June 28, 2008: After Irish voters rejected the EU's Lisbon treaty, last week's EU summit meeting in Brussels was understandably focused on the result of the Irish referendum. However, another topic was also on the agenda for the Brussels meeting: the increasing cost of energy for Europe. The price of oil on world markets prompted European Commission President José Manuel Barroso to suggest that low income families in the EU be given some kind of energy subsidy to offset the rising cost of fuel.

Cost is not the only issue on Europe's energy agenda. A secure supply of energy is another major concern, which helped set the stage for this week's EU-Russian talks in Siberia on renewing the treaty on cooperation which expired last year. The EU and Russia have a strange relationship of disagreements and economic need. Many European analysts question whether Russia is really a viable democracy that represents those values that are part of the EU's philosophical core. On the other hand, the EU and Russia are mutually dependent trading partners: Russia is the EU's third biggest trading partner and half of all Russian exports are sent to the EU.

The big ticket item on Russia's supply list is energy. In an analysis published in November 2000 on the subject of energy security, the EU commission warned that by the year 2030 Europe would be importing 90 percent of the petroleum it needs, up from the current 76 percent. The same trend is predicted for natural gas, the other leading component in Europe's energy mix. This year Europe will import about 40 percent of the natural gas it consumes. Three fourths of those imports come from Russia and the rest come mainly from the Persian Gulf. With Europe's own natural gas reserves being depleted – largely in the Netherlands and the North Sea – Russia will be supplying well over half the natural gas used in Europe by 2030.

Russia's energy giant Gazprom is already the dominant energy supplier for natural gas in several new EU countries in eastern Europe. It has a market share of 100 percent in the Baltic States and in Slovakia, 99 percent in Poland and 82 percent in the Czech Republic. Gazprom's current market share of 35 percent in Germany will jump in 2010 when the new North European Gas Pipeline comes on line, supplying Germany directly from Russia via a pipeline that will be laid on the floor of the Baltic Sea.

Europe's options for reducing its dependence on foreign energy are limited. Gas and oil account for 60 percent of the energy used in Europe. The rest of Europe's energy comes from domestic resources: nuclear power (15 percent), coal (18 percent) and renewable energy (about 7 percent). However, environmental concerns create considerable resistance to expanding the use of nuclear power and coal. In Germany, for example, all nuclear power plants currently in use are required to be phased out by 2020. Renewable sources of energy won't make up the gap caused by using less nuclear power and coal. The result? An increase in the demand for oil and natural gas, which have to be imported.

Europe's dependence on imported energy is aggravated by the lack of a joint energy policy for the European Union, which is all the more remarkable since the EU is the world's largest importer of energy. Like other critical areas, including taxation and economic policy, energy policy is still determined at the national level. The result is that Europe has no common approach to dealing with Gazprom. Each individual EU member negotiates its own contracts with the Russian energy giant, and Gazprom has been more than willing to utilize a "divide and conquer" strategy.

With Europe's growing dependence on imported energy and world supplies becoming tighter in the continuing energy supply crunch, there can be little doubt that the European Union and Russia will renew their treaty on cooperation. In fact, at some point in the future the energy card may even help Russia put some distance between Europe and the United States. What foreign policy price would Europe be willing to pay to have a secure supply of Russian oil and natural gas? It is no secret that Russia has been upset by NATO's eastward expansion to include former members of the Soviet bloc. Perhaps a Kremlin spokesman quoted by the BBC hinted at possible developments in the future: "These questions [NATO issues] aren't decided in Brussels, but in Washington. The European Union isn't the initiator of the expansion of Nato."