norms 

in Russia were changing during Perestroika and the 

first post-Soviet decade. Optimistic forecasts, such as 

Mikhail Gorbachev’s expectation that Russia would 

join a common European home, were grounded less in 

the construction of new identities and institutions, let 

alone geopolitical realities, than expressions of wishful 

thinking. Even Russia’s 1992 application to the Council 

of Europe, the European organization imposing the least 

demands on new entrants, was delayed until 1996 when 

it was decided that “integration” and “cooperation” are 

preferable to “isolation” and “confrontation,” despite 

concerns that Russia fell short of European standards 

for democracy, rule of law, and human rights. Only 4 

years later, in April 2000, the Parliamentary Assembly 

suspended Russia’s voting rights in response to reports 

of human rights abuses by Russian forces in Chechnya 

and recommended proceedings to expel Russia from 

the Council.12 Instead of promoting such common 

values as tolerance, mutual respect, and standards for 

safeguarding civil and political rights, Moscow has 

impeded the work of human rights nongovernmental 

organizations and constrained “the Council’s ability to 

promote normative socialization within the country.”13

Meanwhile, after pushing at the end of the Cold War 

for a leading role for the Organization for Security and 

Cooperation in Europe (OSCE), the only Euro-Atlantic 

institution in which Russia has an equal voice, Moscow 

soured on the organization as it exposed electoral fraud 

in post-Communist countries.

Institutional theory may be a poor predictor 

of the EU-Russia special relationship because it 
10

overemphasizes the positive role of institutions to 

deal with problems of international cooperation while 

ignoring cases of costly, noncooperative standoffs or 

“nonserious bargaining, where states ‘commit’ to vague 

agreements for various political purposes.” As James 

Fearon shows, the dynamics of such cases turn on a 

distributional problem about terms for any mutually 

beneficial bargain or concerns about the feasibility 

of monitoring or enforcement. The first problem is 

indicated when we observe “costly standoffs” in 

which the dispute has a war-of-attrition aspect, and 

the parties suffer the costs of holding out for better 

terms instead of striking a deal that would make both 

sides better off. Various possible agreements exist that 

the parties would prefer to no agreement, but they 

disagree in their ranking of them. Since this process 

involves uncertainty and private information, it is not 

uncommon for the two sides to engage in bluffing and 

misrepresentation of their true positions. In the second 

problem, even when the “shadow of the future” is long, 

the parties may think effective monitoring is infeasible, 

and incentives to renege will discourage any serious 

bargaining or lead to weak, preliminary agreements.14

The Russia-EU relationship involves both types of 

problems: (1) recurring costly standoffs in which the 

stronger side (the EU in most issue areas) demonstrates 

it can incur costs longer, such as the confrontation 

over Moscow’s initial refusal to extend the RussiaEU Partnership and Cooperation Agreement (PCA) 

to the 10 new EU members incorporated in 2004; and 

(2) uncertainty about future intentions, resulting in 

the establishment of vague interim arrangements, 

examples of which include the EU Common Strategy 

on Russia (1999-2003) and the plethora of “dialogues” 

(e.g., on political and security matters) and “action 
11

plans” (to cooperate on combating organized crime, 

etc.) agreed upon at summits and other meetings. One 

important test of the bargaining model for special 

relationships is in the energy area, particularly EURussia negotiations over a regulatory regime and 

liberalization of upstream and downstream markets 

and access to pipelines. The area of greatest mutual 

interdependence, energy cooperation, is a case in which 

Europe faces strong divergent national, political, and 

security considerations as well as asymmetries favoring 

Russia. Moscow possesses some energy trump cards 

and has been willing to hold out for a better deal than 

offered to date.

A second test is the development of the Four 

Common Spaces first initiated in 2003 at the St. 

Petersburg EU-Russia summit—a common economic 

space (building on the notion of a Common European 

Economic Space); a common space of freedom, security, 

and justice; a space of cooperation in the field of external 

security; and a space of research and education. To the 

extent that the common spaces remain abstract and 

unfulfilled ideas, with less potential for momentum and 

substance than even Europe’s Neighborhood Policy for 

engaging its regional partners on a nonmember basis, 

this constitutes shallow cooperation characteristic of 

special relationships. Such an outcome likely reflects an 

inability to resolve competing bargaining preferences. 

Given that Russia prefers equal partnership while the 

Europeans emphasize normative integration without 

membership, a shift in emphasis from the PCA to 

substantive progress on the four common spaces could 

signal a shift in the distribution of power, although both 

fit the special relationship model. The same pattern of 

bargaining problems is likely to influence any followon agreement to the PCA which runs through 2007.
12

Partial Integration vs. Full Integration.

Bargaining theory, unlike institutionalist or cooperation theory, recognizes the centrality of power to 

international politics—particularly to the determination 

of who plays the game, writes the rules, and changes 

the payoff matrix. Power allows some actors to secure a 

more favorable distribution of benefits in international 

bargains and to restrict the choice sets of others, even 

to the point of compelling them to accept outcomes 

that may leave them worse off.15 Thus, in contrast to an 

institutional setting in which all members participate 

on equal terms, in a “partial integration” equilibrium, 

the dominant coalition seeks to lower the costs and risks 

of locking in gains at the expense of weaker rivals or 

defeated adversaries.16 Sensitive to the possibility that 

such steps may foster security concerns or revanchism, 

the stronger side prudently refrains from isolating 

potentially disruptive weaker rivals (or former foes), 

easing their adjustment to a diminished position by 

offering compensation or side-payments in the form 

of “special relationships.”17 Such relationships involve 

only their partial integration into the institutions 

controlled by more powerful global actors. As in 

the examples of Russia and NATO and Ukraine and 

NATO, the recipient gains enhanced international 

prestige but otherwise partial integration creates few 

tangible positive incentives while imposing little or no 

conditionality.18

Although power and interest underpin the partial 

integration model, it remains to be explained why the 

dominant coalition keeps its distance instead of taming 

the ambitions of potential challengers by inviting them 

to jump on the bandwagon, and why, apart from 

weakness, an excluded opponent accepts such an 
13

unfavorable bargain. The outsider, for example, could 

shift instead to a position of confrontation which might 

attract the support of other dissatisfied actors and 

result in superior deals. The bargaining dynamics that 

lead to special relationships and a partial integration 

equilibrium as opposed to noncooperation or closer 

associations appear to involve three factors that are 

not present or significant in alternative outcomes. 

The first is a preference by one or both sides to limit 

liabilities, i.e., to avoid making a commitment to deeper 

cooperation because of an ongoing dispute over terms 

or concerns about enforcement. Neither side, however, 

is likely to leave the bargaining table permanently 

because of the second factor—a strong incentive to 

avoid a complete break in relations, given substantial 

interdependence in areas of important mutual interests. 

Third, the convergence on a special relationship is 

likely to be reinforced by a lack of domestic political 

consensus over the benefits or feasibility of an optimal 

bargain and particularly by the presence of strong 

domestic opponents. Although a special relationship 

is suboptimal for long-term security, stability, and 

prosperity, it may be the compromise position when 

leaders face strong domestic opponents who deem 

deeper cooperation or full integration as inimical to 

their interests. Likewise, the prestige gained by both 

sides from finding some common ground, coupled with 

the absence of conditionality allows political leaders 

to create the symbols and some of the trappings of 

partnership while still pursuing contradictory aims. For 

example, Moscow presses to deepen its participation 

in the decisionmaking structures of NATO and the 

EU’s security committees, while refusing to introduce 

democratic controls and greater transparency in its 

own defense establishment. Similarly, Moscow relishes 

the G-8 and EU-Russia summitry that highlights its 
14

leadership role in helping to resolve major international 

disputes, such as over Iran’s nuclear program, while 

increasing sales of surface-to-air missiles to Teheran 

and cutting deals to upgrade Iran’s Soviet-made 

bombers, fighter aircraft, and main battle tanks. Special 

relationships are welcomed, not least because they 

help protect political leaders from pressures to resolve 

major contradictions in their strategies and policies.

The two-level domestic-international interactions 

which underscore the partial integration equilibrium 

differ significantly from the bargaining dynamics 

that have informed the full integration or accession 

model of the EU.19 The central differences are twofold. First, promising candidates for membership 

in the EU demonstrated in many ways their strong 

preference for a “return to Europe” and desire to 

join the EU. In particular, governments signaled the 

seriousness of their commitment to reform and the 

rules of the organization by agreeing to a rigorous 

preaccession process that would involve “tying the 

hands” of current and future rulers.20 Second, the EU 

signaled its willingness to consider new applicants 

according to specified criteria, which was designed 

to reveal whether compliance with the organization’s 

conditionality requirements sufficiently corresponded 

to the applicant’s domestic interests and a shared system 

of norms and understandings perceived as legitimate.21

Acceptable bargains were predicated further on the 

understanding that the long-term economic benefits to 

existing members outweigh the short-term adjustment 

costs of enlargement. The next section describes how 

these factors worked in the successful transformations 

of Central and East European countries and their 

integration into the EU and then turns to a preliminary 

examination of the variations in the EU-Russia relationship.
15

International and Domestic Incentives to Reform: 

The Successful European Integration Model.

When the Cold War ended, ironically the EU was 

focused inward on deepening the terms of interaction 

among its members. European governments had not 

yet created the institutions necessary to develop a 

common foreign and security policy, leaving such 

matters entirely in the hands of the individual member 

governments. Even worse than merely bad timing, as 

one observer recounts, “Few politicians were in any 

mood for grand gestures or financial generosity.” They 

put priority on the reunification of Germany, “and 

the evident political risk and financial expense of that 

unification made many leaders even more reluctant to 

commit themselves to enlarging the EU as a whole.”22

The EU delayed a decision on further enlargement 

another 2 years and then moved slowly on accession 

negotiations with even the three Central European 

front-runners among the Visegrad states.

By comparison, for many Central Europeans, the 

goal of EU membership and the rewards associated 

with it created “a normative focal point for domestic 

adjustment efforts, often in advance of participation 

in existing organizations or western demands.”23

However, lacking a credible EU commitment to enlarge, coupled with specific accession criteria, aspiring 

entrants tended to push for membership while pursuing 

domestic agendas that conformed to existing patterns 

of government and prevailing interests, whether or not 

they were compatible with membership requirements.24

Only when the aspirants were assessed publicly 

against precise criteria and informed of their prospects 

were the international costs of domestic practices such 

as anti-democratic behavior, rent-seeking, corruption, 
16

and ethnic nationalism revealed to electorates which 

generally favored Western integration. This approach 

tended to make pro-Western liberal and moderate 

parties more attractive to voters even when they were 

in the opposition. Still a domestic backlash could not 

be ruled out if domestic groups that stood to lose 

from accession organized and mobilized against 

conditionality and even membership.25

The three Central European countries that most 

quickly transitioned to market democracies and gained 

entry to the EU had “regimes-in-waiting” when the 

communist period ended. Consensus prevailed among 

elites and in society on the goals of “returning to 

Europe” and creating a liberal political and economic 

order.26 In Poland, Hungary, and the Czech Republic 

(the so-called Visegrad countries), even reformed 

communist parties, which transformed themselves into 

social democratic parties and successfully reentered 

politics, embraced economic reform, and the quest to 

join Europe. The former Eastern bloc countries stood 

to gain large tangible and intangible economic, social, 

political, and security benefits from full membership in 

the EU (and NATO). However, their strong motivation 

was counterbalanced by a weak bargaining position in 

relations with a European community reluctant to pay 

the economic and political costs of EU enlargement 

and preoccupied with deepening their own relations. 

Despite the West’s endorsement of a democratic, free, 

and undivided Europe, EU members (prominently 

led by France) resisted challenging powerful domestic 

interests in sectors such as steel, textiles, and agriculture, 

which benefited from subsidies from the EU budget 

and extensive protectionist policies, including against 

East European imports.27

The Visegrad countries persevered in the face 

of blatant protectionism as they redirected trade 
17

from east to west, persistently pressing the EU for 

precise guidance on how to prepare for membership, 

beyond the “anticipatory adaptations” in legislation 

already under way in the early 1990s.28 By 1993, the 

EU acknowledged the long-term geopolitical and 

economic benefits of enlargement, despite continuing 

distributional disputes over short-term economic costs. 

The resulting “Copenhagen criteria” (and further 

refinements) stipulated the political and economic 

terms for the preaccession process, emphasizing 

democratic stability, rule of law, human rights, 

protection of minorities, and a functioning market 

economy. In addition, prospective members were 

expected to accept in full all of the existing rights and 

obligations of the EU, contained in some 95,000 pages 

of the acquis communautaire.

EU conditionality not only helped lock-in liberal 

reforms in the front-runners for accession, which 

already were proving that the simultaneous and rapid 

introduction of competitive politics and markets were 

conducive to economic growth.29 It also signaled 

electorates elsewhere in East Central Europe that 

they would pay a price for illiberal regimes fostering 

aggressive nationalism, economic corruption, rentseeking, and a host of poor governance practices that 

were tolerated when Greece was admitted in 1981 

during the Cold War but would now block future 

accessions.30 Gradually, the EU shifted from what 

Milada Vachudova calls “passive leverage”—the draw 

of the EU’s economic benefits for its members and 

discriminatory treatment of nonmembers—to “active 

leverage” which, in addition to conditionality, involves 

“the deliberate engagement with the domestic politics 

of states applying for membership.”31

By reducing information asymmetries and boosting 

the political fortunes of fledging liberal opposition 
18

groups in the partially reformed East European states, 

the EU demonstrated that merit and the rigorous 

application of EU rules and norms could trump political 

myth-making by illiberal ruling elites who dominated 

their home media markets and pretended to comply 

with EU requirements.32 Thus, the EU and other 

Western institutions used their leverage to ensure free 

and fair elections after 1995 in Romania, Slovakia, and 

Bulgaria; and subsequently when illiberal rulers were 

replaced, Brussels compelled the new governments 

to tackle difficult reforms of the state and economy, 

such as creating an independent judiciary and civil 

service and privatizing the banking sector. Although 

compliance varies across countries with the quality and 

depth of the reforms, it is likely that changes essential 

for good governance “would have been slower, less 

transparent, and more clientalistic absent the EU 

accession process.”33 In short, since the mid-1990s, the 

EU provided the “crucial external push that has altered 

domestic interests in favor of accomplishing some of 

the key tasks of post-communism.”34

In 2004, the EU embraced 10 new members, 8 of 

which were post-communist states. With an average 

gross domestic product (GDP) per capita of roughly 

half of the existing EU 15 members, the 10 new 

members nonetheless faced up to 7 years of barriers on 

labor mobility and could expect to receive substantially 

smaller amounts of aid from the EU budget than prior 

entrants such as Greece, Spain, and Portugal, who 

had succeeded largely in protecting their privileged 

positions. In return for valued long-term economic 

and geopolitical gains, the new members, as a result 

of their weak bargaining position, had to make 

concessions to satisfy the domestic interests and shortterm adjustment costs of the EU-15 members.35 Recent 
19

research also suggests that although the new Central 

European members benefit from trade access, increased 

foreign direct investment,36 and reduced corruption, 

it is likely that higher public expenditures and taxes 

to support social welfare systems and implement EU 

regulations have put downward pressure on growth 

rates since 1999.37

From the standpoint of the West European EU15, rational cost-benefit considerations involving the 

efficiency gains from an enlarged EU, manageable 

adjustment costs for bringing in new members whose 

combined GDP (measured in terms of purchasing power 

parity [PPP]) was less than 10 percent of the EU GDP, 

and concerns about the risks and costs of instability 

if Central Europe was not anchored firmly appear to 

explain why initially reluctant members of the EU-15 

eventually followed Germany and other proponents 

of enlargement.38 Nonetheless, a persistent tension 

exists between the EU as a reluctant expansionist and 

the open door stipulated by Article 49 of the Treaty of 

Maastricht to any European state which seeks to apply 

for entry.

Prospects for Anchoring Post-Communist 

Neighbors outside the EU.

On March 11, 2003, 18 years to the day that Mikhail 

Gorbachev became the last General Secretary of the 

USSR, Brussels issued a new framework for engaging 

with its “new neighbors” along the expanding 

periphery—those countries which the EU did not 

expect would ever join the community. Paradoxically, 

nearly a decade and half after the end of the Cold War, 

EU leaders quietly acknowledged in this document 

that the “incentive to reform created by the prospect of 
20

membership” unarguably had proven to be the EU’s 

most influential foreign policy instrument. However, 

the purpose of Europe’s Neighborhood Policy was 

clearly to discourage new applicants for membership. 

It aimed instead to develop a “zone of prosperity and 

a friendly neighborhood,” what the EU calls a “ring of 

friends,” so as to avoid new dividing lines in Europe. 

In return for concrete progress demonstrating shared 

values and effective implementation of political, 

economic, and institutional reforms, the EU offers its 

neighbors the prospect of a stake in its internal market, 

and, following further integration and liberalization, 

the possibility of “promoting the free movement of 

persons, goods, services, and capital (four freedoms).” 

As then Commissioner for External Relations Chris 

Patten explained, 

Over the past decade, the Union’s most successful foreign 

policy instrument has undeniably been the promise of 

EU membership. This is not sustainable. For the coming 

decade, we need to find new ways to export the stability, 

security and prosperity we have created within the 

enlarged EU. We should begin by agreeing on a clearer 

vision for relations with our neighbours.39

Russia reacted negatively to the EU’s “Wider 

Europe-Neighbourhood” framework, resentful of 

being lumped together with countries with histories 

of nondemocratic governance and poor human rights 

records. Even worse, Moscow felt marginalized as one 

of many Eastern neighbors instead of a power with a 

special role in Europe’s security and stability.40 However, during the 1990s, the Russian government had 

agreed to a puffed-up, earlier variant of this approach 

to selective nonmembers in the form of a Partnership 

and Cooperation Agreement (PCA). As discussed 
21

below, to a large degree, the PCA reflected the EU’s 

market power and Russia’s relative weakness. A decade 

later, Moscow’s position had improved substantially, 

and as a major exporter of hydrocarbons, it gained 

additional leverage from soaring energy prices and 

monopoly control over infrastructure.

The Framework of Relations: Building a Special 

Relationship in Lieu of Russia’s Membership in EU.

The legal basis of the EU-Russia relationship 

remains the Partnership and Cooperation Agreement 

(PCA), signed by President Boris Yeltsin and EU 

leaders at Corfu in 1994, in force since December 1997, 

and due to expire in 2007 or automatically be renewed 

annually under the treaty’s provisions.41 At the time, 

Moscow sought relationships with both the EU and 

the major European powers but had not yet worked 

out a set of coherent objectives or a coordinated 

policy process for developing those relationships.42 By 

comparison, Europeans already had established three 

guiding principles for dealing with post-Soviet Russia: 

(1) to promote Russia’s transformation to a market 

democracy; (2) to make clear that implementation of 

the planned partnership between the EU and Russia 

presupposes the accomplishment of Russia’s political 

and economic reforms; and (3) to gain Russia’s 

commitment to “common values” and a framework of 

Western norms without any expectation of prospective 

membership in the EU (emphasis added). That all 

three were embodied in the agreement testifies to the 

EU’s stronger bargaining position as well as the early 

consensus in Europe on distinguishing future accession 

countries in Central and Eastern Europe from Russia 

and other CIS countries.
22

The post-communist countries in the first group, 

many of whom became EU member states in 2004, 

were offered “Europe Agreements,” which aimed 

to prepare candidate countries for membership 

and clearly specified integration into the European 

Community as the final objective. In contrast, Russia, 

Ukraine, and other former Soviet republics (except the 

Baltic states which were included in the first group) 

similarly were expected to uphold the rule of law and 

human rights and converge with European norms and 

rules, but could only look forward to the establishment 

of partnerships with the EU or else be marginalized on 

the periphery of European affairs.

Beyond supporting Russia’s transformation, the 

aims of the “partnership” specified the promotion 

of trade, including the creation of conditions for the 

establishment of a free trade area and the development 

of a political dialogue to promote “increasing convergence” on “international issues of mutual concern, thus 

increasing security and stability.” The PCA liberalized 

trade on the basis of reciprocal most-favored-nation 

(MFN) access to markets for trade in goods and 

contains provisions for cooperation on competition 

matters, business and investment, and prevention of 

illegal activities. The institutions created by the PCA 

regulate EU-Russia interactions and provide for regular 

meetings at various levels structured to accommodate 

the EU’s rotational presidency and bureaucratic 

operations more than the purposes of the partnership.

The chaotic events in Russia during the 1990s, 

particularly the derailing of reforms and the first 

war in Chechnya not only delayed the agreement’s 

entry into force but also stymied its implementation. 

Russia was among those post-communist countries 

that failed to undertake radical reforms quickly and 
23

comprehensively and fell into a partial reform trap. 

In the polarized politics of the Boris Yeltsin years, the 

Kremlin used the resources of state to win political 

support and this proclivity, together with political 

and administrative lawlessness, piecemeal reform, 

and insider privatizations facilitated rent seeking, 

corruption, and pervasive theft.43 The early big 

winners were concentrated interest groups—typically 

industrial enterprise insiders, tycoons trading natural 

resources, bankers, and local officials—that gained 

substantial rents or profited from the notorious “loans 

for shares” scheme in which Russia’s most valuable 

enterprises were sold in rigged auctions for fire sale 

prices. These economic oligarchs developed a stake 

in “maintaining a partial reform equilibrium” while 

the costs of transformation were spread throughout 

society.44 According to one estimate, eight shareholder 

groups controlled 85 percent of the value of Russia’s 64 

largest privately owned companies by the end of 2001.45

These groups penetrated all parts of the state structure 

to protect and expand their gains. By “capturing the 

state,” they were able to block objectionable policies 

as well as needed structural reforms and efficiency 

gains.46

Electoral backlash through vigorous political 

competition prompts the reforms necessary to escape 

the partial reform trap. However, in Russia, electoral 

politics were not free and fair; political polarization 

stalled progress; and fundamental democratic institutions, including an independent judiciary, private 

property rights and rule of law, which are necessary 

to hold the state and economic oligarchs accountable, 

never took root.47 This toxic mix created uncertainty 

about future political and economic conditions and 

an ongoing war of attrition over policies and their 

implementation.48 In such conditions, it is impossible 
24

for governments to make credible commitments to 

respect property rights or international bargains.49

Meanwhile, European protectionism, trade disputes, and concerns about Russian politics overshadowed strategic issues. Europeans also were preoccupied 

with their own radical internal transformation associated inter alia with the Maastricht Treaty in 1993, 

which provided for monetary integration and a 

common foreign and security policy (CFSP), and the 

Amsterdam Treaty in 1997, which envisioned the 

progressive development of a European Security and 

Defense Policy (ESDP) and an improved capacity to 

cope with challenges such as those posed by conflict in 

the former Yugoslavia.

Dismayed by the negative developments and crises 

in Russia, the EU attempted to give the objectives of the 

PCA new impetus with an internal review of relations 

with Russia embodied in the “Common Strategy,” 

adopted by the European Council in June 1999.50 In lofty 

language, the Common Strategy reiterates Europe’s 

vision for Russia:

A stable, democratic and prosperous Russia, firmly 

anchored in a united Europe free of new dividing lines, 

is essential to lasting peace on the continent [emphasis 

added]. The issues which the whole continent faces 

can be resolved only through ever closer cooperation 

between Russia and the European Union. The EU 

welcomes Russia’s return to its rightful place in the 

European family in a spirit of friendship, cooperation, 

fair accommodation of interests and on the foundations 

of shared values enshrined in the common heritage of 

European civilization.

Such grandiloquent rhetoric and bold ambitions, 

however, masked the absence of a viable European 

strategy connecting desired goals with the necessary 
25

means to realize them. In its place, the document 

outlines some sensible narrower objectives, such as 

promoting cooperation in areas concerning European 

security (including peacekeeping missions within the 

so-called Petersburg tasks), international crime, and 

the environment. However, the Common Strategy 

leaves unresolved the persistent contradiction over 

whether any practical results from partnership can be 

achieved before Russia is transformed, or even if the 

partnership should actively foster domestic reforms in 

Russia as a first priority.

The bulk of the Common Strategy is devoted to 

several pages of detailed instructions and advice for 

the dwindling number of reformers still remaining in 

the Russian government in the late 1990s. Described 

by a European minister as “long and diffuse,” the 

Common Strategy failed to “clearly signal what 

the EU’s specific priorities are in its relations with 

Russia.”51 Such incoherence no doubt reflected the 

start-up difficulties stemming from the launch of 

the CFSP’s new mechanisms as well as the EU’s 

cumbersome bureaucratic process which incorporates 

the disparate input of many member states.52 But at 

root, it demonstrates a lack of political will.

Looking back on the Common Strategy and similar 

pronouncements from Brussels, the EU’s lengthy list of 

recommended reforms seems a pompous substitute for 

a concrete plan to operationalize strong positive and 

negative incentives to anchor Russia. At the time it was 

clear already that Russia’s transformation would not 

be achieved with the kind of technical initiatives and 

financial assistance arranged through the Technical 

Aid to the Commonwealth of Independent States 

(TACIS) and other programs. Europe had honed its 

stick of extensive conditionality requirements and 
26

possessed commanding market power, but in Russia’s 

case (as with other non-Baltic former Soviet republics), 

it refused to proffer the huge stimulus that might have 

made a difference—the promise of accession.

As discussed above, the realistic potential of EU 

accession has a significant influence on the design of 

new political, economic, and regulatory institutions 

in transition countries and the scope of domestic 

adjustment, which in turn affects the dynamics 

supporting successful consolidation. In particular, 

the EU is able to empower reformist politicians by 

rewarding their efforts with aid, trade, and political ties. 

When domestic conditions are favorable, supportive 

external conditions can “create a domino effect.”53

On the other hand, a weak signal for membership 

prospects may reinforce weak domestic incentives 

to reform political and economic structures and vice 

versa, creating a “vicious cycle” of outcomes instead of 

the positive reinforcing “virtuous circle” of reforms.

Because differences in the structure of international 

incentives affect domestic political fortunes, such 

settings are especially conducive to ethnic nationalism 

and politically-inspired opposition. As Paul Kubicek 

observes, EU “membership may be great for the 

country, but would the required political reforms 

be good for the existing leadership?”54 For instance, 

politicians consumed by a struggle to control and 

distribute astronomical rents from high energy 

prices and who engage in excessive patronage and 

more nefarious activities stand to lose from greater 

transparency and secure property rights. Such leaders 

are strongly motivated to mask their political and 

personal interests by appealing to voters on more 

noble grounds of protecting national autonomy and 

sovereignty from the application of “double standards” 
27

and other “unfair” demands.55 Thus in Russia, where 

senior officials simultaneously hold top positions in 

key national firms or reap other financial rewards 

from their positions of authority, warnings abound 

about supposed threats to Russia’s sovereignty from 

foreign multinationals pushing for transparent, stable 

rules for foreign investment in strategic industries 

such as oil and gas. A similar line is evident about 

democratic breakthroughs from “color revolutions” 

in which outsiders working with domestically based 

nongovernment organizations (NGOs) declare the 

government ineffective and supposedly provoke 

internal conflicts which challenge the nation’s security 

or its geopolitical position in regions of vital interest.56

According to the President’s deputy chief of staff 

and chief political strategist, Russia must resist such 

“invasions” by controlling its own leading sectors of 

the economy and thereby “carve out a place in the 

global hierarchy. . . . Our sovereignty and who we are 

in the world’s spider web—spiders or flies—depends 

on this.”57 Likewise, distorted images of outsiders 

provoking political instability during color revolutions 

are largely a convenient justification for additional 

authoritarian controls and repressive measures such 

as the recent backlash in Russia against NGOs and 

legislation constraining their activities.58

However, a strong EU commitment, coupled with 

credible threats to use the stick of conditionality, may 

tilt the balance in favor of reformers and even convince 

Western-oriented voters to change leaders who are 

responsible for regressive policies. This effect assumes 

that liberal reformers already exist in some numbers 

to create a “beachhead” from which democracy can 

be advanced.59 Thus, threats by Brussels to postpone 

consideration of membership in Slovakia under 
28

Vladimir Méciar had a positive effect, exposing the 

emptiness of Méciar’s claims that Brussels resorted 

to double standards. The real cost of supporting a 

government which refused all manner of accountability 

while pretending to work toward the goal of EU 

accession was revealed to Slovak citizens.60 Similarly, 

in Romania, Bulgaria, and especially in Turkey, the 

EU initially proved to be a weak anchor in stimulating 

radical domestic change in the absence of clear 

prospects for membership. However, the authentic 

prospect of membership, for example in Turkey after 

1999, provided a common sense of purpose to an 

inchoate pro-EU coalition and hastened a wave of 

liberal reforms.61

It remains to be seen whether the EU will offer 

encouragement to Ukraine which, like Slovakia, only 

rhetorically espoused a pro-European choice under 

President Leonid Kuchma, while adopting policies that 

undermined the goal of EU membership.62 During the 

Orange Revolution, Viktor Yushchenko emphasized 

a commitment to substantive reforms and appealed 

to Brussels for a strong signal that membership was 

possible, invoking the EU’s 1998 precedent in taking 

a “clear European position that helped the democratic 

forces in Slovakia defeat an authoritarian regime.”63

Russia, although in theory eligible to apply for 

membership as a European state,64 is even more of an 

outlier, not least because of its increasingly authoritarian measures. Strobe Talbott, President Bill Clinton’s 

deputy secretary of state and a distinguished Russia 

expert, considers Russia as “beyond the gravitational 

pull of the EU’s political values and norms.”65 Against one 

set of indicators for successful democratic convergence 

or democracy through use of conditionality,66 Russia 

indeed would fall short on many conditions. These 
29

include the prevalence of nationalist temptations, a 

weak civil society coupled with entrenched elites, no 

readily available sticks or carrots to induce reform, 

ambivalent attitudes towards membership, and 

alternatives to the EU in the form of both “special 

relationships” and countervailing coalitions in the CIS 

and Eurasia of like-minded authoritarian regimes. To 

be sure, international leverage and inducements have 

been absent from the outset because Brussels made 

clear that Russian accession is out of the question.

In 2002, then European Commission President 

Romano Prodi stated publicly that former Soviet 

republics have no place in an enlarged EU. When on 

a visit to Brussels Putin had inquired about potential 

Russian membership, Prodi recounted how he told 

him that Russia is just “too big” to join.67 The EU 

plainly is concerned more with the size of Russia’s 

large, albeit fast shrinking, population (presently 

double the size of Turkey’s current but growing 

population) which would be difficult to absorb, than 

with its vast geographic expanse. Were Russia ever 

to become a serious candidate for membership in the 

EU, institutional changes would be expected in voting 

rights and structural funds to protect existing members’ 

privileges to a large degree. Russia’s nuclear stockpile 

and great power ego are added annoyances, but it is 

unlikely that Russia’s GDP is a disabling factor since it 

is roughly equivalent to the combined GDPs of the 10 

new members and only a fraction of the truly big EU 

output.

It is beyond the scope of this monograph to 

speculate in greater detail about hypothetical Russian 

accession in view of the many obvious impediments 

to further EU enlargement, including concerns over 

financial transfers, voting rights, collective action 
30

problems, the relative distribution of economic gains 

and losses, and enlargement fatigue. Suffice it to 

suggest first that accession is a key element of a viable 

transformation model, even for “hard cases” such as 

Slovakia and Turkey. Second, the EU accession model 

was and perhaps remains an important counterfactual 

alternative for still more challenging cases, such as 

Russia and Ukraine, where illiberal pluralist states have 

degenerated into corrupt oligarchies or competitive 

authoritarian regimes in which elections are rigged, 

information is constrained, NGOs are repressed, and 

partially reformed economies are captured by powerful 

vested interests or ruling “syndicates.”68 There is no 

prior empirical record to estimate the probability of 

successfully dislodging a country caught in the partial 

reform trap. Certainly, Turkey’s experience of halting 

reforms over 2 decades punctuated by the fortuitous 

alignment of internal and international stimuli is 

a reminder that timing matters, and that stagnant 

progress over a long period does not necessarily lead 

to irreversible failure.

At the same time, it should be emphasized that 

in sharp contrast to the positive effects derived from 

anchoring post-communist transition countries in 

Europe, nonmembership partner agreements of the 

sort negotiated with Russia and Ukraine have been 

widely dismissed as being too weak to affect the 

general direction of policy.69 As the European Bank for 

Reconstruction and Development (EBRD) observed, 

“In the absence of prospects for closer integration, EU 

association agreements have not exercised significant 

influence on the reform process in the CIS.”70

After the Orange Revolution, Brussels agreed to a 

10-point plan of “additional measures to further 

strengthen and enrich” the Action Plan negotiated be-
31

tween the EU and the Kuchma regime in 2005 before the 

presidential elections. Although these measures have 

been criticized as a tepid response to the democratic 

breakthrough in Ukraine, one element of the plan 

called for shifting half of total funding available to 

CIS members from the European Investment Bank to 

Ukraine, principally at the expense of Russia, then the 

only CIS country to receive such loans.71 Also notable is 

that the European Neighborhood Policy (ENP) bilateral 

Action Plans, such as the one for Ukraine, are meant 

to “encourage and support . . . further integration 

into European economic and social structures” short 

of recognizing any participant’s aspirations for full 

membership.72 Each Action Plan is designed to meet 

the interests of the participant for deeper cooperation 

in specific areas, although all involve conditionality as 

well as positive support (financial assistance, technical 

dialogue, or transfer of best practice) as progress is 

made. For some, deeper cooperation within ENP would 

involve a stake in the EU’s internal market, moving 

from “‘shallow’ integration to deeper economic and 

regulatory integration.”73

Such steps resemble elements of the European 

Free Trade Association (EFTA) and could lead to 

associations with the EU that resemble Norway’s 

status, recognizing that such nonmembers lack voting 

rights over regulations that govern their behavior and 

they have negotiated multiple separate arrangements 

in diverse issue areas. Norway and other associate nonEU members, of course, were already well-established 

market democracies when such arrangements were 

put in place. Given such noteworthy differences as well 

as the changing dynamics of domestic and regional 

politics, it is premature to predict the potential impact 

of the new ENP Action Plans on the domestic policy 
32

choices of transitional countries such as Ukraine and 

Moldova.

At its own request, Russia is not a participant in 

the ENP. Yet the EU’s Common Strategy and the PCA 

underscore a persistent, unresolved contradiction in 

Europe’s approach—partnership leads to shallow 

agreements which solve some practical problems and 

create an illusion that Russia is not excluded, but there 

is no convincing evidence that a special relationship 

will bring about the desired liberal transformation. 

So long as an accession strategy for Russia is ruled 

out as unwarranted, too costly, and too risky, the EU 

will likely continue to settle for a second-best, limited 

liability solution of special relationships, hoping 

Russia will gradually adapt to European norms while 

avoiding worse outcomes.

Russia’s Approach to Partnership: 

Underlying Commitment Problems.

Russia’s reaction to the EU’s 1999 Common Strategy 

reflected the changed domestic and international 

context which featured culminating political chaos 

associated with the derailing of reforms under Yeltsin, 

deflated hopes for post-Cold War harmony, acrimony 

over NATO’s use of force in the Balkans and expansion 

eastward, and the ascendancy of Yevgenny Primakov 

from the intelligence service to foreign minister and 

then prime minister. Primakov’s anti-Western and 

especially anti-American attitudes and vision of a 

multipolar world were shared widely by vast swaths 

of unreconstructed Soviet-era functionaries still pushing their ideological predispositions and parochial 

interests in the corridors of power, particularly in the 

ministries of foreign affairs and defense. Competition 

over strategic and ideological visions was exacerbated 
33

by the continued absence of strong domestic political 

institutions, rendering Russia’s international commitments as uncertain and lacking in credibility as its 

domestic commitments were to private firms and 

societal groups. However, beyond trade disputes, 

Brussels was not on Russia’s primary radar scope until 

the EU moved decisively in favor of its own expansion 

and began to develop independent foreign and defense 

policies.74

Moscow responded dismissively to the Common 

Strategy with a strategy statement of its own and then 

Prime Minister Putin presented it to the EU in October 

1999.75 Where the European grandees prefer to speak 

of common values and convergence to European 

norms (and leave discussion of their enormous market 

power and use of sanctions to less polite settings), the 

Russians emphasize geopolitics, great power interests, 

and the instrumental bases of cooperation. It follows 

that “The Medium Term Strategy for the Development 

of Relations between the Russian Federation and the 

EU (2000-2010)” sees no need to link the development 

of the EU-Russia “strategic partnership” to democratic 

reforms in Russia or common values. Rather, cooperation should be established on an equal basis and with 

full respect of Russia’s sovereignty. The strategy refers 

to “the objective need to establish a multipolar world” 

and to ensure cooperation in European security to 

“counterbalance, inter alia, the NATO–centrism in 

Europe.” That the Russian statement also mentions 

developing contacts with the West European Union 

(WEU) raises questions about the competence of the 

foreign ministry in the 1990s which should have known 

that the WEU was soon to be disbanded.

Further, the strategy is aimed at “enhancing the role 

and image of Russia in Europe and in the world” and 
34

“mobilizing the economic potential and managerial 

experience of the EU to promote the development of 

a socially oriented market economy” in Russia. The 

strategy also pressed for EU recognition of Russia as 

a market economy, which was subsequently granted 

in 2002. This achievement makes it more difficult for 

Brussels to apply various import restrictions and antidumping procedures against such Russian exports as 

steel, textiles, nuclear fuel, and space technologies. Still, 

the strategy asserted Russia’s prerogative to protect 

key economic sectors, notwithstanding the terms of 

the PCA or bilateral negotiations on accession to the 

WTO which Russia finally concluded with Brussels in 

May 2004.

The Russian government does not anticipate 

accession to the EU during the 10 years under review, 

according to the strategy document, which echoes 

Putin’s studied refusal to rule out Russia’s membership 

as a future option. The strategy paper then goes on to 

insist on Russia’s special status: “As a world power 

situated on two continents, Russia should retain its 

freedom to determine and implement its domestic 

and foreign policies, its status and advantages of a 

Euro-Asian state and the largest country of the CIS, 

[the] independence of its position and activities at 

international organizations.” The document similarly 

foreshadows Russia’s tension between deepening 

cooperation with the West and developing a counter 

“system of interstate political and economic relations 

in the CIS” with Moscow at the center. Such ambiguity 

over preferences is another principal source of the 

suboptimal special relationships and impediment to 

deeper cooperation and integration between Russia 

and the EU.
35

Russia-EU Partnership under Putin: 

Tactical Success and Strategic Stalemate.

Putin’s ascendance to the position of president in 

2000 breathed new life into Russia’s strained relationship with the EU. But it also intensified Russia’s commitment problems and the contradictions in Russia’s 

developing “multi-vector” foreign policy,76 signaling 

continued ambivalence about integration with 

Europe. Putin’s economic modernization program—

which features selective liberal economic reforms, 

the promotion of high growth, national control 

over strategic sectors, particularly energy, and the 

stabilization of Russian politics—was initially coupled 

with a charm offensive abroad and willingness to stand 

with the United States after September 11, 2001 (9/11), 

and with France and Germany against the war in Iraq, 

raising expectations about a fundamental reorientation 

of Russian foreign policy towards the West.77 However, 

at root, Putin’s strategy aims to restore Russia’s 

power and position, not to forge an alliance based on 

common values, as Alexander Vershbow, then the 

U.S. ambassador in Moscow was among the first to 

discern.

President Putin invokes his country’s “Western 

vocation” and refers often to Russia as “a European 

country” which has special relations with Europe’s 

major powers and seeks “to strengthen . . . interaction 

with the EU as a whole.”78 Key government officials, 

and at least one of the potential successors to Putin, 

find it expedient to echo this sense of national identity. 

Thus, First Deputy Prime Minister and Gazprom 

Chairman Dmitri Medvedev stated matter-of-factly at 

a gathering of international business leaders, “Russia 

is a part of Europe and European civilization, and that 
36

is that.”79 Yet the Russian president acknowledged in 

his 2001 address at the German Bundestag that “We 

continue to live in the old system of values. We speak 

of a partnership, but, in reality, we still have not yet 

learnt to trust one another.” In clear German, Putin 

added, “Despite all the sweet talk, we secretly still 

resist.”

In 2001, Russia still was positioned too weakly 

to bargain for better terms in its fledgling special 

relationships with the EU, NATO, and G-8. Frustrated 

by this situation, Putin complained to the German 

parliamentarians:

Despite all the positive things that have been achieved 

over the past decades, we have not yet managed to 

work out an efficient mechanism for cooperation. The 

coordination organs, which have been established so far, 

do not give Russia any real opportunity to participate 

in the preparation of decisions. Nowadays, decisions are 

sometimes made without [consulting] us at all, and then 

we are emphatically asked to approve them.80

In 2002, the Kremlin succeeded in gaining market 

economy status for Russia from both Washington 

and Brussels, but this was largely a political gesture. 

Putin was still unable to press European officials into 

meaningful concessions in other areas, such as over 

Russia’s open transit rights to Kaliningrad, its enclave 

in EU territory.

Moscow expected that improvements in its 

economic and political conditions would translate 

into greater leverage in its dealings with the EU and 

other Western actors. In fact, Russia consistently has 

exceeded growth expectations since the 1998 financial 

crisis, with an average rate slightly above 6.5 percent 

per annum in 1999-2003.81 However, it was large price 

rises in oil and a monopoly grip on gas distribution 
37

to Europe that solidified Moscow’s perception in 2005 

of its strengthened bargaining position as an indispensable energy great power.82 Putin had earlier brought 

greater stability to Russian politics and, using a clear 

majority in the parliament, was able to enact select 

efficiency-enhancing policy changes. However, the 

president’s moves to centralize power in the Kremlin 

and the state and an increase in chekisty (former 

KGB) cronies from St. Petersburg and other siloviki83

supporters from the military and security services84 at 

the expense of private business and civil society raised 

doubts about the credibility of Russia’s commitment to 

market reforms and property rights, let alone to what 

Putin referred to as “managed democracy.”

Political polarization has diminished under 

Putin, but it comes at the price of the parliamentary 

electoral defeat and discrediting of liberals with a proEuropean orientation.85 Meanwhile the centralization 

of power in the Kremlin has led to sharp reversals in 

the level of political openness.86 The assault on Yukos 

and its chairman, Mikhail Khodorkovskii, further 

demonstrated that “Putin wants dynamic capitalist 

development without having to deal with the political 

power of a dynamic capitalist class.”87 In fact, the fusion 

of state and business under Putin, with top officials in the 

Kremlin also holding senior executive posts in leading 

firms, has given new meaning to state capture and led 

to a notable worsening of corruption and racketeering 

in the administrative structure, as well as a decrease 

in transparency.88 The current autocratic rulers in the 

Kremlin, like monopolists, are likely to block socially 

beneficial economic and political reforms when they 

threaten their political power. Absent institutions 

holding them accountable, ruling elites typically are 

unwilling to forego further redistributions of wealth, as 
38

in Russia where high political office is now the surest 

path to phenomenal riches.89

In these circumstances, Europeans have not 

been reticent to raise “questions about Russia’s 

commitment and ability to uphold core universal and 

European values and pursue democratic reforms.” 

Such concerns surface repeatedly and permeated an 

internal assessment of EU-Russia relations presented 

to the Council and European Parliament in February 

2004.90 The communication reiterated the main goal of 

engagement—to “promote a fully functioning rulesbased system in Russia.” It went on to insist that 

the EU “as a whole” (warning against troublesome 

freelancing by leaders of certain member states, such 

as Italy’s President Silvio Berlusconi) “should confirm 

that European values remain the basis for deepening 

relations.” Brussels intended to send another clear 

message to Moscow about what was required to build 

a “strategic partnership.”

Thus, despite a brief period of euphoria after 

September 11, 2001 (9/11) and a spectacular rise in 

economic growth, Russia’s relations with the West and 

the EU in particular have rankled from lack of vision 

and mutual distrust. With Brussels, Moscow has made 

an effort to play its cards with greater skill but still has 

had only mixed luck and nothing remotely equivalent 

to a royal flush. Staking out a firmer bargaining position, 

Russia successfully insisted on separating itself from 

the ENP and asserting its “special” importance in 

relations with the EU. At the St. Petersburg summit in 

May 2003, the EU and Russia agreed to develop their 

plan for Four Common Spaces, and in recent years 

Moscow has pushed hard to get its priorities specified 

on separate road maps for this initiative instead of the 

one action plan envisioned by the EU.
39

The Long and Winding Road to Nebulous 

Common Spaces.

It was hoped that with the Four Common Spaces 

initiative Moscow finally would be able to develop 

more equal relations with Brussels and escape from 

the position of demandeur—with respect to WTO, trade 

disputes, the transit of people and goods to and from 

Kaliningrad, visa requirements for Russians traveling 

within the Schengen zone, extension of the PCA to 

new members, and so on. To this end, Russia has been 

keen to develop the institutional structure of the EURussia relationship and extracted minor concessions 

from Brussels on process and procedural matters. 

For example, in June 2003 the EU-Russia Permanent 

Partnership Council (PPC) was established to replace 

the Cooperation Council whose task was to oversee 

the implementation of the PCA. The PPC is a body at 

the ministerial level which was designed to be flexible 

and permit meetings in different formats as often as 

necessary, bringing together relevant ministers to 

discuss specific issues. To date, PPCs have been held 

in the format of foreign ministers, justice and home 

affairs ministers, and energy ministers. Russia and the 

EU also hold regular biannual summits, and on two 

occasions the EU has been represented by all its heads 

of state and government, not just the usual troika of 

officials from the EU Member State that holds the EU 

Presidency (and possibly the incoming EU Presidency), 

the European Commission, and the EU Council 

Secretariat. Dialogue between the EU and Russia, in 

fact, is now more frequent than between Brussels and 

any other actor.91

With respect to the ESDP, a high priority area 

for Moscow,92 the two sides agreed to frequent 
40

consultations, including monthly meetings between the 

Russian ambassador in Brussels and the EU’s Political 

and Security Committee (COPS) and the assignment 

of a Russian officer as liaison to the EU Military 

Staff in Brussels. Moscow now proposes biweekly 

meetings and also regular sessions on terrorism issues 

and greater participation of the Russian Ministry 

of Defense in partnership activities.93 Although 

discussions in this area are more extensive with Russia 

than with ENP countries, Moscow remains concerned 

about being sidelined on a host of European security 

issues within the EU’s domain. The irony, not lost on 

officials in the corridors of the defense ministry, is 

that Russia’s partnership with NATO is not only more 

institutionalized, as in the Russia-NATO Council, but 

also more advanced with respect to development of 

multiple avenues of cooperation, such as procedures 

for interoperability and joint operations.94 Neither 

Russia nor the EU views the other as a military threat, 

but neither do they see their relationship as a means 

to solve existing security requirements, which further 

decreases the likelihood of deepening cooperation.95

Expanded dialogue thus has proved to be no 

substitute for substantive results, and, as Putin’s 

first term came to a close, there were few notable 

achievements from the EU-Russia partnership to 

trumpet. In a July 2004 speech to Russian diplomats 

at the foreign ministry where anti-Western attitudes 

still run deep, President Putin nonetheless pointedly 

insisted that, after the CIS, “Europe remains our 

traditional priority.” He explained, “The latest wave 

of EU and NATO enlargement has created a new 

geopolitical situation on the continent, and now we 

must not so much adapt to it as, first of all, minimize 

the potential risks and damage to Russia’s economic 
41

security and economic interests, and, second of all, 

find some opportunities here and use them to good 

effect. There is no other option left to us but to build up 

equal cooperation with the EU and the North Atlantic 

Treaty Organization.”96 There is no mistaking Putin’s 

defensive tone or the widespread skepticism he faces 

about achieving tangible results from cooperation with 

an expanding EU.

The lack of significant progress is visible most 

readily in the once vaunted development of the four 

Common Spaces. For example, in the Common Space 

on freedom, security, and justice, Moscow insisted 

on including discussion of visa-free travel within the 

Schengen zone which now prevents Russians from 

traveling freely in the 25 member states of the EU, 

let alone to and from Russia’s Kaliningrad enclave 

which is entirely within the EU. The road map for 

this space agreed to at the Moscow summit in May 

2005 underscores the objective of “building a new 

Europe without dividing lines” and joint agreement 

to examine the “conditions for visa-free travel,” 

but only over the long term.97 Cooperation also is 

envisioned in combating terrorism, international 

crime, and drug trafficking, with mechanisms for 

interagency coordination, although it remains unclear 

how the parties will surmount problems of secrecy and 

bureaucratic corruption in Russia.

At the 2006 Summit in Sochi, the two sides reached 

a limited agreement that made minor changes to the 

rules for issuing visas, simplifying procedures for 

certain categories of citizens on both sides, such as 

students, journalists, businessmen, cultural activists, 

scientists, and athletes. Putin heralded the “new” visa 

regulations as the first step toward eventual visa-free 

travel,98 putting a positive spin on the meeting, just 2 
42

months before Russia’s first hosting of a G-8 summit 

in St. Petersburg. However, such happy talk could 

not mask the usual outcome of shallow cooperation 

or Russia’s concession on the corollary “readmission 

agreement” which commits Moscow to accept back 

any person who illegally enters the EU from Russia.

The road map for the Common Economic Space 

is supposed to build on previously agreed goals 

for the establishment of a single economic space, 

linking it to both Russian membership in the WTO, 

further liberalization of the Russian economy, and 

the application of principles embodied in the PCA 

to economic relations. However, the road map is less 

precise than the PCA about progress toward a free trade 

area and leaves open whose standards—EU norms, 

international or Russian—will govern legislative and 

regulatory convergence. This uncertainty may reflect 

Russia’s preference for equal partnership in lieu of 

EU normative dominance, or it may be a “costly 

standoff” in the bargaining over trade relations. The 

EU’s dominant market power usually ensures that 

its rules prevail in such relationships, as is the case 

in the Action Plans and other arrangements for ENP 

countries. Although still at an elementary stage, those 

arrangements resemble the European Economic Area 

(EEA) which gives non-EU members, such as Norway 

and Iceland, full access to the EU single market in 

return for their implementation of the acquis in most 

areas.

Russian economists already have raised concerns 

about the desirability of adopting all or most of the 

acquis, pointing especially to inflexibilities from 

over-regulation and the high costs of the EU’s social 

welfare norms, which are impediments to economic 

growth.99 Unilateral adoption by Russia of the acquis
43

and integration without membership in the EU would 

mean having no voice in shaping European rules and 

no effective legal protection in conflicts against the 

EU. Such a relationship may work for Norway and 

Switzerland (although former EEA members Austria, 

Finland, and Sweden ultimately opted to apply for 

membership), but it is doubtful that a large power 

sensitive about its position, such as Russia, would 

embrace it willingly.100 Many Russian elites dismiss the 

notion as a nonstarter,101 although President Putin has 

made at least one positive reference to the Norwegian 

model. Given that EU regulations would help lock-in 

improved rules in a number of areas such as competition 

policy and lead to increased foreign direct investment 

(FDI), it is evident that some opposition to nonmember 

integration comes from Russia’s protectionist industrial 

lobbies and the Kremlin. Perhaps as important, there 

are strong sentiments in the Russian political class that 

Brussels should abandon its expectation that Russia 

adopt even a “light” version of EU laws and standards. 

In this view, it is better to use available international or 

jointly negotiated standards as a basis for integration 

wherever possible to bring about open markets and the 

free movement of people, goods, services, and capital 

than to get bogged down by excessively bureaucratic 

plans for “harmonization.”102 The Russian emphasis 

on equality in relations in all aspects of possible 

integration, however, rests on the false assumption 

that a group of rule-governed market democracies 

would ever integrate willingly with an illiberal corrupt 

autocracy caught in a partial reform trap. The default 

compromises, given such contradictions, therefore 

will likely remain within the existing pattern of special 

relationships.

Of all the Common Spaces, Russians and Europeans 

alike have viewed the potential for equal partnership as 
44

most promising within the context of External Security 

or ESDP. The two sides have definable common security 

interests with respect to terrorism and weapons of 

mass destruction (WMD) nonproliferation, and also, 

from the Russian perspective, security has the added 

benefit of being an area of comparative advantage.103

Underappreciated, however, was the extent to which 

Russia’s underlying commitment problems would 

undermine progress even in an area where Europe 

could benefit from Russian capabilities. Thus, instead 

of taking up a Russian offer to fill Europe’s need for a 

strategic airlift capability, Europeans opted to develop 

their own new aircraft. Similarly, Russia may be invited 

to participate in EU crisis management operations and 

be involved in managing the mission if it contributes 

significant capabilities. However, Foreign Minister 

Sergei Lavrov complains that the “old approach” in 

which the EU leads and Russia follows is not suitable 

for an equal strategic partnership. Moscow appreciates 

that the EU may assume a leading role on many 

European security issues but wants to share the driver’s 

seat, according to Lavrov, proposing operations that 

will be implemented jointly.104 Russia is motivated 

partly by an interest in preventing another Kosovo or 

a future EU intervention in border areas where there is 

considerable friction between the two sides. One such 

hot-spot is Moldova, where the EU in November 2003 

undercut a Russian initiative to end the dispute over 

Transdnistria on terms that legitimated a long-term 

Russian military presence in the region.

The road map for the Common Space of External 

Security notes that the two parties intend to cooperate 

to promote the resolution of so-called frozen conflicts 

(e.g., in Transdnistria, Abkhazia, South Ossetia, 

and Nagorno-Karabakh), in line with UN and 
45

OSCE commitments, given Russia’s sensitivity to 

retrenchment from the former Soviet space. Although 

Russia fears more situations like the 2004 Orange 

Revolution and exaggerates Western involvement, 

Moscow is coming to appreciate that not all proWestern, pro-EU orientations are necessarily antiRussian.105 What is unclear is whether Moscow sees 

sufficient common interests and is willing to share the 

driver’s seat with Brussels in settling conflicts along 

their common frontier.106 Russia has been a party to 

these post-Soviet disputes which involve sensitive 

questions about sovereignty, separatist groups, and 

Russia’s future influence. In May 2006, Russia agreed to 

new international negotiations on turning the Russian 

“peacekeeping” contingent in Moldova into an authentic international operation including personnel from 

EU members and elements of the Polish-Ukrainian joint 

peacekeeping battalion. But Moscow has yet to give up 

its insistence on a prior political settlement between 

Chisinau and Tiraspol, which is a cover for legitimizing 

Moscow’s role as meddler in the conflict and ensuring 

Russian military presence indefinitely.107 Meanwhile 

in June the OSCE Chairman demanded that Russia 

finally honor the 1999 OSCE accord and withdraw 

its troops from the territories of both Moldova and 

Georgia, even offering to pay for Russia’s withdrawal 

from Transdnistria. The Russian Foreign Ministry, 

however, has shifted to a harder line, announcing that 

the breakaway entities in these former Soviet republics 

are entitled to self-determination, not unlike Kosovo 

and Montenegro, despite the challenge to international 

principles of sovereignty and territorial integrity.108 If 

Moscow is capitalizing on its stronger position to lay 

claim to exclusive prerogatives in its borderlands, this 

policy will seriously strain Russia’s special relationship 

with the EU.
46

With the admission of Romania to the EU in 2007 and 

the expansion of ENP programs, such developments 

will test whether Brussels has sufficient political will 

and strategic vision to promote settlements of frozen 

conflicts which reflect the values and interests that 

it wants to project in the new border areas it shares 

with Russia. It is premature to predict with confidence 

whether Europe and Russia will emphasize competing 

stakes in their common neighborhood, let problems 

fester, or find common ground to develop workable 

solutions. The “special relationship” equilibrium 

suggests the probability of continued stalemate or 

limited and shallow agreements, but, understandably, 

this is not how political leaders prefer to characterize 

the “special” nature and importance of this partnership 

or its achievements.

Taking 2005 as an important turning point for 

Russia’s role in the world arena (and a new high 

point for recent oil prices), government officials in the 

Putin administration were prone to exaggerate the 

achievements and significance of the 15th EU-Russia 

summit held in Moscow that May and the development 

of the road maps for the Four Common Spaces. Foreign 

Minister Lavrov boasted of the changed conditions in 

which Russia and the EU negotiated, insisting that 

Russia will no longer condescend to being “an object 

of the EU’s policy.” As late as the Russia-EU summit 

in February 1999, Lavrov conceded, “the entire agenda 

was . . . interspersed with issues concerning measures 

to stabilize the economic and social conditions in 

Russia, international assistance to these measures, the 

maintenance of trade dynamics, and the attraction 

of direct investment, technical assistance, and 

humanitarian aid.” By comparison, “if we compare 

the February 1999 agenda with the themes of the two 
47

summit meetings which took place this year [in 2005], 

then, of course, striking changes have occurred.”109

The Russian Foreign Minister could reasonably point 

to a strengthening of Russia’s economic conditions and 

its growing influence on energy matters (discussed 

below). At the October 2005 EU-Russia Summit held 

in London, President Putin underscored Russia’s new 

confidence, given sustained high economic growth and 

dominance in energy. He recalled with gratitude how 

serious European politicians had not “humiliated” 

Russia when it suffered from economic decline and 

weak state capacity, asserting that Moscow would 

reciprocate now that “our possibilities have increased 

considerably.” But he underscored that the dialog and 

partnership would now be “equal.”110

Thus, bowing to Moscow’s insistence, the EU 

and Russia launched in March 2005 a new round of 

consultations which was tasked with examining 

human rights not only in Russia, including Chechnya, 

but also in the EU, focusing on minorities, in particular 

Russian-speaking minorities living in the Baltic States. 

In line with Moscow’s more assertive stance, Russia 

no longer would act as if the admission of post-Soviet 

countries to the EU and NATO signified that they were 

no longer an area of Russian national interest. The 

Baltic states, in particular, would be targeted as areas 

of concern on issues such as transit or the status of the 

Russian language and Russian community.111 To the 

extent that Moscow could successfully tilt the agenda 

for discussions with the EU in favor of such issues, it 

expected to gain an advantage in the distribution of 

benefits from the relationship. That Russia’s focus 

primarily was instrumental cannot be doubted, given 

its own record of double standards on human rights 

issues. Moreover, since the 1990s, Russia actively 
48

had engaged in economic penetration and pursued 

partners and influence in Central and Eastern Europe, 

especially exploiting energy dependent, indebted weak 

links, such as Slovakia under Meciar, while ignoring 

Western and international criticism of Slovakia’s 

discriminatory policies toward its large Hungarian 

and Roma minorities.112

It would be an exaggeration to claim that progress 

on the road maps had reached a high point or that they 

clearly indicate where the EU and Russia are heading, 

let alone whether these indistinct destinations will 

ever be reached. Prime Minister Tony Blair engaged 

in diplomatic hyperbole at the conclusion of the EURussia summit in London in 2005 when he speculated 

that “the new institutional arrangements that will 

supersede the present Partnership and Cooperation 

Agreement are likely to see a significant institutional 

strengthening of the relationship between Europe and 

Russia for the future.”113 More accurately, as one analyst 

concluded, the EU has a “well-identified corpus of law, 

norms and values. But it does not have a well-defined 

model for exporting these beyond suggesting weak and 

fuzzy derivatives of the enlargement process. . . .”114

This is the dilemma of special relationships; they 

tend to produce second-best or shallow preliminary 

agreements. Not even growing economic and energy 

interdependence is encouraging Brussels or Moscow 

to rethink the current paradigm in favor of a deeper 

commitment to more substantial arrangements.

Economic Asymmetries and Energy 

Interdependence.

Russia and the EU are very unequal partners and 

large economic asymmetries create an imbalance of 

power which greatly weakens Russia’s bargaining 
49

position in every area except energy, where there is 

mutual interdependence and growing tensions. The EU 

population is now over 457 million after enlargement 

(EU-25) compared to less than 143 million Russians, 

a number which is declining steadily.115 Russia’s real 

GDP (PPP) is only 12 percent of the EU total in 2004 

(up from 10.5 percent in 2001) and only 6 percent larger 

than that of the 10 new members (EU-10) combined. 

The enlarged Europe is Russia’s main trading partner, 

absorbing 50 percent of Russia’s exports. However, 

Russia is a relatively small trading partner for the EU, 

accounting for only about 5 percent of total EU foreign 

trade, just ahead of the level of EU transactions with 

Norway. EU-Russia trade more than doubled between 

1995 and 2003 but again the structure of trade is 

unbalanced. In 2004, energy and fuels accounted for 

about 59 percent of Russian exports to the EU while 

Europe exports mostly manufactured goods to Russia 

(see Table 1 for data and comparisons with recent 

[Poland], new [Romania and Bulgaria], and aspiring 

[Turkey and Ukraine] EU members).116

With surging energy prices but stagnant domestic 

production, Russia seeks to create economic and political advantages by encouraging greater competition 

among buyers for Russian energy and higher European 

dependencies on Russia as its principal supplier of gas. 

At present, Europe relies on Russia for 30 percent of 

its oil imports (or 25 percent of oil consumption) and 

50 percent of its natural gas imports (or 25 percent of 

gas consumption), including gas from Central Asia 

sent through Russian pipelines (see Figures 1, 2, and 

3). Overall, members of the EU import 50 percent of 

total energy supplies, and forecasts suggest imports 

will rise to 70 percent and natural gas consumption to 

80 percent by 2030.
50

Population

(mil)

GDP US$

Billions

GDP/

capita

US$

GDP 

with PPP 

Billions

3DP/capita 

with PPP 

US$

GDP 

percentage 

of 

agriculture

Russia 142.8* 581.8 4,086.6 1,449.2 10,179.5 5*

Poland 38.2 242.2 6,344.0 475.4 12,451.0 3.07

Turkey 70.7 302.6 4,286.2 529.6 7,503.0 11.9

Ukraine 48.0* 65.0 13,65.7 312.1 6,554.3 13.66

Romania 21.7 71.3 3,206.6 170.7 7,641.5 12.84

Bulgaria 7.8 23.8 3,056.4 66.1 8,499.8 10

EU-25 457.2 12,864.0* 28,136.0* 12,111.0* 26,488.0* 2.2*

EU-15 383.0 12,279.0* 32,019.0* 11,104.0* 28,955.0*

EU-10 74.3 585.0* 7,938.0* 1,007.0* 13,653.0*

* From 

World 

Bank.org

* From 

www.

eiu.com 

Country 

Forecast

* From 

www.

eiu.com 

Country 

Forecast

* From 

www.

eiu.com

Country 

Forecast

* From 

www.

eiu.com 

Country 

Forecast

* From 

CIA World 

Factbook

(2005 

estimate)

Source: Population from Eurostat

GDP, GDP/capita, GDP with PPP, and GDP/capita with PPP 

from IMF’s World Economic Outlook Database

GDP% agriculture from WorldBank.org

Table 1. Comparative Economic Data for Current, 

New and Potential EU Members.

Russia Energy sector contribution to GDP approximately 25%

Oil Exports to the EU-25 63% of oil exported

Gas exports to the EU-25 65% of gas exported

EU-25 Oil Exports from Russia 30%

Gas exports 50%

Source: European Commission, 2004.

Figure 1. EU-Russia Energy Relations.
51

Russia (30%)

Other (34%)

Norway (18%)

Saudi Arabia (10%)

Libya (8%)

Russia (50%)

Algeria (23%)

Norway (22%)

Others (5%)

Figure 2. EU-25 Energy Imports: Origins.
52

Source: U.S. Department of Energy (DOE), Energy Information 

Administration (EIA), Country Analysis Briefs, Russia, “Natural 

Gas,” January 2006, available at www.eia.doe.gov/emeu/cabs/Russia/

NaturalGas.html.

Figure 3. Existing and Planned Natural Gas 

Pipelines to Europe.

Unlike oil, the market in natural gas depends 

more on long-term supply agreements, such as those 

between the energy-poor but technology/capital-rich 

West European countries and the energy-rich but 

technology/capital-constrained economies of Russia 

and Central Asia. In the 1990s the EU attempted to 

reconcile the contradictions between competitive 

markets and long-term producer-consumer supply 

agreements with the Energy Charter Treaty which aims 
53

to provide certainty and protection for energy trade, 

transit, and investment, and open Russia’s domestic 

energy market to competition, reflecting Europe’s stake 

in securing reliable supplies on favorable commercial 

conditions.117 Moscow has refused to ratify the charter, 

however, insisting that its unequal terms favor energy 

consumers over suppliers and that “energy security” 

should be defined not only in terms of supply but also 

as security of demand and acceptable prices for energy 

suppliers.118

Likewise Russia remains unwilling to agree to 

greater transparency and nondiscriminatory rules for 

all participants. Despite President Putin’s assurances 

at the May 2006 EU-Russia Summit in Sochi that 

Moscow is prepared to allow Europeans access to the 

Russian economy’s “holiest of holies, the energy area,” 

if they take “reciprocal steps,” any transit protocol 

on pipelines is likely to be limited or unreachable, 

given Moscow’s aversion to relinquishing its huge 

advantages from national ownership or command over 

the dispatch, transport, and storage infrastructure for 

natural gas.119 Moreover, given huge price differentials, 

Gazprom’s control over pipeline access and monopoly 

on CIS exports adds rents to its market power as well 

as an incentive to discriminate among independent 

producers. For example, Turkmenistan sells gas 

to Russia at the cut-rate price of $50 per 1,000 cubic 

meters and initially proposed only a $10 increase over 

the 25-year life of the Turkmenistan-Russia gas supply 

agreement, signed in 2003.120 More recently, however, 

Turkmenistan and Russia have been in dispute over 

the pricing of gas, leading to a complete halt in natural 

gas supplies in 2004 and Turkmenistan’s insistence 

on a price system more in line with the resale value of 

natural gas in European markets.121
54

Despite its principled approach to the energy charter, 

Europe’s willingness to deregulate and liberalize its 

energy market, let alone forge an integrated EU policy, 

is problematic. Some countries, such as France, prefer to 

protect national energy firms from competition, while 

Germany leans toward negotiating separate deals with 

Gazprom, including a direct supply of Russian gas 

from the construction of a 1,200 km undersea Baltic 

pipeline system, bypassing existing transit routes 

through Ukraine and Poland.122 EU countries vary 

greatly in levels of dependency on Russian energy, 

with the Central Europeans, Baltic states, and Finland 

among the most heavily dependent on imported 

gas (see Table 2). For example, Finland imports 100 

percent of its natural gas from Russia. Although the 

share of natural gas is only about 10 percent of the total 

energy consumption, Finland also depends on Russia 

for 70 percent of its oil and coal imports. Altogether, 70 

percent of Finnish energy imports comes from Russia 

which in 2004 translated into 50 percent of total energy 

use. Poland imports 58 percent of its natural gas from 

Russia, or 13 percent of consumption; 97 percent of its 

crude oil, accounting for 24 percent of consumption; 

making domestically produced coal the largest source 

of Poland’s energy needs, accounting for around 60 

percent of consumption.123 By comparison, Germany 

gets about one-third of its imported oil (37 percent of 

its consumption) and 40 percent of its gas requirements 

(23 percent of its consumption) from Russia, while 

several countries, including Spain, Portugal, Sweden, 

and Norway do not import any gas from Russia.124
55

Major European Recipients of Russian Gas Exports, 2004.

1200

1000

800

600

400

200

0

Imports (bof/year)

top figure is % of total gas imports

Country

Germany

Italy

Turkey

France

Hungary

Finland

Slovakia

Poland

Czech Rep.

Austria

Bulgaria

Romania

Fmr. Yugoslavia

Greece

Switzerland

44%

29%

65% 26%

72%

100% 100% 60% 82% 63% 94% 24%

92%

17%

Source: U.S. Department of Energy (DOE), Energy Information 

Administration (EIA), Country Analysis Briefs, Russia, “Natural 

Gas,” January 2006; BP (2005), CIS and E. European Databook, 

2005.

Table 2.

In these varied conditions, the collective good 

has given way to national solutions, particularly the 

interests of the large European gas importers, such as 

Germany and Italy. When the North European Gas 

Pipeline was initiated by Germany, it was welcomed 

by the EU and much of Western Europe which faced 

falling production in Norway and Great Britain. As 

much as it affords Old Europe an alternate source of 

supply, Russia’s temporary shut-off in January 2006 

of gas transiting through Ukraine over a price dispute 

set off alarm bells. This dispute revealed the risk that 

commercial or political differences also might prompt 

Russia to block energy supplied directly to the West 

and not just indirectly as a result of clashes with 

transit countries, despite years of Soviet and Russian 
56

reliability.125 Unlike previous supply disruptions 

affecting Ukraine, Moldova, and the Baltic states, 

major Western customers such as Germany were 

affected during the cold winter of 2006 by the decrease 

in pressure in their pipelines. Europe’s dependency 

suddenly became a security concern as many countries 

learned the hard way that, as of 2005, 73 percent of 

Russian natural gas began to be piped to Central 

and Western Europe (with the exception of Finland) 

through Ukraine. Moreover, the Baltic Sea pipeline 

to Germany, which is scheduled for completion in 

2010, will reduce this volume by less than 10 percent; 

Ukrainian pipelines will still carry 66 percent of Russia’s 

gas exports to Europe.126 It is an open question whether 

Putin and some members of his administration now 

appreciate the shortsightedness of Gazprom’s cutoff to 

Ukraine or were deliberately signaling Europeans that 

Moscow has coercive power and wants to renegotiate 

the terms of its relationships. In either case, nothing 

better illustrates Moscow’s commitment problem 

in political and economic affairs, especially coming 

not long after the trial and sentencing of Yukos CEO 

Mikhail Khodorkovskii.

European concerns about Moscow’s coercive 

handling of the Ukrainian crisis are complicated by 

that country’s corruption, its profligate use of energy 

and frequent payment arrears, and recent failure to 

open and reform the energy sector, not to mention the 

irony of Russia and former Soviet republics in Central 

Asia subsidizing the independence of post-Soviet states 

with cheap energy for more than a decade.127 What the 

Ukrainian gas crisis underscores is that Brussels lacks 

not only a unified energy policy but also a serious strategy for dealing with front-line states such as Moldova 

and Ukraine which, despite the Orange Revolution, 
57

remains captured to a large degree by Russian energy 

interests and vulnerable to exploitation and bullying 

by Russia. Corrupt government and business practices 

long favored Russian firms. As a result, 80 percent of 

refining capacity in Ukraine is owned by Russia.

At a transatlantic conference in late April 2006, 

European Commission President Jose Manuel Barroso 

diplomatically highlighted such concerns without 

explicitly mentioning Russia or Brussels’ long-standing 

neglect of the problem. “We are seeing more frequently 

the use of energy resources as an instrument of political 

coercion,” Barroso said, just days before Vice President 

Dick Cheney’s more blunt comments on the same 

issue.128 Subsequently, Viktor Chernomyrdin, Russia’s 

former Gazprom chief, Yeltsin’s prime minister, 

and now Russian ambassador to Ukraine, affirmed 

that “Where there are bad political relations, good 

economic [affairs] just don’t happen.” Yushchenko’s 

pro-Western stance, and particularly Kyiv’s public 

intention to seek NATO membership, have harmed 

relations with Moscow, according to Chernomyrdin, 

who maintained that “politics and economics are, 

unfortunately, inseparable.”129

 In its most recent Green Paper on Energy, issued in 

March 2006, the European Commission acknowledges 

the need to take additional measures beyond the ENP 

and Action Plans to create a common regulatory space 

around Europe and a predictable and transparent 

market, as well as “security of supply, for the EU and 

its neighbours.”130 The EU and Ukraine agreed in a 

memorandum of understanding at their December 

2005 Summit that Kyiv will “progressively align 

with EU energy legislation and rules, and gradually 

integrate with the EU energy market, as foreseen in the 

ENP Action Plan for Ukraine.” The Annex to the Green 
58

Paper further underlines the particular vulnerability 

of Moldova, “not only to unilateral actions from a 

party with monopoly status in the energy area, but 

also to steep and sudden increases in the pricing of 

energy.” Given that Moldova is also a transit country 

for Russian gas to Romania, Greece, and Turkey, 

and to the Balkans, Brussels is pursuing an agenda 

for cooperation on energy issues with Chisinau as 

part of its ENP action plan.131 Such tepid first steps, 

however, will mean little if they are not followed 

with concrete actions to ensure transparency and 

accountability in East European energy deals. Europe’s 

vulnerabilities will only multiply if Russia’s quest for 

unconstrained monopolistic power is unchecked by 

international rules and market competition. EU Energy 

Commissioner Andris Piebalgs, who is from Latvia, 

readily appreciates the need for “real coordination” 

and “pro-active policy” on securing and diversifying 

gas supplies.132 But it remains to be seen whether the 

EU has sufficient political will to pursue its collective 

interests, including those of its most vulnerable new 

members in Central Europe and the Baltic states, let 

alone to recognize that supporting Ukraine’s European 

aspirations and reforms in other borderland countries 

could also promote Europe’s energy security.

Also troubling for Europeans are the periodic 

threats by Gazprom to divert supplies to China and 

elsewhere as partial retaliation for being blocked from 

acquiring European energy assets and the move by the 

Kremlin to break production sharing agreements with 

Western energy companies for oil and gas extraction 

in Eastern Russia. Moscow’s new policy requires that 

the government retain controlling rights of at least 50 

percent for strategic industries such as energy and 

mineral resources. Thus, Gazprom decided to develop 
59

the Shtokman field independently and redirect a larger 

percentage of the gas to Europe, although Putin did not 

rule out the possibility of foreign firms participating in 

development and partial liquefication of gas for other 

markets.133 Russia still seeks and desperately needs 

Western investment in energy projects, preferring 

asset swapping deals similar to those with German 

firms in the North Sea Gas Pipeline project, but it is 

pressing harder for reciprocal rights to acquire utilities, 

pipelines, natural-gas facilities and other infrastructure 

in Europe and the United States. The risk of allowing 

Moscow a bigger foothold in the EU distribution 

system is that Gazprom’s suppliers will not invest 

in alternative sources or transit means to meet rising 

demand, and thereby draw European countries deeper 

into Russia’s oil and gas orbit.

At the same time, Moscow’s bluster on new markets 

and its supposed superior bargaining position must 

be counterbalanced by Gazprom’s critical reliance on 

current European profits. Sales of Russian raw materials 

to the EU provide needed foreign currency, about 25 

percent of GDP and nearly 50 percent of the Russian 

federal budget. Gazprom itself sells only 30 percent of 

its production to Europe, reserving about 70 percent 

for Russia, but depends on the European market for 

70 percent of its earnings because domestic prices are 

only 15-20 percent of the export price to Europe.134

Probably the greatest risk to Europe and corresponding incentive to pursue energy diversification more 

vigorously is the very real prospect that Russian 

capacity will be unable to meet Europe’s growing 

demand. Russia’s principal resource curse is that it 

lacks adequate resources for a country bent more on 

state control and redistribution of wealth than much 

needed reforms and investment.135 The Russian 
60

Energy Strategy to 2020 issued in 2003 only foresees an 

increase in total gas exports of some 50 million tons of 

oil equivalent between the years 2000 and 2020. These 

additional 50 million tons are not only for the EU which 

is forecasted to need an additional 200 million tons of 

oil equivalent by 2020. Moreover, the Russian strategy, 

which underscores problems of aging capital stock, 

inefficient equipment, and lack of modern technology, 

depends on significant investments of about $200 

billion.136 The International Energy Agency projects 

that on average about $11 billion per year is needed 

to ensure adequate export and domestic supplies, 

but that this is 20 percent more than current (2003) 

investment.137

Russia possesses 27 percent of the world’s known 

gas reserves as well as vast oil fields. It is the world’s 

largest exporter of natural gas and second-largest 

exporter of oil, after Saudi Arabia. However, after 

declining during the 1990s, domestic gas output is 

suffering from under-investment in infrastructure and 

new fields and is leveling off or rising only slightly. 

The Russian gas industry, dominated by the statecontrolled Gazprom, is by most measures Russia’s 

least reformed and perhaps most inefficient sector. 

Its labor unit costs were more than double the levels 

of 1997 and despite a drop of around 20 percent in 

labor productivity, wages which were four times 

higher than the overall industrial average before the 

1998 crisis rose much faster afterwards. In 2000-04, 

industrial output rose by about 40 percent, crude 

oil output rose by 50 percent, while gas production 

stagnated and even had a slightly negative impact 

on Russia’s GDP growth (1999-2004).138 As a result, 

Russia depends more on increasing production from 

independent producers and cheaper foreign suppliers, 
61

such as Kazakhstan, Turkmenistan, and Azerbaijan, to 

meet its expanding commitments.139 As already noted, 

Gazprom extracts high rents from these arrangements 

and is determined to be the monopsonist buyer in parts 

of Central Asia, locking in long-term agreements with 

Turk­menistan and Uzbekistan and reselling the gas 

to Europe. However, Moscow increasingly resembles 

the Sorcerer’s Apprentice, promising more gas exports 

than it realistically can deliver. At a summit in Beijing 

in March 2006, President Putin promised 60-80 billion 

cubic feet of gas to China and the Asia-Pacific region 

as early as 2011 through pipelines that have yet to be 

built.140 Putin and Gazprom subsequently reassured 

Europe of secure supplies if Russia is allowed a 

foothold in downstream infrastructure. Moscow is 

similarly overcommitted on oil, agreeing in 2005 

to build a pipeline to Nakhodka, on the Pacific, to 

supply multiple customers, but then in March Putin 

announced an extremely costly branch line also 

would go to China. Energy experts warn that $70 oil 

prices encourage governments to act dysfunctionally, 

such as by blocking FDI or building uneconomical 

pipelines.141

Europe’s energy situation also will be affected 

negatively by the fact that Russia, like Ukraine, is 

among the most energy inefficient economies in the 

world with respect to both households and firms and 

has significant transportation costs, given its large 

territory. Russia already is the world’s third largest 

consumer of energy, so continued domestic economic 

growth is likely to add to the pressures on available 

supply. Russia is the second largest gas user, after the 

United States, despite an economy 20 times smaller, 

and energy use per unit of output in manufacturing 

is twice the rate of Western Europe. The Russian 
62

economy uses about 500 million tons of hydrocarbons 

(oil and gas converted into oil equivalent) per year, 

which amounts to the total annual production of Saudi 

Arabia. Not surprisingly, Russia only exports about 

the equivalent of three tons of oil per capita annually 

which makes it unlikely that Russia will have sufficient 

resources for all of its economic modernization projects, 

not to mention the greed of state officials.142 Meanwhile 

only independent Russian energy companies are 

performing well while state enterprises like Gazprom 

are stagnating and running high debts. Instead of using 

its energy wealth to invest and restructure priority 

sectors of the economy, the government engages in 

further encroachments, enriching the new oligarchs 

in the Kremlin and their cronies while leaving Russia 

vulnerable to an economic crash when energy prices 

finally come down. Without dramatic increases in 

foreign investment to develop new fields, Russia 

could be forced to raise domestic prices considerably 

higher than planned, which will dampen what Russian 

energy experts consider a “too high” dependence on 

natural gas, but also possibly cause disruptions to 

manufacturing.143

Walking this tightrope adds economic incentives to 

Moscow’s geopolitical agenda for cutting subsidized 

gas (in Ukraine on the level of $3 to $5 billion per 

year) and adopting across the board gas price rises to 

CIS countries, including Belarus. Thus Putin lectured 

visiting media executives in June 2006 that the West 

should pick up the cost if it wants Ukraine to pay belowmarket prices for its gas. “Why should consumers in 

Germany pay $250 per thousand cubic meters and 

those in Ukraine $50?” Insisting that Russia no longer 

would provide such subsidies, Putin asserted, “If you 

[the West] want to give Ukraine that kind of gift, then 

pay for it.”144
63

For the EU, there is no alternative to pursuing 

energy diversification as a hedge against the worst 

case and a prudent supplement to Russian imports. 

Europe must heed Winston Churchill’s strategy as 

First Lord of the Admiralty for ensuring oil supplies 

to the Royal Navy after shifting its power source from 

coal to oil: “Safety and certainty in oil,” he insisted, 

“lie in variety and variety alone.”145 Even if Europeans 

rethink their aversion to nuclear energy, which seems 

improbable outside of a few countries like France 

for the present, needed future energy resources will 

require greater external capacity, particularly given 

current limitations on renewable energy. According 

to the EU’s Green Paper, “The challenge is to ensure 

a continued high level of diversification of supply.” It 

lists several options although a more critical assessment 

is necessary. With respect to natural gas, the choices 

include North Africa, which cannot adequately meet 

Europe’s demand; liquefied natural gas (LNG), which 

is expanding notably but is expensive and requires 

large investments in infrastructure and transport;146 and 

Iran, which has the world’s second largest gas reserves 

after Russia but is politically more dicey, currently on 

hold as a result of the nuclear dispute, and already has 

large commitments to China and India. Nonetheless 

EU leaders look to a quick start to the Nabucco pipeline 

which will cross Turkey, Bulgaria, Romania, Hungary, 

and Austria, and make it possible to transport gas from 

the Caspian region, Iran, and the Middle East to the 

European market with a capacity of up to 31 bcm by 

2020.147 Together with the United States, there is also 

now EU support for a Trans-Caspian pipeline to free 

Central Asian energy from Russian domination and to 

promote a more competitive and transparent market 

while reducing Moscow’s commercial and political 

leverage.
64

The more difficult challenge for the EU is to 

recognize that its “special relationship” with Russia 

legitimates precisely the sort of myopic, bilateral deals 

best illustrated by the German-Russian energy cartel 

while fostering Moscow’s commercial and political 

leverage at the expense of open markets and liberal 

reforms. Resisting the external checks and balances 

and regulations associated with large international 

investments, the Putin administration deepens the 

confluence of political and business interests in Russia 

with its policy of renationalizations in important 

sectors of the economy. The grabs by the Kremlin 

are continuing beyond the destruction of Yukos and 

the government’s acquisition of a 51 percent stake in 

Gazprom.148 Russia’s extraordinary concentration of 

wealth and power fuels corruption and unchecked 

greed while stalling economic reform and solidifying 

authoritarian tendencies. According to a former Russian 

finance minister and Gazprom board member, some 

“$2 billion to $3 billion disappears from Gazprom each 

year through corruption, nepotism, and simple theft.”149

The tangle of Byzantine domestic politics, economic 

corruption, and swelling geopolitical ambitions, based 

on a faulty image of Russia as a petrostate,150 spins a 

noxious web that ultimately could ensnare Russia 

again in backwardness when the price of hydrocarbons 

drops, blocking development of an open society and 

rule of law for many more years.

The EU let slip a signal opportunity to make 

inroads towards promoting energy diversification 

and more open markets when it endorsed Russia for 

WTO membership without gaining any substantial 

concessions on key regulatory issues, let alone a 

commitment to increase gas production. President 

Putin dismissed the EU’s feeble attempts to engage in 
65

“arm-twisting,” with the admonishment that “Russia’s 

arms are getting stronger and the EU won’t succeed in 

twisting them.”151 European leaders have been slow to 

question how Russia can expect to create a Common 

Economic Space with the EU or solve its commitment 

problem if it refuses to follow accepted rules of market 

regulation. Yet absent international pressure or a 

prior foundation in rule of law, arguably Russia will 

not wean itself off its natural-resource dependency 

or escape the associated curses of autocratic politics, 

corruption, and myth-making.152 Without a more 

effective EU strategy, Europe may have to cope with 

an aggressive monopoly supplier in future energy 

disputes or supply disruptions caused by Russia’s 

economic mismanagement and criminal behavior.

Given the dangers of energy interdependence and 

Russia’s reliance on Europe for trade, it is paradoxical 

that Russia’s partnership with the EU is the weakest and 

least institutionalized of its three special relationships 

(the other two with NATO and G-8). This outcome may 

be traced not only to national preferences for bilateral 

relations but also to Europe’s persistent unwillingness 

to agree to deeper cooperation, given Russia’s partially 

reformed political and economic conditions and 

inability to make credible commitments.

Mutual Ambivalence about the Europeanization 

and Integration of Russia.

Besides asymmetry and commitment problems, a 

third factor which underpins the EU-Russia special 

relationship is that both sides have ambiguous stakes 

in deeper cooperation. Europeans are troubled by 

Russia’s failure to liberalize after 1989, but in the 

prevailing view an increased military threat seems 
66

unlikely to materialize. Major European powers have 

based their bilateral “Russia first” orientations on this 

assumption. Europeans acknowledge the negative 

impact of unrealistic expectations about the scope of 

change in Russia, continued ideological biases, and 

Western policy inconsistency.153 Yet there is a hope, 

particularly in Western European countries, that with 

continued interaction and generational change, Russia 

may still converge to European values and norms. The 

incorporation of eight new members in 2004 from the 

former Soviet bloc has intensified the EU’s focus on 

problems in the new borderlands, increased the EU’s 

vulnerability to energy disruptions, and raised the 

level of concerns about Russia’s failure to democratize 

and resist imperial temptations. As a consequence, 

Brussels finds it still more difficult to produce a 

coherent and integrated policy towards Russia. 

But whatever differences exist on the modalities of 

cooperation, no one in a position of authority in Brussels 

or the national capitals (with the unserious exception of 

Silvio Berlusconi, the former prime minister of Italy)

endorses the idea of promoting Russia’s formal accession 

to the EU as a stimulus to dislodge its frozen reforms. 

Europeans remain profoundly ambivalent about the 

realistic possibilities for substantive deep cooperation 

with Russia and strongly resist any proposal, beyond 

a free trade zone after Russia enters the WTO, which 

involves Russia’s integration into EU institutions. 

The EU’s special relationship with Russia is a natural 

outgrowth of such preferences.

With the weaker but strengthening hand, Moscow’s 

ambivalence is greater still, sustained not only by 

doubts about the benefits of integration but also by 

years of polarized politics and the wellspring of resentment, sense of exclusion, and anti-Western attitudes 
67

among elites and those whose interests run counter to 

open markets and liberal politics. It manifests itself in 

contradictory policies in which Russia simultaneously 

pursues equal partnership and special relations with 

the EU, special relations with the United States, and 

a leading role for itself in the integration of the CIS, 

as well as assorted partnerships with rising powers in 

Asia.

Western integration was always the preferred 

strategy of Russia’s dwindling number of liberals who 

tended to view relations with Russia’s neighbors as of 

secondary importance or troublesome legacies from 

the Soviet past which, like Russia’s antiquated military 

industrial complex, were best ignored. However, 

Russia got trapped in the early stages of reform and 

failed to develop democratic institutions and the rule 

of law while the United States and Europe avoided 

a commitment to full integration. Such a Western 

commitment would have necessitated developing a 

strategy to help anchor a reform-oriented Russia in the 

safe harbor of Western institutions. With the failure of 

liberalization in Russia, it was predictable that the West 

and Russia’s liberals would become the scapegoats for 

the collapse of the Soviet Union as well as Russia’s 

economic decline and imperial retrenchment in the 

1990s.

Russia’s political class not only shares Putin’s 

perspective on the breakup of the Soviet Union as one 

of the greatest tragedies of the last century but also 

views the 1990s as a time of chaos when Russia, as 

Vladislav Surkov, the deputy head of the presidential 

administration, emphasized in a recent speech, “was 

on the verge of losing its sovereignty.”154 It follows 

that despite Putin’s strong affinity for Europe and 

an economic modernization strategy premised on 
68

good relations with the West, the Kremlin has not 

relied exclusively on the European or Western path to 

modernization.155 The Putin administration consistently 

has emphasized the restoration of Russia’s national 

power and influence and recently also shifted to a 

more mercantilist approach to economic development. 

In Russia it is no longer acceptable for large Russian 

corporations in strategic sectors to merge with major 

foreign multinational corporations and thereby 

lose controlling interest, as in the case of TNK-BP. 

Ironically, the minister of finance acknowledges that 

“the expansion of the state’s share of the oil sector 

will constrain the development of this sector of the 

economy.”156 Nonetheless, under the new rules, the 

integration of Russia’s leading economic sectors into 

the global economy will follow the national model 

in which the state controls at least 51 percent interest 

as in Gazprom and Rosneft and the rest is sold to a 

strategic partner like Ruhrgas or WestinghouseGas or 

floated through initial public offerings (IPOs) in the 

free market.

Putin also supports large concentrations of capital 

and monopolies, subordinated to the Kremlin, because 

he sees them as levers of control, the ultimate means 

of political patronage and instruments of foreign 

policy, as demonstrated by Russia’s gas distribution 

monopoly in Europe. Some estimates indicate that the 

government share of industrial output and employment 

is now 40 percent, up from about 30 percent in 2003. 

To some observers it seems as if, instead of efficiently 

regulating the economy, “the state owns the economy.” 

According to a Russian economist, “even private 

owners know that their property rights are contingent 

on their relationships with the Kremlin.”157

Russia’s current ruling group includes a sizable 

number of siloviki, presidential cronies from St. 
69

Petersburg as well as elites from the apparat whose 

attitudes broadly correlate with the direction of policy 

under Putin, with the notable exception that their 

national and foreign agenda is strongly anti-Western, 

especially anti-American.158 Such people bitterly dismiss 

“the dreams about a single European economic expanse 

nurtured by the perestroika heroes” as naïve.159 They 

support a strong state directing society and the economy 

as well as a powerful military and defense industry. 

This ideological orientation centers on the restoration 

of the traditional Russian state and requires a struggle 

against external and internal enemies, which include 

the United States and its Western allies. Thus, Surkov 

labored in a 2004 interview to find an appropriate way 

to describe Putin’s cordial relationships with American 

and European leaders within Moscow’s dominant antiWestern world view. Surkov resorted to distinguishing 

between a “good” West and a “bad” West. The former 

welcomes a stronger Russia as a “good neighbor and 

reliable ally” while the second seeks to “destroy Russia 

and fill its enormous geographic space with numerous 

unviable quasi-state entities,” relying on the help of a 

“fifth column” of domestic opponents for support.160

Even President Putin, who continues to emphasize 

positive relations with Washington, was not above 

taking a swipe at the Bush administration in his May 

2006 address to the nation, calling for more effective 

defense in a world where “Comrade Wolf knows 

whom to eat and doesn’t listen to anyone.” Not so the 

major European powers, who are more often part of 

the “good” West and ill-disposed to the use of force, 

when they are not unduly influenced, according 

to presidential aide Sergei Yastrzhembskii, by the 

“Russophobic” politically immature Easterners, who 

were “integrated into Europe with all their inferiority 
70

complexes.”161

Putin frequently refers to how “Russia was and 

will remain a great power,” and reaffirms Russia’s 

traditional reliance on a “great, powerful and mighty 

state.” In his 1999 Millennium manifesto, Putin 

emphasized that “For Russians, a strong state is not an 

anomaly, which should be got rid of . . . [but rather] a 

guarantor of order and the initiator and main driving 

force of any change.” For elites who embrace a national 

identity which features traditional velikhoderzhavie,

or attachment to great power status, the starkness of 

Surkov’s characterization is a fitting reflection of their 

wounded pride over Russia’s perceived loss of position 

at the end of the Cold War. According to a policy 

planner in the foreign ministry, “nothing the West is 

doing to help Russia join the WTO, to develop closer 

cooperation with the EU, to establish equal interaction 

with NATO, etc. . . . can be regarded as a complete 

and adequate compensation for the lost strategic 

security that took many decades to be created.”162 The 

suggestion that the world might look different had 

Russia blazed a path of reform, joined Western clubs, 

and recovered economically is dismissed by many 

careerists with a mixture of incredulity and hostility at 

the preposterousness of such counterfactual thinking.163

With power and position deemed greater virtues than 

virtuous circles of democratic and market reform, 

many Russian elites see as degrading the notion that 

Russia should get in line behind puny, former Soviet 

satellites to press for membership in an unwelcoming 

EU or NATO.164 Such resentment underscores a firm 

determination that “Russia will never accept the role of 

a poor relation, which the West would like to impose 

on it.”165

 In this perspective, it makes sense not only 

to strengthen the state, but also develop Russia’s 
71

comparative advantage as an “energy superpower” 

and in other strategic industries, and reinvigorate the 

former Soviet space, not as a historical atavism in the 

Soviet mold but as a developing economic zone with 

Russia as its powerful center. The Russian president 

warned diplomats in his 2004 speech at the Russian 

foreign ministry that “the absence of an effective 

Russian policy in the CIS or even an unjustified pause 

inevitably will entail nothing more than energetic 

occupation of this political space by other, more active 

states.” Concern about Western encroachments into 

the former Soviet space initially centered on the United 

States and NATO’s expansion, but increasingly the EU 

has come under criticism for problems connected to its 

enlargements, democracy promotion programs, and 

attempts at conflict resolution in former Soviet bloc 

countries. As discussed above, Brussels is engaged 

in a range of ENP activities which Moscow sees as 

interference in Russia’s borderlands.

Nonetheless, it has been no easy task to find an 

effective strategy to promote Russia’s interests in the 

post-Soviet space, partly because of disagreement over 

what those interests should be. Opinion in Moscow 

was still divided in 2004, a truly annus horribilis for 

Russia when the blows from the Beslan school hostage 

disaster and the Ukrainian election debacle shook the 

confidence of the government. Three main schools of 

thought, ranging from neoimperial to “benevolent 

integrationist” and pragmatic bilateralism, dominated 

the debate.166 Reacting to a perceived urgent need to 

stop the retreat from Russia’s traditional sphere of 

interest, the neoimperialists argued that the forces 

underpinning the Rose revolution in Georgia and 

Western orientations in other post-Soviet countries 

threatened the existence of the CIS. The neoimperialists 
72

called for redoubled efforts to assert Russian 

dominance in the region, using all available means of 

political and economic influence and Russia’s military 

presence in the former Soviet areas. The “benevolent 

integrationist” model holds that post-Soviet countries, 

due to civilizational dissimilarities and differences in 

values, are not a good fit for the EU. “Only Russia,” 

asserts a Kremlin-connected analyst, can lead the 

process of building a Evrovostok—“Euro-East”—which 

in turn eventually will be transformed into a higherlevel, Europe-wide process of integration involving 

western Europe.167 By comparison, the “pragmatists” 

question the value of the “paper integration” 

underpinning the CIS and favor prioritizing relations 

with CIS countries according to Russia’s national 

interests and conducting bilateral relations instead. 

Aggressive expansion of Russian capital, penetration 

of information markets, and a naturalization program 

for CIS migrants can turn Russia into a true leader and 

magnet for the majority of the post-Soviet countries, 

according to Sergei Karaganov, a leading proponent of 

this school.

Two democratic oriented strategies have gained 

almost no political traction. One is a liberal variant of 

the integrationist approach championed by Anatolii 

Chubais, the controversial architect of privatization 

in the Yeltsin administration and now head of the 

United Energy System, who has argued for a liberal 

empire in which private business is a powerful agent 

of market reforms and gradually the development of 

democratic government. The second strategic idea, 

outlined by Konstantin Kosachev, head of the State 

Duma’s Foreign Affairs Committee, suggests that 

Moscow should present a “democratic alternative” to 

more authoritarian options, partly to counter Western 
73

advances in the region. According to Kosachev, Russia 

needs a strategy that will eliminate “the widespread 

representation of Russia’s influence and presence in the 

post-Soviet space as a phenomenon which thwarts the 

development of democracy.”168 Predictably, neither of 

these strategies could find support after the post-Beslan 

emphasis on security and further moves to centralize 

power. Russia could hardly be a credible exporter of 

democracy in the region when it has its own serious 

deficit of democracy at home. Just days after the Beslan 

atrocity, in a meeting with Western analysts Putin 

warned that democracy can be “counterproductive” if 

it is introduced too quickly or in ways not in conformity 

with the development of society.169

Undeterred, as 2004 was ending, Kosachev 

returned to the subject, warning that Russia will not 

out-compete Western countries and organizations in 

the CIS successfully if they address the people directly 

under the banner of democratization, while Russia 

is openly preoccupied with pursuit of narrow selfinterests and can offer no “unifying projects.” Other 

commentators struggled unsuccessfully to identify 

values and projects that would be attractive in the 

region, while Karaganov squarely pinpointed the 

importance and attractiveness of economic success. “If 

we don’t have an economically viable and politically 

attractive model,” Karaganov bluntly warned, “other 

countries . . . will reorient themselves towards the 

EU.”170

At the CIS summit in August 2005, Putin maintained that the organization still had a future but also 

admitted that changes were needed, and a reevaluation 

was still underway. Deputy foreign minister Grigorii 

Karasin and other government officials signaled 

Moscow’s acknowledgement that it did not have a 
74

monopoly on the post-Soviet space and realistically 

could not oppose the involvement of the United States 

or the EU in a civilized competition of ideas there. 

However in newspaper interviews, Karasin warned that 

Russia would not tolerate “forced ‘democratization’” 

or “color revolutions” in Russia’s borderlands, and that 

Western interests could never equal Russia’s in this 

region. Other high-ranking officials likewise declared 

that Russia’s aid and subsidized energy supplies would 

now be targeted to advance geopolitical priorities, and 

that Moscow would eliminate discounts to Westernoriented countries.171 The move by Georgian President 

Mikhail Saakashvili and Ukrainian President Viktor 

Yushchenko in August 2005 to create a new regional 

organization, the Commonwealth of Democratic 

Choice, with the aim of uniting all democratic states 

in the Baltic, Black Sea, and Caspian regions, and 

promoting their integration into the Euro-Atlantic 

community, underscored the sharp divisions between 

CIS countries still largely within Moscow’s orbit and 

those seeking to break free and join the West.

Russia’s Multi-Vector Strategy and the Mixed 

Appeal of “Euro-East.”

Faced with more acute geopolitical competition in 

its declared sphere of interests, the Kremlin gradually 

settled on a differentiated approach to the post-Soviet 

states that is both more bilateral and more muscular. 

Russian policy now would reward more powerfully 

friendly governments while punishing renegades. 

This approach was not entirely new in design, but the 

intention is to strengthen its implementation.

Moscow has long used a variety of inducements 

and coercive means to gain a hegemonic position in 
75

the former Soviet space, from subsidizing energy and 

exchanging large debts for a share in the ownership of 

strategic industries and infrastructure to using Russian 

capital for major buyouts of oil refineries, banks, 

aluminum plants, and other key sectors and pushing 

for the creation of a Single Economic Space with a single 

policy on trade, taxes, currency, and other economic 

and financial activities.172 Countries such as Moldova, 

Georgia, Belarus, and especially Ukraine owed enormous debts to Russia in relation to their state budgets, 

often insisted on paying in barter, and reportedly siphoned off gas illegally for their own use, prompting 

Russian companies to cut off gas supplies many times 

before the January 2006 crisis. Such mismanagement of 

their economies has been self-defeating financially, and 

made it more costly and difficult for these countries 

to pursue a fully independent foreign policy.173 Thus, 

under Shevardnadze, the Georgian government was 

compelled to agree not to pursue NATO membership, 

while Yushchenko’s government has been unable to 

break free from the stranglehold of Russian economic 

penetration and dependency in energy and metallurgy, 

in part because of the collusion of Ukrainian oligarchs 

and middlemen. Moscow also has exploited the 

Russian minority and supported separatism in Crimea 

to put political pressures on Kyiv.

Throughout the 1990s and during Putin’s rule, 

Russia also has put the squeeze on aspirants for EU and 

NATO membership, not only in the Baltic states but 

also in Eastern and Southeastern Europe, in countries 

such as Bulgaria.174 Vagit Alekperov, the president 

of Russia’s oil giant, LUKOIL, candidly bragged in a 

2001 interview on the Russian oil industry’s expansion 

in Eastern Europe that he was “certain that Bulgaria, 

whose oil sector is owned almost entirely by Russian 
76

companies, will not conduct an anti-Russian foreign 

policy in the foreseeable future.”175 Yet Moscow was 

unable to draw this former close Soviet ally back 

into its orbit or prevent its turn toward Euro-Atlantic 

institutions, despite Bulgaria’s high dependency on 

Russian gas supplies, major Russian investments 

(especially during the UN’s economic embargo on 

Serbia which isolated Bulgaria from EU markets), 

and its role as a major transit juncture for energy 

supplies into Europe. The Putin administration has 

made a more concerted effort to gain control over 

energy transit and consumption by penetrating the 

gas transmission network and preventing alternative 

sources and routes from the Caspian. The complicated 

mix of energy inputs for dependent countries such 

as Bulgaria makes it especially difficult to increase 

diversification while also meeting EU regulations. For 

example, in 2006, Bulgaria faced simultaneous pressure 

from the EU to close its aging Kozlodui nuclear power 

plant, which uses technology similar to the ill-fated 

Chernobyl station in Ukraine, and from Russia over 

the cash pricing of gas provided in lieu of transit fees. 

Ironically, Moscow often has been more successful in 

gaining preferential treatment for Russian firms than 

in advancing Russia’s geopolitical interests, although 

this may not overly trouble the new oligarchs in the 

Kremlin who see the two as synonymous. Despite 

years of various types of coercion and inducements as 

well as Russian intelligence, criminal, and subversive 

activities, Sofia generally has resisted Moscow’s 

geopolitical gambits since it joined NATO and entered 

into accession negotiations with the EU.

Russia is even more determined not to suffer the 

same fate in the post-Soviet space. Thus, although 

many Russian elites think that the CIS is obsolete and 

should be eliminated, the government firmly is 
77

committed to promoting Russia’s strategic interests in 

Eurasia with or without this organization. According 

to Russian Minister of Defense Sergei Ivanov, Russia’s 

top concern is the domestic situation of the former 

Soviet republics and nearby regions. In an obvious 

warning to the West and Russia’s wayward neighbors, 

Ivanov emphasized that the Russian military had to 

be prepared to intervene in a “political or militarypolitical conflict or process that has a potential to pose 

a direct threat to Russia’s security, or to change the 

geopolitical reality in a region of Russia’s strategic 

interest.”176 Moscow’s strong measures in the escalation 

of tensions between Russia and Georgia in the autumn 

of 2006 indicate its firmer stance.

Without discounting the importance of such 

signaling, political and economic instruments of 

foreign policy clearly remain in the forefront of 

Russia’s intensified realpolitik in the borderlands. 

Taking a page from the EU strategy book, Moscow is 

resurrecting its 1999 goal of creating a single economic 

space in the CIS, this time drawing on the gravitational 

field of Russia’s growing market and the opportunities 

this presents for some of Russia’s neighbors whose 

citizens find readily available work in the expanding 

Russian economy. According to Putin, Russia already 

has natural advantages in the region from the past—a 

single energy system, transport infrastructure, deep 

economic cooperation, and a common language 

(Russian), and it would be “simply stupid not to use 

them.”177 Although details about the newly proposed 

economic zones remain sketchy, some Russians 

envision a greater Europe in which there is a loose 

association,178 or even a “strategic union,”179 between 

the EU and Russia-led countries in Eurasia. At least 

one variant foresees overarching cooperation not 
78

only in economics and trade, but also between the EU 

and NATO on one hand and the Collective Security 

Treaty Organization (CSTO) which includes Armenia, 

Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and, as 

of 2005, Uzbekistan, on the other.

Dizzy from the success of sustained high economic 

growth and energy wealth, Russian officials and 

elites are happy to convince themselves that Russia 

is fast becoming an “indispensable” great power. 

Such confidence bolsters a familiar claim recently 

resurrected by Russian diplomats, namely, as Deputy 

Foreign Minister Vladimir Chizhov insists, “The future 

of Europe is impossible without Russia, without its 

active participation in the processes occurring on our 

continent.”180 Chizhov went on to explain that Russia 

does not “regard the existing contradictions” between 

its EU and CIS strategies “as insurmountable” and 

hopes to “bring the integration processes in the postSoviet area in sync with the course of the expanding and 

deepening European integration, including within the 

EU framework, so that they complement each other.” 

Similarly, leader of the Motherland nationalist party 

Dmitry Rogozin asserts that “building a united Europe 

without the largest country in Europe—Russia—is 

practically impossible.”181

Given the proliferation of international organizations in post-Soviet Eurasia and emergence of competing geopolitical agendas, there are obvious strategic 

underpinnings to the Russian debate over the “CIS 

project,” the CSTO, and other alternative means 

to promote Russia’s national interests. However, 

Moscow’s “multi-vector” foreign policy line reaches 

beyond collaborations in Europe and Eurasia to more 

extensive involvement in Asia, which according to 

some politicians, has usefully strengthened Russia’s 
79

positions with the United States and EU.182 Which 

vectors loom most prominently over time will help 

reveal the strength of competing agendas and interests 

in Russia’s internal debate over its role in the postSoviet space. Significantly, the strongest opponents of 

partnership with the EU warn that Russia’s convergence 

to EU norms would diminish its power and “unique 

Euro-Asian role” and thereby derail its leadership 

in directing the reintegration of the CIS. As a former 

deputy foreign minister bluntly intones, “great powers 

. . . do not dissolve in integration unions—they create 

them around themselves.”183

Integration with the West: An Idea Whose Time 

Keeps Coming.

It is an exaggeration, however, to suggest that 

the Russian government and political class have 

fully abandoned the idea of integration into Western 

institutions, such as the EU, in favor of more limited 

and gradual economic integration into the global 

economy.184 Strikingly, Konstantin Kosachev has 

remarked that “the time is already coming” to talk 

about Russia joining the EU. “The problem,” he 

observes, “lies in the fact that the EU has still not 

determined what kind of strategic relations it wants to 

build with Russia, and the same can also be observed 

on the Russian side.”185 A survey in mid-2005 of 

leading Russian experts on relations with the EU 

echoed Kosachev, criticizing Russian policy for a lack 

of “strategic vision” of Russia’s place in Europe and 

poor administrative execution of the administration’s 

declared “European choice.” Reflecting a strain of 

Putin’s thinking, these experts concluded that there 

are no “objective insurmountable obstacles” to raising 
80

the question of Russia’s formal accession to the EU. 

However, to preclude unrealistic expectations and 

disappointment the experts recommended focusing 

on practical projects for a period to reverse the current 

negative state of relations.186

Nearly half of the Russians polled in 2005 expressed 

trust in the EU, and 60 percent said that Russia should 

seek to join—a slightly higher percentage than those 

who favored joining the WTO.187 That May, in an 

interview with French television, Vladimir Putin 

claimed that “uniting within a single framework” is not 

Russia’s objective “at the moment.” But invoking the 

experience of European countries such as Norway, the 

President added “at some future point, our cooperation 

could reach such a level that it would be almost akin to 

actual membership in the EU.”188

In an earlier press conference in 2004, Kosachev 

speculated that “10 years ago no one could imagine that 

Poland or the Baltic states would become EU members. 

I am sure that 10 years from now the prospects of 

Russian membership of the EU will be quite different 

than they are today.” Perhaps, but only 3 years later, 

such statements seem oddly out of place, ironically 

from a different era, as a stronger, more self-confident 

Russia, and a politically weakened, often divided 

Europe face diminished expectations and enthusiasm 

for building a closer partnership.189

Conclusions.

European and Russian ambivalence about the 

nature and scope of their relations presently do not favor 

an optimal bargain in which Russia consolidates a liberal 

transformation and is integrated into European and 

Western institutions. Despite positive developments 

in broadening the scope of Russia’s participation in 
81

the NATO-Russia Council, Washington is even more 

pessimistic about the political trend line in Russia, 

and American politics are likely to further dampen 

the outlook for deepening cooperation.190 However, 

Europeans and Americans alike should avoid excessive 

swings in attitudes and approaches and instead adapt 

to the realities of the current paradigm until and unless 

its underlying conditions change. European gravitas 

can counterbalance the psychological temptation in 

Russia to become enamored with a concept, such as 

a Russia-dominated regional association that would 

somehow “integrate” with the EU, not because it 

has a basis in reality or sound strategy but because it 

represents a symbol of hope that Russia is again in the 

game of competitive great power politics.191

In war, “the first, the supreme, the most far-reaching 

act of judgment that the statesman” has to make is to 

establish “the kind of war on which he is embarking.” 

This insight from Clausewitz applies equally well 

to understanding the framework in which the EuroAtlantic community and Russia interact. To pretend 

to be engaged in a historic struggle to integrate postcommunist Russia into Western institutions and the 

international order while actually pursuing a limited 

liability strategy is as senseless as it is to rush to the 

barricades and proclaim a new era of Cold Peace when 

Russia behaves like a typical monopolist in energy 

deals while simultaneously weakening its future 

economic prospects, tolerating an unreformed military, 

and accepting a level of political openness greater than 

what prevails in China. Since the end of the Cold War, 

Russia and the West have forged a basis for interaction 

which favors shallow agreements rather than Pareto 

optimal outcomes. The resulting special relationships 

endure because, for the foreseeable future, they are 
82

capable of producing second-best outcomes that meet 

base-line levels of acceptability to all parties—from 

limited cooperation to stabilize the Balkans and limited 

collaboration to delay Iran’s development of nuclear 

weapons, to expansion of trade short of the creation of 

a free-trade area, and deals for new pipelines and asset 

swaps to fuel European consumption absent open 

competition in energy and rule-based commercial 

contracts.

The West has a stake in Russia’s transition to a 

peaceful, market democracy but needs to recognize that 

after 15 years of turbulent transition, neither dialogue 

and annual summits nor self-righteous lectures will 

help unfreeze Russia’s domestic political status quo 

run by a corrupt clique motivated as much by murky 

concentrated interests as a dysfunctional urge to outcompete the West. Radical internal reforms, if and 

when they come, will be more a matter of necessity, 

decided by a new set of rulers, than an outgrowth of 

a spreading European normative structure. Moreover, 

although the realistic opportunity for accession has had 

demonstrable positive effects on domestic politics and 

economics in other post-communist countries, at this 

juncture Europe lacks the consensus and the capacity 

to consider even in theoretical terms the possibility of 

membership for Russia. If Russia undergoes its own 

color revolution and if a new democratic government 

follows up with liberal political and economic reforms, 

then, like Ukraine, European support for deeper 

cooperation will accelerate. Such a hypothetical scenario for Russia borders on fantasy at a time when the 

leaders of the Orange Revolution are faltering in the 

swamp of Ukrainian politics and Russian meddling. 

Nonetheless, 1989 is a lesson that the impossible 

sometimes materializes, and in such conditions, if 
83

Russians start pressing aspirations to join the EU, 

Brussels’ closed door policy could become unsustainable. 

For now, Europe and the United States should be candid 

about the origins and limits of existing arrangements 

and resist politicizing the special relationships with 

Russia so long as more optimal solutions remain out 

of reach.

The December 2007 deadline to renegotiate or 

renew the PCA presents an opportunity to undertake a 

systematic review of the respective stakes, benefits, and 

limitations of the current arrangements. Using 2007 as a 

stimulus, forward thinkers in Brussels and the national 

capitals should form working groups with their Russian 

counterparts in and outside of government to consider 

the conditions that would be necessary to shift to points 

along the continuum of deeper cooperation, including 

a new bargain which would link positive incentives 

to conditionality requirements. The agenda should 

include lessons learned from 15 years of comparative 

post-communist transitions and policy analysis which 

highlight the serious obstacles presented by the 

partial reform trap. As part of the nongovernment 

work, academics, journalists, and other independent 

researchers should examine the political and societal 

implications of perverse corruption, racketeering, 

and theft of assets, not only by reviled oligarchs like 

Khodorkovskii, but also by top government leaders 

and officials throughout the bureaucracy. There is 

also value in systematic analysis drawing on empirical 

comparisons of alternative frameworks for interaction 

in Europe—Europe Agreements for EU accession 

countries, European Neighborhood Action Plans, and 

Partnership Agreements (i.e., Special Relationships) 

such as between the EU and Russia. Ongoing 

engagement on these issues cannot be expected to 
84

promote immediate changes in policy but will provide 

more realistic assessments of tradeoffs and an analytical 

base for future decisionmakers.

In the interim, the United States should continue 

to support its transatlantic partners in the EU’s 

engagement with Russia on resolving “frozen 

conflicts” in their new neighborhood. Propinquity 

favors a division of labor in which Europe takes the 

lead, although more will be gained from a consistent 

transatlantic line which shows resolve in promoting 

outcomes consistent with Western and European values 

and interests. An important part of the work involves 

encouraging Moscow to resist becoming attached to 

the falacy that outcomes in Montenegro and Kosovo 

are universal precedents applicable to places like 

Transdnistria, Abkhazia, and South Ossetia, trumping 

alternative peaceful solutions to problems involving 

separatist struggles and minority rights as evidenced 

for example in Quebec, the Basque region of Spain, 

and, even more recently, in Northern Ireland.

A second convergence of transatlantic interests 

concerns the vital matter of energy security. With oil 

breaking $70 per barrel and higher gas prices, the 

energy factor is no longer underestimated in relations 

with Russia. Even at $60 a barrel, the United States will 

spend about $4,320 billion on oil imports annually, and 

in 25 years the world will need 50 percent more energy 

than it does now.192 Europe and the United States have 

a common interest not only in energy conservation, 

but also in diversification of supply, given most of 

the world’s energy is concentrated in places that are 

politically antagonistic or unstable, vulnerable to 

terrorism, or, like Russia, lacking secure property 

rights and unable to make credible commitments as 

suppliers.
85

In advance of the G-8 Summit in St. Petersburg, 

European Commission President Jose Manuel Barroso 

called for the EU and the United States to work together 

to press Moscow to open its energy market and create 

transparency and legal guarantees to ensure predictable 

energy supplies. Warning about the frequent “use 

of energy resources as an instrument of political 

coercion,” Barroso argued that “[t]ogether, the EU and 

the United States must send a clear signal on the need 

for a paradigm shift on energy.”193 Unfortunately, the 

status quo is not likely to be dislodged by diplomacy 

alone. The EU, as energy commissioner Piebalgs has 

emphasized, must achieve greater unity and a coherent 

strategy to promote Europe’s energy security.194

Second, Europeans, with U.S. support, need to send 

a credible signal to Russia that they are prepared to 

underwrite the costs of greater energy diversification. 

Only a united front and concerted action are likely to 

prod Moscow towards accepting greater transparency 

and international rules of commerce.

Mesmerized by extraordinarily high energy 

prices, Russia’s rulers are consumed by the politics 

of controlling the distribution of rents rather than 

problems related to production and investment.195 But 

the energy bubble will not last forever, and when the 

end comes, Russia likely will face serious economic 

and political crises if it has not yet created secure 

property rights. Economic shocks of this order can 

create openings for progressive political change or for 

destabilizing aggressive nationalism that will positively 

or negatively impact Russia’s relations with the West. 

Europe and the United States need to be prepared to 

support opportunities to promote deeper cooperation 

or contain the damage and, to the extent possible, to 

limit the ability of hostile nationalist groups to exploit 
86

the international situation to further their domestic 

political ambitions.

If the argument developed in this monograph 

is correct, progressive movement away from the 

special relationships that now underpin the partial 

integration equilibrium presupposes a narrowing of 

the asymmetries and distributional disputes which 

divide the two sides, a positive resolution of Russia’s 

commitment problem, and a stronger consensus in both 

Russia and Europe on the value of Russian integration. 

Without discounting the long-term prospects, those 

who expect near-term forward movement in any of 

these dimensions are just whistling in the dark.

ENDNOTES

1. Michael McFaul, “Russia and the West: A Dangerous Drift,” 

Current History, Vol. 104, October 2005, pp. 307-312. 

2. Zbigniew Brzezinski, “Living with Russia,” The National 

Interest, No. 61, Fall 2000, p. 16. Cf the subsequent commentary 

by Stephen Sestanovich on “Where Does Russia Belong?” The 

National Interest, No. 62, Winter 2000/2001, which emphasizes 

the normative value attached since 1989 to integrating Russia into 

Western institutions.

3. Dmitri Trenin, “Russia Leaves the West,” Foreign Affairs, 

Vol. 85, No. 4, July-August, 2006, pp. 87-96. 

4. Russia, of course, is a full member of the OSCE and the 

Council of Europe, although its status in the latter was put in 

jeopardy in the 1990s as a result of the first Chechen war. With 

respect to the G-7/G-8, the Clinton administration pushed to 

include Russia in part of the program of the summits as a sidepayment for accepting NATO enlargement and a stimulus for 

liberal reform. However, when it became clear that Russia would 

become a regular participant, Treasury Secretary Robert Rubin 

made it clear that the G-7 would have to reconstitute itself to do 

its important financial business outside of the new G-8 process 

(author’s interviews in Moscow and Washington, 2005). 
87

5. For a similar argument about the conundrum of attempting 

to modernize in the absence of democracy or Western integration, 

see especially the editors’ introduction in Alexander Motyl, Blair 

A. Ruble, and Lilia Shevtsova, eds., Russia’s Engagement with the 

West: Transformation and Integration in the Twenty-First Century,

Armonk, NY: M. E. Sharpe, 2005.

6. Javier Solana, “The EU-Russia Strategic Partnership,” 

Stockholm: Council of the European Union, October 13, 1999. 

7. “Joint Statement on EU Enlargement and EU-Russia 

Relations,” Brussels: European Commission, April 27, 2004. 

8. Stephan De Spiegeleire, “Europe’s Security Relation with 

Russia: Staying the Course,” in Dmitri Trenin, Stephan De 

Spiegeleire, and Angela Stent, “Russia’s Security Policy and EURussian Relations,” ESF Working Paper No. 6, March 2002.

9. See, for example, Sarah E. Mendelson and Theodore P. 

Gerber, “Failing the Stalin Test,” Foreign Affairs, Vol. 85, No. 1, 

January/February 2006, pp. 2-8.

10. For insightful accounts, see M. Steven Fish, Democracy 

Derailed in Russia. The Failure of Open Politics, New York: Cambridge 

University Press, 2005; Michael McFaul, “The Fourth Wave of 

Democracy and Dictatorship: Noncooperative Transitions in the 

Post-communist World,” World Politics, Vol. 54, No. 2, 2002, pp. 

212-244; and Lucan Way, “Authoritarian State Building and the 

Sources of Political Competition in the Fourth Wave: The Cases 

of Belarus, Moldova, Russia, and Ukraine,” World Politics, Vol. 57, 

No. 2, January 2005, pp. 231-261. 

11. Valerie Bunce, “Rethinking Recent Democratization, 

Lessons from the Post communist Experience,” World Politics, 

Vol. 55, No. 2, 2003, pp. 167-192; McFaul, “The Fourth Wave;” 

and European Bank for Reconstruction and Development (EBRD) 

Transition Reports.

12. Russia’s voting rights were restored in 2001 after agreement 

to establish a task force on restoring peace in Chechnya. Nothing 

significant resulted, and both the European Court of Human Rights 

and the Parliamentary Assembly of the Council took up cases 

involving torture, executions, and other human rights violations 

by Russian troops. See Pamela A. Jordan, “Russia’s Accession to 

the Council of Europe and Compliance with European Human 

Rights Norms,” Demokratizatsiya, Vol. 11, No. 2, Spring 2003; idem, 

“Does Membership have its privileges?: Entrance into the Council 
88

of Europe and Compliance with Human Rights Norms,” Human 

Rights Quarterly, Vol. 25, No. 3, August 2003, pp. 660-688; and 

William D. Jackson, “Russia and the Council of Europe: The Perils 

of Premature Admission,” Problems of Post-Communism, Vol. 51, 

No. 5, September/October 2004, pp. 23-33. 

13. Jeffrey T. Checkel, “International Institutions and 

Socialization,” ARENA Working Paper, Vol. 99, No. 5; and 

Sarah E. Mendelson, “Russians’ Rights Imperiled. Has Anybody 

Noticed?” International Security, Vol. 26, No. 4, Spring 2002, pp. 

39-69. 

14. James D. Fearon, “Bargaining, Enforcement, and International Cooperation,” International Organization, Vol. 52, No. 2, 

1998, pp. 268-305. 

15. Stephen D. Krasner, “Global Communications and National 

Power: Life on the Pareto Frontier,” World Politics, Vol. 43, No. 

3, April 1991, pp. 336-366; and Lloyd Gruber, Ruling the World: 

Power Politics and the Rise of Supranational Institutions, Princeton: 

Princeton University Press, 2000. 

16. The concept of “partial integration” is not specified 

clearly in international relations theory. It may take the form of 

a relationship between a powerful victor or coalition of great 

powers and their weakened defeated adversary, arising when 

the victors seek to lower the costs and risks of filling political 

vacuums and expanding their superior position to lock in gains at 

the expense of their former adversary. For an examination in the 

Russia-NATO context, see Cynthia Roberts, “Russia and NATO: 

Explaining the Sources of Partial Integration,” Paper presented at 

the ISA Annual Convention, Honolulu, Hawaii, March 1-5, 2005. 

Although, unlike the United States the EU has been a reluctant 

expansionist, it is worth noting that the temptation to expand 

positions and influence is the norm in international anarchy. As 

Randall Schweller underscores: “Hegemonic postwar junctures are 

precisely when great powers, especially the leading state, can be 

expected to expand, not bind, their power.” Randall L. Schweller, 

“The Problem of International Order Revisited,” International 

Security, Vol. 26, No. 1, Summer 2001, p. 174. See also Robert 

Gilpin, War and Change in World Politics, New York: Cambridge 

University Press, 1981; Eric J. Labs, “Beyond Victory: Offensive 

Realism and the Expansion of War Aims,” Security Studies, Vol. 

6, No. 4, Summer 1997, pp. 1-49; and John J. Mearsheimer, The 

Tragedy of the Great Power Politics, New York: Norton, 2003. 
89

17. Initially the United States and its allies compensated Mikhail 

Gorbachev for Soviet concessions primarily with enhanced 

international prestige to mask the gross imbalance in power. See 

Philip Zelikow and Condoleezza Rice, Germany Unified and Europe 

Transformed: A Study in Statecraft, Cambridge: Harvard University 

Press, 1995; and Randall L. Schweller and William C. Wohlforth, 

“Power Test: Evaluating Realism in Response to the End of the 

Cold War,” Security Studies, Vol. 9, No. 3, Summer 2000, pp. 60-

107.

18. Cynthia Roberts, “Russia and NATO: The Limits of Partial 

Integration,” Aktualnye problemy Evropy (Urgent Problems of Europe), 

No. 4, 2004, pp. 87-113; and idem, “Russia and NATO.”

19. On two-level games, see Robert D. Putnam, “Diplomacy and 

Domestic Politics: The Logic of Two Level Games,” International 

Organization, Vol. 42, No. 3, 1988, pp. 427-460. 

20. Jon C. Pevehouse, “Democracy from the Outside-In? 

International Organizations and Democratization,” International 

Organization, Vol. 56, No. 3, 2002, pp. 515-549; and Fearon. 

21. Robert O. Keohane and Helen V. Milner, Internationalization 

and Domestic Politics, Cambridge: Cambridge University Press, 

1996; Frank Schimmelfennig, The EU, NATO and the Integration 

of Europe, Cambridge: Cambridge University Press, 2003; and 

Jeffrey T. Checkel, “International Institutions and Socialization,” 

ARENA Working Paper, 05/1999, March 3, 2004. 

22. Heather Grabbe, “Challenges of EU Enlargement,” in 

Anatol Lieven and Dmitri Trenin, eds., Ambivalent Neighbors: The 

EU, NATO and the Price of Membership, Washington, DC: Carnegie 

Endowment for International Peace, 2003, p. 67.

23. Stephen Haggard, Marc A. Levy, Andrew Moravcsik, 

and Kalypso Nicolaidis, “Integrating the Two Halves of Europe: 

Theories of Interests, Bargaining and Institutions,” in Robert 

Keohane, Joseph S. Nye, Jr., and Stanley Hoffmann, eds., After the 

Cold War: International Institutions and States Strategies in Europe: 

1989-1991, Cambridge: Harvard University Press, 1993, p. 185. 

24. Milada Anna Vachudova, “The Leverage of International 

Institutions on Democratizing States: Eastern Europe and the 

European Union,” European Union Institute Working Paper, 2000; 

and idem, Europe Undivided: Democracy, Leverage, and Integration 

After Communism, New York: Oxford University Press, 2005. 
90

25. Ibid. and idem, “The Czech Republic: The Unexpected Force 

of Institutional Constraints,” in Jan Zielonka and Alex Pravda, 

eds, Democratic Consolidation in Eastern Europe, London: Oxford 

University Press, 2001, pp. 325-362.

26. Ibid., 2005; Valerie Bunce, “Rethinking Recent Democratization, Lessons from the Post communist Experience,” World 

Politics, Vol. 55, No.2, 2003, pp. 167-192; and M. Steven Fish, “Post 

communist Subversion: Social Science and Democratization in 

East Europe and Eurasia,” Slavic Review, Vol. 58, No. 4, Winter 

1999, pp. 794-823. 

27. A study in 1997 by the Centre for Economic Policy 

Research estimated that accession of countries of Central and 

Eastern Europe—even in a conservative scenario—would bring 

an economic gain for the EU-15 of € 10 billion, and for the new 

members of € 23 billion. R. Baldwin, J. F. François, and R. Portes, 

“The Costs and Benefits of Eastern Enlargement,” Economic Policy, 

Vol. 12, 1997, pp. 125-176. 

28. Haggard, et al., “Integrating the Two Halves of Europe,” 

p. 185.

29. See EBRD Transition Reports.

30. Joshua A. Tucker, Alexander C. Pacek, and Adam J. 

Berinsky, “Transitional Winners and Losers: Attitudes toward EU 

Membership in Post-Communist Countries,” American Journal of 

Political Science, Vol. 46, No. 3, 2002, pp. 34-43. But there were still 

exceptions for countries below the level of Greece. See the series 

of EBRD Transition Reports. 

31. Vachudova, Europe Undivided, p. 143. 

32. Ibid., chs. 6, 7; and Paul Kubicek, ed., The European Union 

and Democratization, New York: Routledge, 2003. 

33. Vachudova, Europe Undivided, p. 186; and Kubicek, The 

European Union and Democratization. 

34. Jeffrey Kopstein and David Reilly, “Geographic Diffusion 

and Transformation of the Post-Communist World,” World 

Politics, Vol. 53, No. 1, pp. 1-37, at p. 28.

35. Vachudova, Europe Undivided, p. 234. 

36. The early candidates for EU accession attracted a high level 

of Foreign Direct Investment (FDI) per capita, which is related 

not only to their advanced stage of economic liberalization but 
91

also to the real prospect of EU membership. Oleh Havrylyshyn, 

“The Impact of EU Enlargement on Countries Beyond the New 

Frontiers,” in Michael Landesmann and Dariusz Rosati, eds., 

Shaping the New Europe: Economic Policy Challenges of European 

Union Enlargement, London, 2004, ch. 13.

37. Anders Åslund and Nazgul Jenish, “The Eurasian Growth 

Paradox,” conference paper, 2005. Note these countries also are 

running budget deficits of about 6 percent of GDP, violating the 

Maastricht restriction that is supposed to limit budget deficits to 

3 percent of GDP. Unlike Ireland, the member of the EU with the 

highest GDP per capita, new members are compelled to accept all 

the social provisions of EU rules and cannot opt out to allow for 

more flexible labor laws, for example.

38. Vachudova, Europe Undivided. But for an important 

counterargument, see Frank Schimmelfennig, The EU, NATO and 

the Integration of Europe, Cambridge: Cambridge University Press, 

2003. 

39. “Wider Europe—Neighbourhood: A New Framework 

for Relations with our Eastern and Southern Neighbours,” 

Communication from the Commission to the Council and the 

European Parliament. Brussels, March 11, 2003, available at www.

europa.eu.int/comm/world/enp/news/11032003_en.htm. 

40. V. A. Chizhov, Statement at the International Conference, 

“Wider Europe: Enlarging Trans-Border Cooperation in Central 

and Eastern Europe,” Press release No. 32, November 11, 2003. 

41. European Commission, EU’s Relations with Russia, 

“Agreement on Partnership and Cooperation,” available at www.

eu.int/comm/external_relations/ceeca/pca/pca_russia.pdf. 

42. Timofei Bordachev, “Toward a Strategic Alliance,” Russia in 

Global Affairs, Vol. 4, No. 2, April-June 2006; and idem and Arkady 

Moshes, “Is the Europeanization of Russia Over?” Russia in 

Global Affairs, Vol. 2, No. 2, April-June 2004; Dov Lynch “Russia’s 

Strategic Partnership with Europe,” Washington Quarterly, Vol. 27, 

No. 2, Spring 2004, pp. 99-118; idem, Russia Faces Europe, Chaillot 

Paper No. 60, Paris: European Institute for Security Studies, 

2003; I. Leshukov, “Beyond Satisfaction: Russia’s Perspective on 

European Integration,” ZEI Discussion Paper 26, Bonn: ZEI; and 

author’s interviews in Russia, 2002, 2003, 2005. 

43. EBRD Transition Reports; and Cynthia Roberts and Thomas 

Sherlock, “Bringing the Russian State Back In,” Comparative 

Politics, Vol. 31, No. 4, July 1999, pp. 477-498. 
92

44. Joel S. Hellman, “Winners Take All: The Politics of Partial 

Reform in Post-communist Nations,” World Politics, Vol. 50, No. 

2, 1998, pp. 203-234. 

45. Peter Boone and Denis Rodionov, “Reformed Rent-Seekers 

Promoting Reform?” Moscow Times, August 23, 2002; “Moscow’s 

Group of Seven,” Financial Times, November 1, 1996, p. 17; David 

E. Hoffman, The Oligarchs, New York: Public Affairs, 2003; 

Kommersant, “Who Owns Russia?” Moscow: Vagrius, 2003.

46. Hellman, “Winners Take All”; Joel S. Hellman and 

Mark Schankermann, “Intervention, Corruption and Capture,” 

Economics of Transition, Vol. 8, No. 3, 2000, pp. 295-326; Joel 

S. Hellman, Geraint Jones, and Daniel Kaufman, “Seize the 

State, Seize the Day: State Capture and Influence in Transition 

Economies,” Journal of Comparative Economics, Vol. 91, 2000, pp. 

751-753; and Thomas Graham, Jr., Russia’s Decline and Uncertain 

Recovery, Washington, DC: Carnegie Endowment for International 

Peace, 2002. 

47. Fish, Democracy Derailed; Timothy Frye, “The Perils of 

Polarization: Economic Performance in the Post-communist 

World,” World Politics, Vol. 54, No. 3, 2002, pp. 308-337; idem,

“Markets, Democracy, and New Private Business in Russia,” 

Post-Soviet Affairs, Vol. 19, No. 1, 2003, pp. 24-45; McFaul, “The 

Fourth Wave;” and idem., Russia’s Unfinished Revolution: Political 

Change from Gorbachev to Putin, Ithaca, NY: Cornell University 

Press, 2001. 

48. Timothy Frye, “Credible Commitment and Property 

Rights: Evidence from Russia,” American Political Science Review, 

August 2005; and Alberto Alesina and Allan Drazen, “Why Are 

Stabilizations Delayed?” American Economic Review, Vol. 81, 1991, 

pp. 1170-1188. 

49. For thoughtful analyses of the commitment problem and 

property rights, see William Tompson, “Putin and the ‘Oligarchs’: 

A Two-Sided Commitment Problem,” unpublished paper, April 

2004; and Frye, ibid.

50. The Common Strategy instrument was created by the 

Amsterdam Treaty as the means of setting out the objectives, 

overall policy guidelines, organization and duration of the EU’s 

external policies towards geographic or thematic areas. The EU’s 

1999 Common Strategy on Russia was its first. European Council, 

Common Strategy of The European Union of June 4, 1999, on Russia
93

(1999/414/CFSP), Official Journal of the European Communities, 

available at europa.eu.int/comm/external_relations/ceeca/com_strat/

russia_99.pdf.

51. Letter from Right Hon. Denis MacShane, MP, Minister for 

Europe, Foreign, and Commonwealth Office to the Chairman, 

available at www.parliament.the-stationery-office.co.uk/pa/ld200506/

ldselect/ldeucom/16/16128.htm. 

52. Rolf Schuette, “E.U. Russian Relations: Interests and 

Values—a European Perspective,” Carnegie Paper No. 54, 

December 2004; Hiski Haukkala and Sergei Medvedev, eds., 

The EU Common Strategy on Russia—Learning the Grammar of the 

CFSP, Helsinki: FIIA, 2001; Anna Krok-Paszkowska and Jan 

Zielonka, “The EU’s Next Big Enlargement: Empirical Data on the 

Candidates’ Perceptions,” European University Institute Working 

Paper, San Domenico di Fiesole, RSC No. 54, 2000.

53. Ziya Onis, “Diverse but Converging Paths to European 

Union Membership: Poland and Turkey in Comparative 

Perspective,” East European Politics and Societies, Vol. 18, No. 3, 

2004, pp. 481-512.

54. Kubicek, The European Union and Democratization, p. 210.

55. Jan Zielonka and Alex Pravda, eds., Democratic Consolidation 

in Eastern Europe, Vol. 2: International and Domestic Factors, New 

York: Oxford University Press, 2001; Frank Schimmelfennig, 

et al., “Costs, Commitment and Compliance: The Impact of EU 

Democratic Conditionality on Latvia, Slovakia, and Turkey,” 

Journal of Common Market Studies, Vol. 41, No. 3, 2003; Ziya Onis, 

“Diverse but Converging Paths to European Union Membership: 

Poland and Turkey in Comparative Perspective,” East European 

Politics and Societies, Vol. 18, No. 3, 2004, pp. 481-512. There is 

an extensive, growing literature on international influences on 

democracy promotion. See also Levitsky and Way; Phillippe C. 

Schmitter, “The Influence of the International Context upon the 

Choice of National Institutions and Policies in Neo-Democracies,” 

in Laurence Whitehead, ed., The International Dimension of 

Democratization: Europe and Americas, London: Oxford University 

Press, 1996; Geoffrey Pridham, et al., eds., Building Democracy? 

The International Dimension of Democratisation in Eastern Europe, 

London: Leicester University Press, 1997. 

56. V. Surkov, “General’naya liniya” (“The General Line”), 

Moskovskie novosti, Vol. 7, No. 1324, March 3-9, 2006, pp. 10-11; and 
94

March 10-16, 2006, Vol. 9, No. 1325; and Sergei Ivanvov, “Russia 

Must Be Strong,” Wall Street Journal, January 11, 2006. 

57. Ibid.

58. Thomas Carothers, “The Backlash Against Democracy 

Promotion,” Foreign Affairs, Vol. 85, No. 2, March/April 2006, pp. 

55-68. 

59. Kubicek, The European Union and Democratization, p. 210. 

60. This interpretation is closer to one argued by Paul Kubicek 

than the analysis of Kevin Krause. See both in Kubicek, The 

European Union and Democratization.

61. Onis, “Diverse but Converging Paths.”

62. Taras Kuzio, “EU and Ukraine: A Turning Point in 2004?” 

Occasional Paper, No. 47, Paris: European Union Institute for 

Security Studies, March 2003.

63. International Herald Tribune, September 9, 2004.

64. Is Russia a European state? The sole condition for a country 

to apply to join the European Union was laid down by the Treaty 

of Maastricht (or the Treaty of the European Union, 1992) and 

holds that the applicant must be a ‘European State’. There is no 

explicit interpretation of this criterion and can be considered in 

geographical, cultural, or political terms. Thus, the Council rejected 

a 1987 application from Morocco to become a member on the 

grounds that Morocco was not a European State. By comparison, 

Cyprus, geographically an island in Southwest Asia, has extensive 

historical, cultural, and political ties to Europe and entered the EU 

in 2004. Whether Turkey is a European country, given that only 

3 percent of its territory lies in Europe and its population is more 

than 90 percent Muslim, is a controversial question. On the other 

hand, Turkey has historically been part of European diplomacy, 

it is strategically important, and a member of NATO. Article 28 

of the Association Agreement signed in 1963 includes the option 

of Turkey eventually joining the EU, and Ankara in fact lodged 

an application to accede in 1987. The European Parliament, 

Council, and Commission confirmed Turkey’s eligibility, and 

the EU formally started accession negotiations with Ankara in 

2005. These examples show that the term “European State” is 

as much subject to political as it is geographical assessment. On 

Turkey, see Council Decision of October 1, 1987, cited in Europe 

Archives, Z 207; EP resolution Doc. A4-0368/97, 4.12.1997, recital 

S and para. 31; Luxembourg European Council of 12-13.12.1997, 
95

Presidency’s Conclusions, para. 31; Commission opinion of 

18.12.1989, SEC(89)2290 final; Commission communication to the 

Council, European Strategy for Turkey—Initial Operational Proposals 

by the Commission COM(98)0124 final, 4.3.1998. Cited in European 

Parliament. Briefing No 23, Legal questions of enlargement, 

available at www.europarl.eu.int/enlargement/briefings/23a2_en.htm. 

65. Strobe Talbott, “Putin: Talk Like a Democrat, Walk Like an 

Autocrat,” YaleGlobal, May 12, 2004.

66. Kubicek, The European Union and Democratization, pp. 199-

200.

67. Johnson’s Russia List #6575, November 27, 2002.

68. Fish, Democracy Derailed; Lucan A. Way, “Authoritarian 

State Building and the Sources of Regime Competitiveness in 

the Fourth Wave: The Cases of Belarus, Moldova, Russia, and 

Ukraine,” World Politics, Vol. 57, No. 2, January 2005, pp. 231-

261; Steven Rosefielde, Russia in the 21st Century: The Prodigal 

Superpower, Cambridge: Cambridge University Press, 2004; 

and Stephen Kotkin, “All that Stands Between Democracy and 

Russia is Russia,” The New Republic, May 29, 2006. For a strong 

counterargument, see Andrei Shleifer and Daniel Treisman, “A 

Normal Country,” NBER Working Paper No. W10057, November 

2003.

69. Kataryna Wolczuk, “Integration without Europeanisation: 

Ukraine and its Policy towards the European Union,” EUI 

Working Paper, RSCAS No. 15, European University Institute, 

October, 2004, p. 21.

70. EBRD, Transition Report, 2000, p. 22. See also Oleh 

Havrylyshyn, Divergent Paths in Post-Communist Transformation. 

Capitalism for All or Capitalism for the Few? New York: Palgrave 

Macmillan, 2006.

71. Marius Vahl, “Is Ukraine En Route to the Union?” European 

Voice, March 10, 2004.

72. European Commission, EU-Ukraine Action Plan, available 

at ec.europa.eu/world/enp/documents_en.htm.

73. Benita Ferrero-Waldner, Speech by European Commissioner for External Relations and European Neighbourhood Policy, 

“Giving the Neighbours a stake in the EU internal market,” 10th 

Euro-Mediterranean Economic Transition Conference, Brussels, 

June 6, 2006. 
96

74. Leshukov, “Beyond Satisfaction.” 

75. “The Medium Term Strategy for the Development of 

Relations between the Russian Federation and the EU (2000-

2010),” Unofficial Translation. 

76. See, for example, V. Chizhov, “Russia-EU Cooperation: The 

Foreign Policy Dimension,” International Affairs, 2005, pp. 134-138; 

and K. Kosachev, “Russia Between the European Choice and Asian 

Growth,” International Affairs, 2006, pp. 1-9; Sergei Lavrov, “The 

Foreign Policy Outcomes of 2005: Reflections and Conclusions,” 

Unofficial translation from Russian, Russian Ministry of Foreign 

Affairs, December 28, 2005; and Alexander Grushko, “The EuroAtlantic Vector of Russian Foreign Policy,” Unofficial translation 

from Russian, Russian Ministry of Foreign Affairs, December 27, 

2005. 

77. For example, Robert Legvold, “All the Way: Crafting a U.S.-

Russian Alliance,” The National Interest, Vol. 70, Winter 2002-03. 

78. Talbott, “Putin: Talk Like a Democrat”; and Interview 

Granted by President Vladimir Putin to France-3 Television, 

February 9, 2003. 

79. Victor Loshak, interview with Senior Deputy Prime 

Minister Dmitri Medvedev, Ogonyok, No. 24, June 12-18, 2006. 

80. Text of Putin’s speech to the Bundestag, carried live by 

Russia TV and German ZDF TV on September 25, 2001, BBC 

Monitoring Service, United Kingdom. 

81. OECD Economic Survey of the Russian Federation 2004: 

The Sources Of Russian Economic Growth, available at www.oecd.

org/dataoecd/56/0/32389025.pdf. 

82. Lavrov, “The Foreign Policy Outcomes of 2005.”

83. Siloviki are members of the elite from (current or past 

service) the armed forces, state security, law enforcement, or other 

“force ministries.”

84. Olga Kryshtanovskaya and Stephen White, “Inside the 

Putin Court: A Research Note,” Europe-Asia Studies, Vol. 57, No. 

7, November 2005, pp. 1065-1075; and idem, “Putin ́s Militocracy,” 

Post-Soviet Affairs, Vol. 19, No. 4, 2003, pp. 289-306.

85. Pilar Bonet, “Public Opinion and Pro-Western Interest 

Groups in Russia,” in Motyl, Ruble, Shevtsova, eds., Russia’s 

Engagement with the West, pp. 91-92.
97

86. Fish; Daniel Kaufmann, Aart Kraay, and Massimo 

Mastruzzi, “Governance Matters IV: Governance Indicators for 

1996–2004,” World Bank Policy Research Working Paper 3237, 

Washington, DC, 2005, available at worldbank.org/wbi/governance/

pubs/govmatters4.html. 

87. Tompson, “Putin and the ‘Oligarchs,’” p. 15. 

88. Transparency International in August 2005 ranked Russia 

the 90th-least corrupt country out of 145 surveyed. The Russia 

Indem Foundation, in a survey comparing the situation in 2005 to 

2001, estimated that businesses pay around $316 billion in bribes 

annually, with “ordinary” Russians paying another $3 billion in 

petty corruption. The report claims that the average businessman 

pays $135,800 in bribes each year—13 times higher than the 

corresponding figure 4 years ago. Shaun Walker, “A Matter of 

Choice? Corruption as a Social Value or a Systemic Constant,” 

Russia Profile, September 22, 2005, available at www.russiaprofile.

org. See also Transparency International Global Corruption Report, 

available at www.transparency.org/publications/gcr; and Steven Lee 

Myers, “Pervasive Corruption in Russia Is ‘Just Called Business,’” 

New York Times, August 13, 2005. For informative larger accounts, 

see Andrew Jack, Inside Putin’s Russia, London: Oxford University 

Press, 2004; and Peter S. Baker and Susan Glasser, Kremlin Rising: 

Vladimir Putin’s Russia and the End of Revolution, New York: 

Scribner, 2005. 

89. Daron Acemoglu and James A. Robinson, “De Facto 

Political Power and Institutional Persistence,” American Economic 

Association Papers and Proceedings, May 2006; idem., “Political 

Losers As a Barrier to Economic Development,” American Economic 

Review Papers and Proceedings, Vol. 90, May 2000, pp. 126-130; and 

Tompson, “Putin and the ‘Oligarchs.’” 

90. European Commission, “Communication of the 

Commission to the Council of Europe and European Parliament 

on Relations with Russia,” COMM, 2004, No. 106, final, February 

9, 2004. 

91. Dov Lynch, “From ‘Frontier’ Politics to ‘Border’ Policies 

Between the EU and Russia,” in Oksana Antonenko and Kathryn 

Pinnick, eds., Russia and the European Union, New York: Routledge, 

2005, p. 25.

92. Dimitry Danilov, The EU’s Rapid Reaction Capabilities: 

A Russian Perspective,” ESF Working Paper, No. 4, IISS/CEPS 
98

European Security Forum, October 2001. See also idem, “Russia 

and European Security,” in Dov Lynch, ed., What Russia Sees,

Chaillot Paper No 74, Paris: International Institute for Strategic 

Studies (IISS), 2005.

93. Olga Levitskaya and Natalia Simorova, “Russia-EU 

Cooperation Mechanisms Need Improvement,” Itar-Tass Weekly 

News, November 28, 2005. 

94. Roberts, “Russia and NATO”; author’s interviews in 

Moscow and Brussels, 2003, 2005.

95. Danilov, The EU’s Rapid Reaction Capabilities; Tuomas 

Forsberg, “The EU-Russia Security Partnership: Why the 

Opportunity Was Missed,” European Foreign Affairs Review, No. 9, 

2004, pp. 247-267; Dov Lynch “Russia’s Strategic Partnership with 

Europe,” Washington Quarterly, Vol. 27, No. 2, Spring 2004, pp. 99-

118; and author’s interviews.

96. Vladimir Putin, Address at the Plenary Session of the 

Russian Federation Ambassadors and Permanent Representatives 

Meeting, Moscow, Foreign Ministry, July 12, 2004, Unofficial 

translation. See also V. Chizhov, “European Union: A Partnership 

Strategy,” International Affairs, 2004, pp. 79-87; and author’s 

interviews with officials at the Russian Ministry of Foreign Affairs, 

Moscow. 

97. For more on the visa issues and some flexibility concerning 

short-stay visas, multiyear visas and visas for certain categories 

of citizens, see Derek Averre, “Russia and the European Union: 

Convergence or Divergence?” European Security, Vol. 14, No. 2, 

June 2005, pp. 185-186.

98. RIA Novosti, May 25, 2006.

99. V. Mau and V. Novikov, “Otnosheniya Rossii i ES: 

Prostranstvo Vybora ili Vybor Prostranstvo?” (“Russia-EU 

Relations: The Space of Choice or the Choice of Space?”) Voprosy 

ekonomiki, No. 6, 2002, pp. 133-145; Anders Aslund and Andrew 

Warner, “The Enlargement of the European Union: Consequences 

for the CIS Countries,” Carnegie Paper No. 36, Washington, DC: 

Carnegie Endowment, April 2003; and Carl B. Hamilton, “Russia’s 

European Economic Integration: Escapism and Realities,” CEPR 

Discussion Paper No. 3840, Centre for Economic Policy Research 

(CEPR) March 2003. See also Philip Hanson, “Making a Good 

Entrance: Russia’s Reengagement with the World Economy and, 

Unfortunately, with Europe in Particular,” in A. Motyl, B. Ruble, 
99

and L. Shevtsova, eds., Russia’s Engagement with the West, chap. 6; 

and Katinka Barysch, “EU-Russian Relations: the EU perspective,” 

in Debra Johnson and Paul Robinson, eds., Perspectives on EURussian Relations, London: Routledge, 2005; and idem, “The EU 

and Russia: Strategic Partners or Squabbling Neighbors?” London: 

Centre for European Reform, 2004. 

100. Barysch, “EU-Russian Relations,” pp. 121-124. For a 

thoughtful analysis suggesting Russia should now apply for 

EU membership, see Stephan Kux, “European Union-Russia 

Relations: Transformation through Integration,” in Motyl, Ruble, 

Shevtsova, eds., Russia’s Engagement with the West, pp. 170-184. 

101. Timofei Bordachev, “Toward a Strategic Alliance,” Russia 

in Global Affairs, Vol. 4, No. 2, April-June 2006. 

102. Ibid. This article draws on provisions of the “Concept 

of a New Political and Legal Format of Russia-EU Relations,” a 

working document drafted in 2005 by the Institute of Europe of 

the Russian Academy of Sciences (the Center for Applied RussiaEU Studies), the Council on Foreign and Defense Policy (SVOP), 

and Russia in Global Affairs. 

103. Forsberg, “The EU-Russia Security Partnership.”

104. Ibid. For a useful discussion of the security area, see also 

Lynch, 2004.

105. V. V. Putin, Address at the Plenary Session of the Russian 

Federation Ambassadors and Permanent Representatives Meeting, Moscow, Foreign Ministry, July 12, 2004; Dmitri Trenin, 

“Russia, the EU and the Common Neighborhood,” Brussels: CER, 

September 2005, p. 2. 

106. See, for example, “Conflict Resolution in the South 

Caucasus: The EU’s Role,” Europe Report No. 173, International 

Crisis Group, March 20, 2006; and “Moldova’s Uncertain Future,” 

Europe Report No. 175, International Crisis Group, August 17, 

2006.

107. Vladimir Socor, “Proposal On The Table To Transform 

Russian “Peacekeeping” In Moldova,” Eurasia Daily Monitor, Vol. 

3, No. 104, May 30, 2006. 

108. Russian MFA Information and Press Department 

Commentary Regarding a Media Question About Georgia’s 

Accusations Against Russian Peacekeepers, Ministry of Foreign 

Affairs, Russia, June 1, 2006; Vladimir Solovyev and Vladimir 
100

Novikov, “Otbiranie zemel’: Rossiia otkazyvaet Gruzii i Modavii v 

territorial’noi tselostnosti” (“Taking Land: Russia Rejects Georgian 

and Moldovan Territorial Integrity”), Kommersant, June 2, 2006.

109. Transcript of Remarks and Replies to Media Questions 

by Russian Minister of Foreign Affairs Sergei Lavrov After 

Roundtable Meeting in International Affairs Committee of the 

State Duma of the Russian Federation, Moscow, November 28, 

2005.

110. Joint Press Conference with British Prime Minister 

Anthony Blair, President of the European Commission Jose 

Manuel Barroso, and European Union High representative for the 

Common Foreign and Security Policy Javier Solana Following the 

Russian-EU Summit, London, October 4, 2005, available at www.

kremlin.ru/appears/2005/10/04/2135_type63377type63380_94904.

shtml. 

111. See, for example, the press conference of Gleb Pavlovskii, 

RIA-Novosti, February 3, 2005.

112. On Slovakia, see Bugajski, Cold Peace, pp. 162-167; and 

passim, for Central and Eastern Europe. See also Jurgis Vilemas, 

“Russia’s Energy Policy,” in Janusz Bugajski and Marek 

Michalewski, eds., Toward an Understanding of Russia: New 

European Perspectives, New York: Council on Foreign Relations, 

2002, chap. 4. 

113. Joint press conference at EU-Russia summit, October 5, 

2005, available at www.number10.gov.uk/output/Page8258.asp.

114. Michael Emerson, “EU-Russia: Four Common Spaces and 

the Proliferation of the Fuzzy,” CEPS Policy Brief, No. 71, May 

2005, p. 4.

115. Since 1992, the Russian population shrank by 6 million 

people, and if current low fertility and high mortality trends 

continue, the Russian Federation will decline by approximately 

18 million people by 2025. As a result, Russia will go from being 

the 6th most populous country in the world to being the 17th. 

Dying Too Young: Addressing Premature Mortality and Ill Health Due 

to Non-Communicable Diseases and Injuries in the Russian Federation, 

World Bank Report, 2006. See also “Vladimir Putin on Raising 

Russia’s Birth Rate,” Population and Development Review, Vol. 32, 

No. 2, pp. 385-389.

116. Pekka Sulamaa and Mika Widgren, “Economic Effects of 

Free Trade between the EU and Russia, ENEPRI Working Paper No. 
101

36, May 2005; Hanson, “Making a Good Entrance;” Peter Havlik, 

“EU-Russia Relations and Challenges of Economic Integration,” 

BOFIT Seminar on Russian Economy, Helsinki, October 2005; 

idem, “Russia, European Union and EU Enlargement,” TACIS 

Russian-European Centre for Economic Policy, RECEP Research 

Papers, July 16, 2002; European Commission, EU “Bilateral Trade 

Relations” 2004, available at ec.europa.eu/trade/issues/bilateral/

countries/russia/index_en.htm. 

117. Energy Charter Secretariat, The Energy Charter Treaty and 

Related Documents, 2004. See also International Energy Agency 

reports, available at www.iea.org/.

118. See for example, “Russia to Propose a New Energy 

Security Concept,” Neftegaz.ru, May 17, 2006.

119. Interfax, May 25, 2006.

120. Interfax, October 20, 2005. See also the insightful 

commentary by Vladimir Socor, “Russia In Control Of Turkmen 

And Ukrainian Gas Trade,” Eurasia Daily Monitor, Vol. 2, No. 197, 

October 24, 2005.

121. U.S. Department of Energy (DOE), Energy Information 

Administration (EIA), Country Analysis Briefs, Russia, January 

2006, available at www.eia.doe.gov/cabs/Russia/Full.html. 

122. George Parker, Sarah Laitner, and Thomas Catan, “Lights 

Out? How Europe Is Trying to Fix a Power Failure,” Financial 

Times, April 5, 2006, p. 11.

123. North Central Europe, EIA, DOE, May 2003, available at 

www.eia.doe.gov/emeu/cabs/poland.html; Judy Dempsey, “Poland 

Intends to Cut Reliance on Russian Gas,” IHT, Alexander’s Gas & 

Oil Connections, Vol. 10, No. 23, December 8, 2005.

124. DOE, EIA, “Russian Energy Data, Statistics and Analysis,” 

December 2005; Bertrand Benoit and Carola Hoyos, “Merkel 

Warms to Closer Ties with Russia,” Financial Times, April 15-16, 

2006, p. 2; International Herald Tribune, April 3, 2006. Data analysis is 

complicated because many European countries depend on Russia 

for a large percentage of their domestic natural gas consumption, 

but when factored into total energy consumption, this dependency 

is often lower. Cf data in EIA, “BP Statistical Review of World 

Energy,” 2006, and sources noted above. See also Vladimir Milov, 

“Putin’s Russia and Its Energy Policy,” presentation at the Centre 

d Etudes et Recherches Internationales (CERI), Paris, October 11, 
102

2006, available at www.energypolicy.ru/files/Milov-Oct11%202006.

ppt. 

125. For insightful commentary, see Arkady Ostrovsky, 

“Energy of the State: How Gazprom Acts as Lever in Putin’s 

Power Play,” Financial Times, March 14, 2006, p. 11; and Michael 

Emerson, “What to Do about Gazprom’s Monopoly Power,” 

CEPS, February 2006.

126. Andreas Heinrich, “Gazprom—A Reliable Partner for 

Europe’s Energy Supply?” Russian Analytical Digest, No. 1, June 

6, 2006, p. 4.

127. For a good account, see Jonathan Stern, “The RussianUkrainian Gas Crisis of January 2006,” Oxford Institute for Energy 

Studies, 2006. 

128. “EU Asks US to Help Pressure Russia on Energy,” 

International Herald Tribune, April 30, 2006.

129. Alan Cullison, “Russia Turns up Heat Again Over Natural 

Gas for Ukraine,” Wall Street Journal, June 6, 2006.

130. European Commission, Green Paper: A European Strategy 

for Sustainable, Competitive and Secure Energy, COM(2006), 105, 

final, {SEC(2006) 317} Brussels, March 8, 2006. 

131. European Commission, Commission Staff Working 

Document, Annex to the Green Paper, “A European Strategy for 

Sustainable, Competitive and Secure Energy: What Is at Stake,” 

SEC(2006), Vol. 317, No. 2 {COM(2006), 105 final, Brussels. 

132. For example, Andris Piebalgs, “A Common Energy Policy 

for Europe,” EU Energy Policy and Law Conference, Brussels, 

March 9, 2006. 

133. Alexei Grivish and Yuri Shpakov, “Meeting Russia’s 

Requirements,” Vremya novostei, October 11, 2006.

134. Jeff Piper, “Towards an EU-Russia Energy Partnership,” 

Directorate-General for Energy and Transport, European 

Commission, 2003; Christian Cleutinx, “The Energy Dialogue 

EU—Russia,” European Commission, October 2005. This section 

also draws on Rudiger Ahrend and William Tompson, “Russia’s 

Gas Sector: The Endless Wait for Reform?” Working Paper 

No. 402, OECD, September 17, 2004; “Energy Dialogue with 

Russia: Update on Progress,” Commission Staff Working Paper, 

SEC(2004) 114; European Commission; OECD/IEA Russia Energy 

Survey 2002; and other IEA reports. 
103

135. Vladimir Milov, “How Sustainable is Russia’s Future as 

an Energy Superpower?” Meeting report, Carnegie Endowment 

for International Peace, March 16, 2006; and idem, “Can Russia 

Become An Oil Paradise?” Pro et Contra, Vol. 10, Nos. 2-3, 2006.

136. Energeticheskaia strategiia Rossii na period do 2020 goda (The 

Energy Strategy of Russia for the Period to 2020), 2003, available 

at www.mte.gov.ru/files/103/1354.strategy.pdf. See also Christian 

Cleutinx, Director, EU-Russia Energy Dialogue, European 

Commission, speech on the “Geopolitics of Energy Security,” 

Brussels, May 10, 2006, available at www.european-enterprise.org/

public/docs/speech20061005.pdf. 

137. IEA, Russia Energy Survey 2002.

138. Rudiger Ahrend and William Tompson, “Realising the 

Oil Supply Potential of the CIS: The Impact of Institutions and 

Policies,” OECD Economics Department Working Papers, No. 484, 

May 12, 2006, p. 22; and passim. 

139. Victor Baranov, “Independent Gas Business in Russia: 

Contribution to Energy Security,” IEA Conference on Energy 

Security: Role of Russian Gas Companies, Paris, November 25, 

2003.

140. Patrick Moore, “Russia/China: ‘Partners’ Struggle With 

An Unequal Relationship,” RFE/RL, March 22, 2006. 

141. Edward C. Chow and Stephen J. Blank, “Can Anyone 

Save This Marriage: Russo-Chinese Energy Relations,” Meeting 

Summary, Carnegie Endowment for International Peace, 

Washington, DC, May 25, 2006. 

142. Vladimir Milov, “Can Russia Become An Oil Paradise?” 

pp. 5-7.

143. OECD/IEA, Russia Energy Survey 2002, p. 35; and 

passim; Milov, “How Sustainable is Russia’s Future as an Energy 

Superpower?” See also Jonathan P. Stern, The Future of Russian 

Gas and Gazprom, Oxford University Press, 2005; and Erik Janssen, 

“Can Russian oil growth be sustained?” CIEP Briefing Paper 4, 

The Hague, Clingendael Institute, October 2005. 

144. Cullison, “Russia Turns up Heat Again Over Natural Gas 

for Ukraine.”

145. Daniel Yergin, “Ensuring Energy Security,” Foreign Affairs, 

Vol. 85, No. 2, March/April 2006, pp. 69-82, at p. 69.
104

146. Chris Holmes, “Atlantic Basin, Mideast Adequate to 

Supply Europe, US in Mid-Term,” Oil and Gas Journal’s LNG 

Observer, April 3, 2006. 

147. “EU Seeks New Supply Routes in Wake of Russia-Ukraine 

Gas Row,” EurActiv, January 18, 2006. 

148. Anders Aslund, “The Folly of Renationalization,” Moscow 

Times, May 23, 2006. 

149. “Documents Show Gazprom Transferred Assets to 

Relatives,” The Moscow Times, May 21, 2001; Jerome Guillet, 

“Gazprom’s Got West Europeans Over a Barrel,” The Wall Street 

Journal, November 8, 2002; Ben Aris and Richard Orange, “Putin 

and the New Cold War. Who Got Burned in the Great Gas War?” 

available at thebusinessonline.com, January 8, 2006. 

150. For a powerful critique, see Milov, “Can Russia Become 

An Oil Paradise?” 

151. “Putin Warns EU on WTO Arm-Twisting,” The St. 

Petersburg Times, October 10, 2003. 

152. Michael Ross, “Does Oil Hinder Democracy?” World 

Politics, Vol. 53, No. 3, April 2001, pp. 325-361; and Fish, Democracy 

Derailed in Russia.

153. See, for example, Angela Stent, “A New Security Agenda 

For U.S.-German-Russian Relations: Interim Report,” American 

Institute for Contemporary German Studies, AICGS Policy Report 

#3, 2002. 

154. Surkov, “General’naya liniya” (“The General Line”).

155. See, for example, Dmitri Trenin, Integratsiia i identichnost’: 

Rossiia kak ‘novyi Zapad’ (Integration and Identity: Russia as the ‘New 

West’), Moscow: Evropa and Carnegie Moscow Center, 2006; and 

idem, “Russia And The West: What You See Is What You Get,” 

www.theworldtoday.org, April 2004. 

156. Aleksei Kudrin in Vedomosti, September 27, 2005, as cited 

in Ahrend and Tompson, “Realising the Oil Supply Potential,” p. 

5.

157. Andrew E. Kramer and Steven Lee Myers, “Workers’ 

Paradise Is Rebranded as Kremlin Inc.,” The New York Times, April 

24, 2006. 

158. See, for example, Dmitri Trenin and Bobo Lo, The 

Landscape of Russian Foreign Policy Decisionmaking, Washington, 

DC: Carnegie Endowment for International Peace, 2005.
105

159. Aleksandr Orlov, “Russia Will Never Accept the Role of a 

Poor Relation,” International Affairs (Moscow), No. 4, 2004. 

160. V. Surkov, Interview with Komsomol’skaia Pravda, 

September 29, 2004, p. 4; and Olga Kryshtanovskaya and Stephen 

White, “Inside the Putin Court: A Research Note,” Europe-Asia 

Studies, Vol. 57, No. 7, November 2005, pp. 1065-1075.

161. Sergei Yastrzembskii, interview with Nezavisimaya Gazeta, 

November 17, 2004.

162. Orlov, “Russia Will Never Accept the Role of a Poor 

Relation.”

163. Author’s interviews.

164. Thus, the politically-connected analyst Sergei Karaganov 

argues that despite the significance of Western influences on 

Russia, preferences were ambiguous. Russia did not want to be 

excluded from important clubs but also was unwilling and insulted 

to be considered in the same category with former satellites. See 

S. A. Karaganov, “XXI vek I interesy Rossii’” (“The 21st Century 

and Russia’s Interests”), Sovremennaya Evropa, No. 3, 2004, pp. 5-

22; and idem, “Building Bridges with Brussels,” Financial Times, 

May 18, 2001. 

165. Orlov, “Russia Will Never Accept the Role of a Poor 

Relation.”

166. This discussion draws on the analysis of Igor Torbakov, 

“Russian Strategists Debate Kremlin Policies on CIS Integration,” 

Eurasia Daily Monitor, Vol. I, No. 24, The Jamestown Foundation, 

June 4, 2004.

167. Gleb Pavlovskii, “Rossia vse eshche ishchet svoiu rol’ 

v mire” (“Russia is Still Searching for Its Role in the World”), 

Nezavisimaia gazeta, May 31, 2004.

168. Konstantin Kosachev, “Rossia dolzhna stat’ eksporterom 

demokratii” (“Russia Should Become an Exporter of Democracy”), 

Izvestiia, June 25, 2004. 

169. Vlad Sobell, “Russia after Beslan,” Johnson’s List, #16 - 

JRL 8377, September 21, 2004.

170. Konstantin Kosachev, “Neftegazovaia diplomatiia kak 

ugroza marginalizatsii” (“Oil and Gas Diplomacy as a Threat of 

Marginalization”), Nezavisimaya gazeta, December 28, 2004; and 

Interview with Sergei Karaganov, “V etom mire povtoriat’ oshibki 
106

ne nado” (“In This World, One Shouldn’t Repeat Mistakes”), 

Nezavisimaya gazeta, December 20, 2004. 

171. “Full text of the interview with G. B. Karasin in Rossiiskaia 

gazeta, “August 16, 2005, posted at Russian Foreign Ministry (in 

Russian); “Interview with G. B. Karasin published in Izvestiia, 

December 28, 2005, posted at Russian Foreign Ministry (in 

Russian). See also Simon Saradzhyan, “Russia Rethinks Its 

CIS Policy,” The Moscow Times, August 24, 2005, p. 1; and Igor 

Torbakov, “Russia Adapts Policy to Address Rift Within CIS,” 

Eurasia Insight, September 12, 2005. 

172. For a useful overview, see Bugajski, Cold Peace.

173. Jaffe and Manning, “Russia, Energy, and the West,” p. 

140. For a sophisticated analysis of the complex nexus of political, 

economic, and security issues in the area with a special focus 

on Ukraine and Belarus, see also Robert Legvold and Celeste A. 

Wallander, eds. Swords and Sustenance: The Economics of Security in 

Belarus and Ukraine, Boston: MIT Press, 2004. 

174. Bugajski, Cold Peace, chap. 8. 

175. Cited in Fiona Hill, “Beyond Co-Dependency: European 

Reliance on Russian Energy,” U.S.-Europe Analysis Series, The 

Brookings Institution, July 2005.

176. Sergei Ivanov, “Russia Must be Strong,” The Wall Street 

Journal, January 11, 2006. 

177. President Putin, interview with German television 

channels ARD and ZDF, May 5, 2005, available at www.kremlin.

ru/eng/speeches/2005/05/05/2355_type82916_87597.shtml. 

178. Trenin, “Russia, the EU and the Common Neighborhood.”

179. Timofei Bordachev, “Toward a Strategic Alliance,” Russia 

in Global Affairs, Vol. 4, No.2, April-June 2006. 

180. Chizhov, “European Union: A Partnership Strategy,” p. 

79. 

181. Interfax, May 30, 2005.

182. K. Kosachev, “Russia Between the European Choice And 

Asian Growth,” International Affairs, 2006, pp. 1-9. 

183. Ivan D. Ivanov, MEiMO, No. 9, September 1999, as cited in 

Michael Emerson, “The EU-Russia-US Triangle,” Brussels, CEPS 

Policy Brief, 2004, p. 3. 
107

184. Trenin, “Russia Leaves the West.”

185. Press Conference with State Duma Committee for Foreign 

Affairs Chair Konstantin Kosachev, RIA Novosti, May 19, 2004.

186. S. A. Karaganov, Timofei Bordachev, Vagif Guseinov, 

Fyodor Lukyanov, and Dmitry Suslov, “Russia-EU Relations: The 

Present Situation and Prospects,” CEPS working document No. 

225, July 2005.

187. Interfax, May 10, 2005.

188. President Putin’s Interview with French Television 

Company, available at Kremlin.ru. May 7, 2005.

189. For interesting commentary on what to do in 2007 when 

the PCA reaches its 10th year and is open for replacement, see 

Bordachev, “Toward a Strategic Alliance”; Nadezhda K. Arbatova, 

“Russia-EU Quandry 2007,” Russia in Global Affairs, Vol. 4, No. 

2, April-June, 2006; Michael K. Emerson, Fabrizio Tassinari, and 

Marius Vahl, “A New Agreement between the EU and Russia: 

Why, What, and When?” CEPS Policy Brief, No. 103, May 2006.

190. For representative examples of how Russia will be a subject 

of contention in American electoral politics, see Vice President 

Cheney’s Speech at the 2006 Vilnius Conference, May 4, 2006, 

available at www.whitehouse.gov/news/releases/2006/05/20060504-

1.html; and Independent Task Force report on Russia’s Wrong 

Direction: What the United States Can and Should Do, New York: 

Council on Foreign Relations, March 2006.

191. This point was inspired in part by Arnold Wolfers’ insight 

about the contradiction between the feasibility and psychology 

of collective security. See his Discord and Collaboration, Baltimore: 

Johns Hopkins University Press, 1962, p. 197. 

192. Senator Richard Lugar, transcript of remarks at The 

Brookings Institution, March 13, 2006. 

193. “EU Asks US to Help Pressure Russia on Energy,”

International Herald Tribune, April 30, 2006. 

194. Andris Piebalgs, “Recent EU Developments on Energy 

Policy,” Speech to the International Energy Agency Governing 

Board members, Paris, June 13, 2006. 

195. Clifford G. Gaddy and Barry W. Ickes, “Resource Rents 

and the Russian Economy,” Eurasian Geography and Economics,

Vol. 46, No. 8, 2005, pp. 559-583.
108

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