"While EU leaders believe that peace and stability are built through interdependence, Russia's leaders are working to create a situation where the EU needs Russia more than Russia needs the EU," the report released by the newly formed European Council on Foreign Relations said. "Particularly in the energy sector."

The EU's population is almost 3.5 times more than Russia's, and the EU economy dwarfs Russia's with a gross domestic product that is 7.5 times bigger, according to the CIA Factbook. The EU's gross domestic product per capita is $29,900 to Russia's $12,200. Yet, "Europeans are squandering their most powerful source of leverage: their unity," the report says.

The EU sells 44 percent of all goods imported by Russia and, in turn, buys 56 percent of Russia's exports. Six percent of the EU's exports are sold to Russia and only 10 percent of its imports come from there, which would suggest Russia is far more dependent on the EU than the other way around.

The report cites fears that Russia is an increasingly dangerous trading and political partner.

"Russia's selective application of the law affects businesses who worry about respect of contracts, diplomats who fear breaches of international treaties, human-rights activists concerned about authoritarianism, and defense establishments who want to avoid military tensions," the report says.

The report says Russia has severely undermined European unity by negotiating energy deals bilaterally with European nations. These long-term deals at favorable rates undermine the bloc's ability to secure a good deal for all member states involved. However, when a dispute arises over bilateral deals signed by member states with Russia, the member states insist the issue is dealt with on a European level. As a result, the countries are reaping the benefits of their deals, but the burden falls upon the EU.

Italy, Austria, Hungary and Bulgaria signed bilateral deals with Russia over gas pipelines and gas storage facilities, undermining the EU-backed Nabucco initiative, which seeks to have a common EU pipeline with a diversified portfolio of providers in order to reduce dependence on one country or region.

Similarly, Russia signed visa-facilitation agreements with France, Germany and Italy that violated the Schengen agreement. The Schengen agreement between European countries had to be protected by the European Commission and so the EU had no choice but to sign a visa-facilitation agreement with Russia that would apply to all member states.

"Russia has sought to bilateralize both its deals and its disputes with EU member states, putting a strain on EU solidarity and making Russia the stronger power," the report said. "This is not part of a master plan to dismember the EU."

Many EU member states would like the EU to reduce Russian influence in Georgia, Ukraine, Moldova and Belarus by involving those countries more closely in European projects. By giving them access to Europe's power grid and oil pipelines, their dependence on Russia would be curbed considerably.

To win back this power, the authors of the report, Mark Leonard and Nicu Popescu, suggest a unified stance on energy.

"To rebalance the relationship, the EU needs to adopt an internal code of conduct on energy deals and guidelines on long-term contracts and forthcoming mergers," they said. "In order to avoid further monopolization and partitioning of the EU energy market, the European Commission could be granted the right to pre-approve big energy deals on long-term contracts and pipelines concluded between EU and foreign energy companies."

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