The Kremlin Wises Up; After strong-arm tactics backfire, Moscow finds smarter ways to extend its influence abroad.

Newsweek International Edition - Owen Matthews and Anna Nemtsova

February 4, 2008

Russians can be forgiven for a little nostalgia. Not long ago, their country commanded a worldwide empire. Yet in the past 15 years, their homeland has lost much of its geopolitical clout. No surprise, then, that the newly rich Russia should hanker to restore its muscle, and not just in its old Soviet backyard. As Tatyana Parkhalina, director of the Moscow-based Center for European Security, describes the government's current attitude, "Russia wants to send the world a message: “‘We are a superpower--we are still here!' "


Many of Russia's neighbors have already borne the brunt of Moscow's efforts to reassert itself. Last year, after a spy row with Georgia, Russia cut off all rail and air links and embargoed Georgian products. Estonia's embassy in Moscow was raided by Kremlin-backed thugs after a spat over the removal of a Soviet war memorial in Tallinn. And both Ukraine and Belarus found their oil and gas supplies suspended when they refused Russian price hikes. But all these attempts to enforce Russia's will backfired: both Georgians and Ukrainians recently re-elected their anti-Kremlin leaders. Even Belarus, once Russia's closest ally, responded to Moscow's squeeze by making overtures to Europe.


Now, it seems, the Kremlin has learned its lesson. Vladimir Putin's latest power plays demonstrate greater subtlety, and his new tactics--trading gas supplies and international diplomatic backing for loyalty--are proving more effective. Last week, for example, he traveled to Sofia to clinch a deal that will see a major new gas pipeline built through Bulgaria and ultimately on to the Balkans and Italy. Bulgaria will get stable energy supplies--but will become dependent on a Russian pipeline. Serbia quickly signed up too, in no small part because Belgrade needs Moscow's backing on Kosovo.


Indeed, Kosovo is set to become the latest showdown between Russia and the West when the breakaway Serbian republic declares its independence in the next few weeks. Washington and Berlin have promised to support it, but Putin has insisted Belgrade must approve the deal--something Serbia's current president has vowed never to do. Behind Moscow's position is an implicit threat: should the West hold firm, Russia could return the favor by ratcheting up separatist pressure in several pro-Western former Soviet states.


Russia's foreign minister, Sergei Lavrov, denied last week that Moscow has any plans to recognize the breakaway Georgian provinces of Abkhazia and South Ossetia. Yet both areas are already effectively Russian protectorates, policed by Russian troops. So is Transdniestr, on the border of Moldova and Ukraine. "Abkhazia and Ossetia are like knives held to the throat of Georgia," says former Georgian parliamentarian Vakhtang Gilovani. While Moscow says it opposes the recognition of breakaway nations, it has been more than ready to use the threat of separatism as a strategic tool in the past.


Even if Moscow wins the showdown over Kosovo, it is likely to continue challenging what Putin has called the U.S.-dominated "unipolar world." U.S. backing for Kosovo's independence is proof that "Americans feel they can give or take away sovereignty depending on their own interests," says Vasily Likhachev, vice chairman of the International Affairs Committee of the upper house of Russia's Parliament. Such rancor among Kremlin leaders could lead to even more ambitious power plays. Today's "resurgent Russia is the world's foremost revisionist power," argues Prof. Robert Skidelsky of the U.K.'s University of Warwick. To balance the West, Moscow, using its "two superpower assets, nuclear weapons and energy," has already established friendly relations with a growing coalition of disgruntled states like Venezuela, Iran and Syria. What's next on the agenda? One option, according to Skidelsky, would be to foment unrest among the sizable Russian populations in Kazakhstan, Belarus and Ukraine to help bring these states back into Moscow's orbit. Another would be to build the Shanghai Cooperation Agreement, a loose alliance of Central Asian dictatorships plus Russia and China, into a powerful union.


Putin's anointed successor, Dmitry Medvedev, due to take over in five weeks' time, has so far remained quiet on questions of foreign policy. But he has said that Russia should be "strong and integrated with the rest of the world." Of course, what form that integration takes remains to be determined, and could shift dramatically if the disgruntled former superpower insists on rewriting the rules.

Russia: No Peacekeepers to Kosovo

MOSCOW (AP) — President Vladimir Putin's newly appointed envoy to NATO emphasized Moscow's opposition to Kosovo's independence bid Thursday, but said Russia would not send peacekeepers to the Serbian province.

Former nationalist lawmaker Dmitry Rogozin also suggested ex-Soviet republics Georgia and Ukraine have no hope of joining NATO soon and called for further revision of a European arms treaty that is a sharp bone of contention between Russia and the Western alliance.

At his first news conference since his appointment, Rogozin said the terms for Kosovo's independence offered to Serbia were "shameful and defective," and compared them to Treaty of Versailles restrictions imposed on Germany after its defeat in World War I.

The independence dispute has sparked speculation that Russia could send peacekeeping troops to Kosovo in a show of force. But Rogozin said, "I see no possibility of the return of our peacekeeping contingent to Kosovo. It's not necessary to do this."

Kosovo's ethnic Albanian leadership is likely to declare independence within weeks, a move Russia says cannot be accepted without the consent of Serbia, Russia's traditional ally. Putin said last week that Western acknowledgment would be "illegal and immoral."

"It's not the Serbs we are protecting, it's the rules of decent behavior and the architecture of international relations," Rogozin said. He likened recognition of Kosovo's independence to opening a "Pandora's box" that would trigger separatist movements in Europe.

Under an agreement with the United States, Russia sent peacekeepers to Kosovo in 1999 after the NATO bombing campaign that forced the withdrawal of the Yugoslav army from the separatist region. Russia pulled its peacekeepers out in 2003.

Putin appointed Rogozin, an outspoken nationalist who until recently was a prominent lawmaker and political party leader, at a time of severely strained ties between Russia and NATO, which has made Moscow nervous by expanding into the former Warsaw Pact and the ex-Soviet Baltic nations.

Rogozin called the NATO aspirations of pro-Western governments in Georgia and Ukraine "ritual and politicized dances," saying that the ex-Soviet nations are too economically and politically weak to be accepted into the alliance.

Russia-NATO ties have been further frayed by U.S. plans to deploy missile interceptors in Poland and a radar in the Czech Republic. Russian officials have dismissed U.S. arguments that the installations are meant to counter a potential threat from Iran, saying they believe the intent is to weaken Russia.

Another cause of tension between Russia and NATO is the 1990 Conventional Forces in Europe treaty, which limits the deployment of tanks, aircraft and other heavy weapons across the continent. Moscow suspended its participation in the pact last month, demanding NATO nations ratify a 1999 revision it says is fairer to Russia.

Russian officials have said they want further changes in the pact, but have offered few specifics. Rogozin said the treaty should include a "naval component" that would reflect a gap between Russian and NATO naval might.

Putin opponent to be investigated

Russian prosecutors have opened a criminal case against former PM Mikhail Kasyanov - an opposition candidate in the 2 March presidential election.

They accuse his campaign of forging some of the reported two million signatures on his nomination papers.

Mr Kasyanov is challenging Mr Putin's candidate Dmitry Medvedev. Mr Putin himself is barred from the March poll.

A spokeswoman for Mr Kasyanov's campaign described the prosecutors' move as "political pressure".

'Harassment'

On Saturday he issued a statement complaining of official harassment.

Mr Kasyanov was dismissed as prime minister in 2004, and the BBC's James Rodgers, reporting from Moscow, says his political journey has turned him from a loyal member of the Putin administration to an implacable critic of the Kremlin.
The authorities refused to register his political party, which is why he was obliged to support his candidacy with a list of signatures.

But prosecutors say they suspect more than 15,000 of these are fakes.

And the electoral commission says it has found 62,000 forged signatures.

If these figures were officially confirmed, they would disqualify Mr Kasyanov from standing.

Mr Kasyanov responded by saying "the authorities are afraid of a direct political contest".

"The question today is, will the voters have a choice or not?" he told reporters.

Mr Putin is standing down as president because he is not allowed more than two consecutive terms as president.

But he is widely expected to retain his influence in the Kremlin. He says he would like to be prime minister under the presidency of his protégé Mr Medvedev, who is hot favourite to win.

Two other candidates have also registered for the poll - Communist leader Gennady Zyuganov and Vladimir Zhirinovsky of the nationalist Liberal Democratic Party.

A leading liberal, former chess champion Garry Kasparov, had planned to run but said he could not after his supporters were not allowed to rent halls for nomination meetings.

The final candidates list is to be announced on Sunday.

Western observers have urged the Kremlin to stand back from the presidential poll.

They accused it of interfering in parliamentary elections last year, even though Mr Putin's party was likely to have won anyway.

Russia Could Use Nuclear Weapons as Preventive Measure to Thwart Major Threat, Official Says

Russia's military chief of staff said Saturday that Moscow could use nuclear weapons in preventive strikes in case of a major threat, the latest aggressive remarks from increasingly assertive Russian authorities.

"We have no plans to attack anyone, but we consider it necessary for all our partners in the world community to clearly understand ... that to defend the sovereignty and territorial integrity of Russia and its allies, military forces will be used, including preventively, including with the use of nuclear weapons," Gen. Yuri Baluyevsky said.

The comments from the hawkish Baluyevsky did not appear to mark a policy shift for Russia, whose leaders have stressed the need to maintain a powerful nuclear deterrent and reserved the right to carry out preventive strikes to counter existential threats. But in most of their public remarks about preventive strikes, President Vladimir Putin and other officials have not specifically mentioned the use of nuclear weapons.

Baluyevsky's remarks came at a time of increasingly strained relations between Moscow and the West, which are at odds over a range of issues and are embroiled in persistent disputes over U.S. plans for missile defense facilities in former Soviet satellite states that have joined NATO as well as alliance members' refusal to ratify an updated European conventional arms treaty.

Like most saber-rattling by Putin and other Russian officials, the chief of staff's remarks appeared aimed at least in part at the United States, which Moscow accuses of endangering global security through aggressive actions such as the invasion of Iraq.

Putin, who has sought to boost his popularity at home and win support abroad with his vocal criticism of U.S. foreign policy, has said that Russia opposes the use of preventive military attacks but reserves the right to carry them out because other countries do so.

Baluyevsky identified no specific nations or forces that threaten Russia. According to the ITAR-Tass news agency, however, he said threats to global security include "the striving by a number of countries for hegemony on a regional and global level" — a clear reference to the United States — and terrorism.

With Russian officials jockeying for position ahead of the March 2 presidential election, Baluyevsky's remarks at a military conference in Moscow may also have been aimed in part at a domestic audience.

Putin is barred from seeking a third term but has endorsed protege Dmitry Medvedev as his favored successor and has said he will become prime minister in the event of Medvedev's election, which is virtually assured given Putin's support and the Kremlin's control over electoral politics.

Russia revives military boast of Soviet days

The Washington Times - David R. Sands

Reviving yet another iconic image from Soviet days, Russia's military announced plans to stage a parade of ballistic missiles, tanks and platoons of soldiers this May through the Kremlin's Red Square.

The display of military hardware, the first of its kind since 1990, will be held May 9, the day Russians mark the victory over Germany in World War II, and could coincide with the inauguration of Dmitry Medvedev, close aide to outgoing President Vladimir Putin, as Russia's new leader.

Similar displays, typically held May 1, were a high point of the old Soviet calendar, with leaders such as Josef Stalin and other top Communist Party figures perched on the reviewing stand above Lenin's Tomb to witness the country's military prowess and send a message to the Soviet Union's Cold War adversaries.

The announcement comes at a time of rising tension between Russia and the West, on issues ranging from a planned U.S. missile defense system in Eastern Europe, to human rights to the future of Serbia's Kosovo province. Mr. Putin also has struggled to rebuild Russia's military forces, which deteriorated badly in the wake of the Soviet Union's collapse.

"You can't teach an old imperial bear new tricks," said Ariel Cohen, a Russian specialist at the Heritage Foundation. "The current regime's craving for international prestige is as high as the insecurity of its rulers."

British Foreign Secretary David Miliband yesterday accused Moscow of following the old, hostile Soviet pattern in an escalating dispute over Russia's order that two British cultural outreach offices in Moscow and St. Petersburg be shut down. Russia claims the centers are operating illegally, but Mr. Miliband said Russian authorities were trying to intimidate the British employees.

"We saw similar actions during the Cold War, but frankly thought they had been put behind us," Mr. Miliband told the House of Commons.

According to Russia's Interfax news agency, the May 9 parade lineup will include the newest version of the Topol-M SS-27 intercontinental ballistic missile, armored personnel carriers, tanks, and 6,000 troops decked out in a newly designed uniform.

Mr. Putin has made restoring Russian national pride and reclaiming some of its lost international influence central to his presidency.

He revived a reworked version of the old Soviet anthem as Russia's new national anthem and once called the collapse of the old Soviet empire "the greatest geopolitical catastrophe of the 20th century."

With Mr. Putin's endorsement, Mr. Medvedev is expected to win the March 2 presidential vote handily. He already asked Mr. Putin to serve as his prime minister.

The official May Day parades were discontinued after 1990. In recent years, the day has been marked in Moscow and other cities primarily by protest marches by the declining Communist Party and by right-wing nationalist parties.

President Boris Yeltsin began staging military parades — without the weaponry — through Red Square in 1995, the first one marking the 60th anniversary of the Allied victory in Europe.

Pavel Felgenhauer, a Russian military analyst for the Washington-based Jamestown Foundation, said the revived display is one of a number of recent symbolic moves by the country's military. They include the resumption of strategic bomber patrol flights over the Atlantic and Pacific in August and plans for major naval exercises in the Mediterranean for the first time since 1991.



Mr. Felgenhauer noted that the traditional route for the May parade must now be altered in part because of the construction of a new shopping mall.



"One can only hope that ... no ancient building will collapse as tanks and ICBMs roll into central Moscow to serve the vanity of Russia's leaders," he said.

Post-Soviet Nationalism and the Future of Russia

Comment by Andreas Umland
Special to Russia Profile

The Kremlin’s Nationalist Policies Could Have Serious Consequences

The roots of Russia’s currently rising nationalism are threefold: pre-Soviet, Soviet and post-Soviet. The idea of Moscow as the “Third Rome,” the belief that Russia has a special mission in world history, goes back several centuries. Contrary to what many in the West believe, Russian nationalism was an important element of Soviet ideology beginning in the 1930s. Like in the early 19th century, when Moscow’s so-called Slavophiles applied German nativist thought to Russian conditions, ideas of various Russian nationalist movements today are often imported from the West.

One of the factors accounting for Russia’s recent nationalist resurgence is the way of thinking learned in Soviet schools and universities – a Manichean world-view which sharply distinguishes between “us” and “them.” Although the basic definitions of “us” and “them” have changed, a number of Soviet stereotypes, about the United States, for instance, have persisted.

The major determinant in the recent rise in Russian nationalism is that the Kremlin’s political technologists have discovered it as a tool suitable for reconfiguring political discourse in general. In the Kremlin’s new political reality, President Vladimir Putin is not competing with alternative programs or parties. Putin’s opponents are not socialists, liberals or other Russian political movements. Instead, Putin is juxtaposed against Chechen terrorists, Estonian fascists, Georgian russophobes, Ukrainian neo-Nazis, American imperialists, Western conspirators, and, in general, to those non-Russians who desire to destroy, divide or at least humiliate Russia. In this atmosphere of paranoia, it is only logical that those opposing Putin are not acknowledged as constituting a legitimate (not to speak of useful) political opposition. Instead, they are represented as a “fifth column” of the West, as traitors who are, in Putin’s words, skulking around foreign embassies like jackals.

All this has made politics an easy game for the Kremlin. If the government is busy defending the country’s pride and integrity, it is impossible to observe all the niceties of freedom of the press, pluralistic public debate or fair party competition. Instead of debating what is best for the country, political discussants are searching for a plausible pretext to label any outward opposition as an enemy of Russia.

The radical, often neo-fascist wing of Russian nationalism, naturally, has been rising together with the movement as a whole. To be sure, both the Kremlin and mainstream public discourse demonstratively condemn manifest expressions of racism. Yet, the extremists - whether active in the neo-Nazi skinhead movement or publishing in high-brow conspirological journals - are part and parcel of the xenophobic hysteria that has recently consumed much of Russian society. A widespread fear among Russian and Western analysts observing the rise of Russian nationalism is now that the Kremlin could lose (or, perhaps, is already losing) control of this genie it has let out of the bottle. Russian nationalism could transform from a political tool of the Kremlin into a societal force of a proportion beyond the limits of manipulation.

A main difference between the Russian and Western forms of nationalism is that, in the contemporary West, the intellectual and political mainstream of a given country usually more or less clearly distances itself from any strong nationalist movement. While the Russian mainstream is quick to condemn racial violence, its relationship to the worldview behind such violence is, in contrast, ambivalent. Thus, authors who, in the West, would be regarded as being far beyond the pale of permissible discourse, such as the ultra-nationalist publicist Alexander Prokhanov or the ideologue of fascism Alexander Dugin are esteemed participants in political and intellectual debates on primetime TV shows. The bizarre, pseudo-scientific ideas of the late neo-racist theoretician Lev Gumilev are required reading in Russia’s secondary schools. Gumilev teaches that world history is defined by the rise and fall of ethnic groups that are biological units under the influence of cosmic emissions.

In recent years, the government has started to persecute racial crimes more actively than before. This is likely because the growing skinhead movement is damaging Russia’s international reputation. Extreme nationalism has already made the Russian Federation an unattractive study destination for dark-skinned international students who are regularly beaten and sometimes killed in Russia’s university towns. In trying to stem this tide, however, the government deals only with the symptoms of the phenomenon. To get to the root of the problem, the whole logic of current Russian politics would need to be changed – something that a well-meaning ministerial bureaucrat obviously cannot do.

If the kind of nationalist developments that have taken place in Russia over the past eight years continue into the future, we will not only witness a second Cold War, but the Russian Federation might become something like a new apartheid state in which foreigners and non-Slavic citizens are treated separately from white citizens of Russia by governmental and non-governmental institutions. Given this trend, some observers do not hesitate to speak of a “Weimar Russia,” comparing post-Soviet conditions to those in inter-war Germany. Though it is not (yet) likely that Russia will turn fascist, it seems even less probable that Russian society will become more tolerant any time soon.

The Kremlin needs to fundamentally change the way it defines Russia’s relationship to the outside world. It needs to take resolute action against the already considerable infiltration of various social institutions such as schools, universities, youth movements and the mass media with radical nationalism. If this does not happen, the Russians will be a lonely people, and Moscow will be an isolated international actor in the new century.

Andreas Umland teaches at the National Taras Shevchenko University of Kiev, edits the book series “Soviet and Post-Soviet Politics and Society," and compiles the bi-weekly “Russian Nationalism Bulletin." This comment is a summary of an interview that he gave to the Russian-language information agency “Washington ProFile,” Washprofile.org.

Putin Names Nationalist to NATO Post

The Washington Post - Peter Finn

MOSCOW, Jan. 10 -- President Vladimir Putin on Thursday appointed a prominent nationalist and political gadfly as Russia's new permanent representative to NATO, a decision that signals the Kremlin's determination to confront the military alliance across a host of divisive issues.

Dmitry Rogozin, a former lawmaker who has been in and out of favor with the Kremlin, has harshly criticized NATO and U.S. policies, including the alliance's eastward expansion and American plans to install a missile defense system in Eastern Europe.

In an interview before his expected appointment, Rogozin said that he hoped to build a constructive relationship between Russia and NATO but that in the post-Cold War world, the alliance had lost its reason for being.

"NATO's problem is that it is trying to invent an enemy in order to keep the alliance together," Rogozin said last month in an interview at the Russian parliament. "That is why people who are looking for a motivation for NATO need to present Russia as an enemy. Why is NATO expanding to the east and at the same time claims that the threat is coming from the south? If the threat is coming from the south, why don't they go to the south?"

Rogozin, 44, led the nationalist Rodina party into parliament in 2003 promising to protect the interests of "ethnic Russians." However, the party, which was created with the Kremlin's backing to siphon votes from the Communist Party, was reined in when Rogozin and other leaders began to strike an increasingly independent line.

Rodina was banned from contesting local elections in Moscow when the courts found that its political advertising was racist. In 2006, Rogozin was forced out of the party leadership.

Rodina was subsequently folded into Fair Russia, another Kremlin creation, which won seats in parliament in last month's elections.

Rogozin attempted to create another party, which was denied registration, and allied himself with some openly xenophobic groups. Analysts here said that the Kremlin remained wary of his appeal and that the appointment to NATO exports a potential rival and simultaneously pokes the alliance in the eye.

"Rogozin is a capable leader, and the first reason for the appointment is to get him out of Moscow," said Alexander Golts, a journalist who specializes in defense matters. "And of course there is a message. It's clear that Russia doesn't want any positive development in relations between the West and Russia. . . . Rogozin will be very happy to annoy NATO. It will be his pleasure."

Rogozin said his rapprochement with the Kremlin came as no surprise and dismissed any suggestion that he was being exiled.


"If they had appointed me a prima ballerina in the Bolshoi Theater or a tiger tamer in the circus, I would be surprised," he said with characteristic wit. "It means that at this point, people such as me are needed. . . . NATO is not Antarctica, not even Siberia."

Rogozin has had particularly strained relations with the Baltic countries -- Estonia, Latvia and Lithuania, all NATO members -- because of his allegations of mistreatment of ethnic Russians there. In 2004, he was refused a visa to visit Latvia after he said it had become a "country of hooligans and outlaws where they get even with our veterans as well as with our children by closing Russian-language schools." He accused the country of having Nazi leadership.

Rogozin said he will oppose any further eastward expansion of NATO, particularly into Georgia, where Mikheil Saakashvili, elected this month to another term as president, is seeking membership.

"Are you seriously ready to accept a country which has not been able to solve any of its serious problems, a country which does not comply with any of NATO's standards?" Rogozin asked. "Why does NATO need to create this kind of problems for itself?"

Russia supports the separatist leaders of two breakaway parts of Georgia, Abkhazia and South Ossetia.

Rogozin said Russia and NATO need to cooperate in such areas as the fight against terrorism, drug-trafficking and transnational crime. But relations are being spoiled by the alliance's fixation on expanding into the former Soviet Union and building up its military capability on Russia's borders, he said.

The Bush administration has said it wants to create a missile defense system in Eastern Europe to guard against a potential threat from Iran. But Rogozin said he did not believe Iran was capable of developing missiles that could target either the United States or Western Europe.

He drew parallels to the Cuban missile crisis of 1962. "What if we put our missiles in Cuba and in Venezuela . . . and say we intend to take down missiles coming from Haiti that represent a threat to our territory?"

Rogozin said Russia and NATO should create a common antimissile system and jokingly warned of the consequences of failing to do so. "Let's have common ears and eyes and a common fist," he said. "What is happening now? Just the opposite. Like in the worst script for 'The Terminator.' "

"To take down one Iranian missile, the antimissile system will have to use 10 antimissiles," he continued. "We may not detect one Iranian missile, but we will detect 10 or 100 antimissiles coming from Poland and

Russia-EU seeking compromise on energy

The EU-Russia energy partnership has become more of a power struggle over the past year. Although some major cross-border deals were signed in the electricity and gas sectors, politicians from both the EU and Russia were looking for compromises that neither side was prepared to make.

The European Union imports around a quarter of its gas needs from Russia, although it’s keen to start getting more from elsewhere.

Russia needs the EU too, as most of its pipelines point West, not East. In addition, Europe is buying around two thirds of what Russia produces and needs to sell on.

The relationship is inter-dependent, but it 's a delicate balance and over the last year it’s become even more fragile, with Russia criticising the European Commission for blocking Gazprom's expansion in Europe.

In autumn, the European Commission proposed legislation on unbundling the gas and electricity sectors throughout Europe to increase competition.

Speaking at a Russia-EU meeting in Brussels last October, Andris Piebalgs, EU Energy Commissioner, said, “The reason for our proposal is that we'd like a very clear separation between transport and supply.”

In Russia, this has been happening in the electricity sector, with the former monopoly Unified Energy System spinning off many of its assets into separate companies in 2007.

Germany's E.ON took control of the generating company OGK-4 and Italy's Enel bought 25% of OGK-5.

However, Gazprom has no plans to separate its extraction and distribution businesses. The Russian government says the nature of the gas market means it makes sense to keep the company together.

“The short-term market rules the situation in the electricity sector to a considerable extent, whereas it is the long-term market and long-term supply schemes that apply to the natural gas industry, with a different scheme of guaranteeing, insuring and crediting the investment,” said Viktor Khristenko, Russia’s Industry and Energy Minister.

Economic protectionism in strategic sectors - particularly energy - is on the rise across the globe and it’s got experts concerned.

“In order to surmount this slowdown in the global economy you need more open markets, including being open to foreign investment. But this is not the signal we're seeing - whether it’s from the leading economies like the EU or the U.S. or whether it’s the developing world,” said Yaroslv Lissovolik, an economist from Deutsche Bank in Russia.

Although deals between companies from both sides continue to go ahead, on a political level the EU and Russia are struggling to find legislation they can agree on.

Russia wants assurance it won't be blocked in Europe, and the EU remains committed to the International Energy Charter.

But Russia is refusing to sign up to the latest version, as it would open up its gas pipeline network to foreign competition.

Putin's New Years Address