Although the EU initially opposed the two Russian initiatives, Brussels ultimately expressed acceptance. Its energy commissioner, Günther Oettinger, attended the ceremonial inauguration of the Nord Stream works, and called the proposed Gazprom-Naftogaz merger -- which would likely rule out EU participation in Ukraine's energy sector reform -- a purely bilateral matter. Further, the South Stream project, a costly Russian-Italian joint venture in direct competition with the EU-sponsored Nabucco pipeline, was revived in April by Austrian and Romanian governmental approvals.

Even Nabucco's halting progress is now seen as a mere "concession" of Russian diplomacy. The resolution of a gas-pricing dispute between Turkey and Azerbaijan, which paves the way to supply the pipeline, was in fact finalized only after President Dmitry Medvedev's trip to Ankara -- during which Russia and Turkey also established a major economic cooperation program and signed a deal for the construction of Turkey's first nuclear plant. As a result, even if Nabucco ultimately does reduce Europe's dependence on Russian gas,Moscow's grip on the Eurasian energy network would still be tight by virtue of its close relations with a vital transit country such as Turkey.

These events have wide-ranging implications and reveal the fundamental flaws of European diplomacy and energy security policies in its Eastern neighborhood. The reliance on the appeal of Western culture, democracy and the free market, accompanied by economic incentives and the creation of ties between Brussels and local political and bureaucratic elites, has repeatedly proved ineffective in the region. What worked very well for the former Warsaw Pact countries -- now Western-style market democracies and EU members -- has not produced the same results in countries formerly within the Soviet Union.

For instance, Europe has officially invested over $1.5 billion on the South Caucasus since 1991, including funding for legal system reforms, infrastructure, and other technical projects. Nevertheless, none of these countries has shown a particular reorientation of their foreign and energy policies as a result of the EU's involvement.

The EU also failed to take advantage of the window of opportunity created by Ukraine and Georgia being governed by strong pro-Western leaders brought to power by veritable popular uprisings. Calls by Presidents Viktor Yushchenko and Mikheil Saakashvili for EU membership fell on deaf ears in Brussels, as European countries struggled to solve their own domestic difficulties, and the European Commission lacked the necessary level of institutional strength to act independently. 

Following the abrupt weakening of Saakashvili manu militari in the summer of 2008 and, more recently, the democratic installation of President Viktor Yanukovich in Ukraine, Russian hegemony in the region has been restored to levels unprecedented since the fall of the Soviet Union. With Europe busy trying to solve its debt and currency crisis, Moscow has not hesitated to monetize its political gains, seeking long-term control of the energy sector in Ukraine, as well as strengthening its influence on those of Azerbaijan and -- to a lesser extent -- Turkey.

However, the EU's situation might not be as gloomy as it appears, mainly because Europe's energy security is not seriously endangered. Russia still provides the majority of natural gas imports in most EU countries, but alternatives abound. The little-publicized GALSI pipeline between Algeria and Italy will be operational in 2014, while Libya and Nigeria are two other good candidates for gas supplies. Rapid technological developments in liquefaction technology and shale-gas extraction also provide Europe with options it did not have only a few years ago. 

Further, the strong bargaining power currently enjoyed by gas producers may not be a permanent condition. Prices for natural gas have never been so low on the spot market, and a recent attempt by producers to establish a price floor by cutting production failed miserably at the Gas Exporting Countries Forum summit in Oran, Algeria. It bears noting, too, that nuclear and solar power are rapidly increasing their share in Europe's energy mix.

Nevertheless, the EU should still reassess the objectives that inform its energy policy. Trying to guarantee security of supplies by battling with Russia for influence in the post-Soviet space is a costly strategy, one that inevitably puts Europe in a disadvantaged position, given the deep political, economic, historical and cultural ties that Moscow enjoys with local leaders and populations. Moreover, the control of energy networks lies at the core of Russia's statehood, and as a result is accorded the highest priority in Moscow. By contrast, energy security will always be one among many items on Europe's agenda.

Russia needs to sell its gas to Europe as much as Europe needs to buy it -- if not more. Given the meager results of the EU's policy of confrontation, Brussels should instead focus on internal developments, such as the creation of an integrated European energy market and the promotion of innovation and alternative sources. Another option is to pursue proposals to regulate gas trading, such as the Global Energy Compact, a Russian version of the rejected European Energy Charter that has been repeatedly promoted by Medvedev. Such an outcome is seen as an admission of defeat in Brussels. But given how things are playing out, it might be preferable to stubbornly maintaining its current losing policy.

**Andrea Bonzanni is a post-graduate student at the Graduate Institute of International and Development Studies in Geneva. He has worked as a consultant for the United Nations and the World Bank and is currently chief editor at the European Center for Energy Security Analysis (ECESA) of the Milan-based think tank, Equilibri. The views expressed here are his alone. He can be reached at andrea.bonzanni (at) graduateinstitute (dot) ch.