Ties dipped to a post-Cold War nadir by the Georgia-Russia military conflict in August. But the EU and Russia have managed to steer their relationship in a more positive direction by the end of the year by resuming long-stalled talks on a new partnership deal.

ON-AGAIN, OFF-AGAIN PARTNERSHIP TALKS

Russia and the EU agreed in 2005 to work out a new deal to replace the 1994 Partnership and Cooperation Agreement (PCA), deemed as having "really outlived itself" as bilateral ties had developed considerably since then.

However, talks between the EU and Russia on the issue had not been able to start due to strong opposition from Poland and Lithuania.

On June 26, 2008, the two sides announced that they would begin negotiations, formally ending an 18-month deadlock.

The announcement came as Russia lifted an import ban on Polish meat products and Lithuania received EU guarantees on energy supply.

Despite the formal launch of the talks, the road leading up to a new partnership deal has proven bumpy, with negotiations taking place only intermittently in the months to follow.

On Augist 8, Georgian troops launched a sudden attack against the breakaway region of South Ossetia to reclaim control over the region. Russia reacted the next day by sending in troops, which soon routed the Georgian forces.

At an extraordinary summit on August 26, the EU strongly condemned Moscow for its recognition of the independence of South Ossetia and a second breakaway Georgian region, Abkhazia. The bloc also announced the suspension of negotiations with Russia, saying talks would not resume as long as Russian troops remained in Georgia.

Ties were revived only after Moscow announced the completion of troop withdrawal from the buffer zone adjacent to South Ossetia and Abkhazia on October 8, two days ahead of the deadline set by EU leaders.

Overcoming internal bickering on the matter, the EU restarted negotiations with Russia on December 2.

CHALLENGES REMAIN

As differences over fundamental issues remain between Europe and Russia, bilateral relations are not likely to proceed smoothly, analysts here believe.

While the EU announced the resumption of negotiations with Russia in December, it also stressed that business as usual was not possible against the backdrop of Moscow's recognition of the independence of South Ossetia and Abkhazia and its failure to withdraw troops to their pre-conflict positions.

The United States, as always, will be a factor affecting EU-Russia ties, analysts say.

The eastward expansion of NATO, together with the planned deployment of a US missile defence system in Poland and the Czech Republic, has been a constant source of Russian complaints.

In addition, the EU's eastward expansion has further strained the nerves of the Russians.

The European Commission, the executive arm of the EU, has proposed the launch of an "Eastern Partnership" with Ukraine, Georgia, Azerbaijan, Belarus, Moldova and Armenia to help the former Soviet republics move closer to the EU and to safeguard energy security. The region is traditionally regarded as Russia's backyard.

Another stumbling block for the advancement of EU-Russia relations is the internal disunity among EU members, each of which has its own set of foreign policies concerning Russia.

Aside from Poland and Lithuania, Britain, Sweden and some other Baltic nations have also tried to block negotiations with Russia at different stages for various reasons.

COOPERATION NEEDED

Resuming negotiations with Russia is in keeping with EU's energy, economic and political interests, EU Commissioner for External Relations Benita Ferrero-Waldner said on Oct. 21 while reviewing Russia-EU ties in the European Parliament.

The EU has a stake in the continued growth of the Russian economy, she told European lawmakers, describing the EU-Russia partnership as "one of the most challenging but one of the most important of our times."

"On the one hand we see a complex web of joint activities and interwoven interests. On the other we see the backdrop of events in Georgia."

Russia, the EU's third most important trading partner, "is an important emerging market right on our doorstep that offers opportunities for EU businesses, notwithstanding the effects of the present financial crisis," she said.

The EU, a major investor in Russia, accounts for 80 percent of its cumulative foreign investment, making Russia one of the largest holders of euro-denominated assets in the world.

Terming energy security "a key component" of the EU-Russia relationship, Ferrero-Waldner pointed out that EU member states "are major buyers of Russian energy products and this is unlikely to change in the short to medium term."

"Even more importantly, Russia is a key geopolitical actor, whose constructive involvement in international affairs is a necessary precondition for an effective international community," she added, citing Russia's engagement in Iran, the Middle East, Afghanistan, the Balkans and elsewhere.

Pursuing negotiations for the new PCA with Russia is the best way "to pursue our own interests, and make sure our concerns are listened to," said the commissioner.

"In all these areas, cooperation is not always easy, but we need to continue."