Two futures: EU-Russia relations in the context of Ukraine.

The enduring crisis in Ukraine presents the European Union (EU) with a conundrum. Should it strengthen its economic and energy ties despite Russia’s growing assertiveness in the hope to solidify its medium term energy security and reel in Russian foreign policy? Or should it rather continue to tighten the screws on the Putin regime, in the hope that doing so will concurrently compel the Russian Federation to moderate its behaviour? This paper argues that it is not prudent for the EU to decrease cooperation with Russia in the short term, but rather push for a political solution without additional sanctions and in the long-term secure different fossil resources such as LNG and different suppliers such as Iraq and Iran. Whichever way the EU chooses, Ukraine’s role in EU energy security is depreciating. Nevertheless, the EU possesses a stronger bargaining position than widely believed because Russia lacks a credible alternative to European foreign direct investments (FDI). The EU should (1) establish an energy union that includes gas storage and distribution plans and extends the Energy Community to include Turkey to pave the way for future gas flows; (2) support infrastructure projects that increase reverse flow capacities within the EU as well as South Stream or its heirs and the Southern Corridor via Turkey to enhance import capacity; and (3) massively invest into energy research. (authors' abstract)