European Union energy companies court Moscow

Brussels has scrambled to address this dependence following two consecutive winters that saw Russia briefly disrupt energy supplies to Europe during price rows with Ukraine and Belarus. But to date, Brussels's only concrete answer to Moscow's energy dominance is the EU's planned $6 billion Nabucco pipeline, which could begin pumping gas by 2012 from Central Asia via Turkey to Austria.

But even those plans are uncertain: Russia made key gas deals in Central Asia last month, and several of the energy companies behind Nabucco, including Hungary's state gas company, MOL, have close dealings with Gazprom.

Brussels has pushed for Europe to open its markets and create more competition, says Friedemann Müller of the German Institute for International and Security Affairs. "But does Gazprom in this market mean more competition?" he asks. "There are doubts, of course, because it acts as a monopolist."

Political will vs. business goals

One key thing Brussels could do, some experts say, is limit the kind of contracts European energy companies sign. Recent deals with Gazprom lock the firms in for 20 to 25 years. "What Brussels can say is that we don't want to see these kind of [long-term] contracts anymore," says Claudia Kempfert, an energy expert at German Institute for Economic Research.

But political will is up against business interests. Even as national governments try to set an EU policy on Russia – continuing to clash with Moscow over missile defense and the fate of Kosovo – businesses within their borders are dealing directly with Moscow.

Perhaps no country is as divided as Germany. The grand coalition governing the country is split between Chancellor Angela Merkel's Christian Democrats and the Social Democrats loyal to her predecessor, Gerhard Schröder.

Mrs. Merkel, who grew up in the former East Germany and speaks Russian, has taken a harder line against Russia, particularly on human rights abuses. The Social Democrats favor more engagement with Moscow. Mr. Schröder himself is out of politics, but still influential. He heads the German-Russian North Sea pipeline project, and his former chief of staff is now the country's foreign minister.

For seven years Schröder's governemnt urged close business ties between Germany and Russia, particularly the country's energy giants. E.ON now owns stakes in Gazprom worth $17 billion.

"You can't ask private businesses to think politically," says Joerg Himmelreich, an EU expert at the Berlin office of the German Marshall Fund of the United States. "They are under the pressure of daily profits, and they will run after Russian business as long as they get something out of it."

Page: 1 | 2