Creating the event. With just a few exceptions, commentators have considered that the most spectacular outcome of the recent Summit between the EU and Russia was the decision to study the use of the euro in reciprocal trade and economic relations, thinking foremost of oil and gas. For the second time, Romano Prodi has thus created the event where Russia is concerned: last year through his initiative on supplies, this time by that on the means of payment. The final declaration only devotes a line and a half to it: "The Russian Federation and the European Union agreed to examine the issue of the use of the euro in their trade and economic transactions". But these few words were preceded by an in-depth analysis of the possible impact of the operation.

The dynamism of the President of the Commission, in agreement with the Presidency of the Council, in this field is logical, for two reasons at least. The first is that to focus an EU-Russia summit of "subjects that anger" (Chechnya, freedom of the press) would mean removing from it all possibility of results. Sure, these are essential subjects, and the EU has to raise them so as to keep up the pressure on Moscow; it did so, knowing beforehand the reluctant or hypocritical answers of Vladimir Putin. The second reason is doubtlessly more promising, as the interests are complementary: the EU has to diversify and guarantee its sources of supply, Russia needs European capital and technologies to make better use of its resources and cut down on waste.

The direction is therefore quite natural. Without however concealing the fact that between intentions and facts, the path is long. The slow pace by which audacious ideas take form can be depressing. One can understand Ms. Loyola de Palacio using encouraging words, filled with satisfaction to describe the state of the ongoing "dialogue". She declared: "the energy dialogue between the European Union and Russia has got off to a good start. Fields of cooperation have been discussed openly and pragmatically. It is certain that Russia has been a reliable energy partners for years and that it would like to confirm this reputation by strengthening interdependence, acknowledging that its future strategy must take account of the enlarged and increasingly integrated European market".

Effective action can be slow. The confidence in and awareness of the stakes are there, but when it comes to putting things into practice, both parties are still at the procedural stage: they have agreed on…the subjects of the dialogue. Here are the main ones: joint examination o the respective energy strategies; efforts to improve market transparency; an assessment of the state of the oil and gas transport infrastructures; a general timetable in view of examining the main regulatory reforms necessary to increase investments into energy in Russia; agreement on a package of measures that could be used as indicators for improving prospects offered to investors; several pilot projects in the field of energy efficiency and energy savings; transfers of technology. There is therefore a consensus to discuss all this. An initial summary report has been announced for July. We shall then see if the dialogue is moving forward and if the aforementioned list is beginning to bear fruit.

What we do now know is not very encouraging. Among the measures that could improve the "prospects offered to investors", three (plus a "possible" fourth) have been mentioned as priorities: a) Russia's ratification of the Energy Charter; b) the Russian Government's creation of a "single window" for private European investors; c) the setting up of a rapid dispute settlement procedure; d) possibly, the creation of an ad hoc instrument to reduce non-commercial risks. Without these instruments, investors would not rush on to the Russian market, however promising it may be. But, as far as we know, nothing yet exists. The Russian Parliament has not ratified the Energy charter, essential basic document that would open up large prospects, and seems in no hurry to do so. The other achievements depend on one major unknown factor: the efficiency of Russian bureaucracy. Is the mentality that prevails there still the one that was so genially described by Gogol and Chekhov? Or has Deputy Prime Minister, V. Khristenko, appointed by Putin as responsible for the dialogue, managed to infuse the administrative machine with dynamism? And will the Russian Parliament understand the need to accept certain undertakings and even renounce certain aspects of national autonomy, if we want to develop international cooperation?

Reasons for urgency, reasons for hope. Russian oil production has fallen by 45% and gas by 8% in the last ten years, for lack of investments, plant upkeep and exploration of new deposits. The waste in unbelievable. The legislation has many shortcomings. A crack of the whip could have a decisive importance for the Russian economy, in terms of currency income, organization, energy efficiency. We are waiting to find out if the Russian colossus wants and can move with a minimum of agility, when the urgency is there.

Far be it from my intention to send out a message of scepticism. The utility, or rather necessity, of the cooperation being envisaged is much to clear not to be understood, and some signs could indicate the beginning of movement. A very recent article announced that ENI (Italy) had concluded a "fifty/fifty" agreement with Astrakhannafteprom that would bestow on it the quality of "on the ground producer" in this Russian region of the Caspian Sea, for the exploration and then exploitation of an oil and gas deposit of 1,800 sq kilometers. Exports of Russian energy to the EU began to climb again last year (they represented 53% of all oil exports and 63% of gas exports). Investments to be made are estimated at $600 billion by 2020. The Russian authorities have confirmed their preference for the "long-term contract" system for the delivery of oil and gas, pointing to their country's credibility in this field (Russia has so far always honoured its undertakings of this type). 41% of the gas the EU imports comes from Russia (29% from Algeria, 25% from Norway). Under these conditions, not to cooperate would be stupidity, madness, whereas Russia badly needs foreign currency, installations, administrative modernization, and that the EU is faced with an uncertain, nebulous energy future, not to say dangerous (see this section dated 30 April/1 May).

The seve advantages of using the euro. The idea of using the euro in economic and trade relations adds a new dimension and weight to the panorama just described. The European Commission's services have drawn up a list of advantages that would result from this initiative, for both parties: a) avoid recourse to a third currency and unnecessary trade costs and risks; b) foster and strengthen EU/Russian commercial links and facilitate the transformation of EU-Russian trade into direct EU investment into Russia. The links between commerce and investments are well-known: in particular, long-term contracts in the currency of one of the parties will encourage investments; c) re-balance Russia's foreign currency reserves; d) make it easier for the Russian economy to integrate with the EU economy and subsequently, as has been the case with the Central and Eastern European economies, to move towards the euro and away from the dollar as the informal or formal monetary benchmark; e) take full account of the opportunities offered by the forthcoming enlargement of the EU; f) give greater price stability to EU consumers for Russian products currently trade in dollars; g) promote stability, trade, investment and better understanding of political and economic relations between the new Europe and the new Russia. Nothing but positive, no? But the Commission does at the same time recognize that the use of the euro is up to companies, public or private. It seems obvious that the letter will only drop the dollar when the euro has been stabilized and gained full market confidence.

A still nebulous notion. Concluding, there is no doubt that wide-scale and successful energy cooperation would represent a central element of reciprocal relations and have considerable influence on all other aspects, even the most delicate and controversial such as EU enlargement, the regime for Kaliningrad, European security and defence policy, Chechnya, freedom of the press, etc.. As we stand, on many of these points, the two parties often limit themselves to reasserting their stances; but even simple statements of principle may have their weight an impact. For example, the Final Declaration of the 17 May Summit explicitly states that freedom of speech and the plurality of the media are essential for a genuine EU/Russia partnership. Those who recognize the importance of general statements, who pay attention to their tone and choice of words, will read with interest, in the next issue of our EUROPE/Documents series, the lengthy final declaration that forgets neither the Balkans, nor North Korea, nor customs cooperation, nor fisheries. Many words, for now, but which unceasingly reassert some fundamental principles, and with an additional element: a high-level group will elaborate "the concept of a common European economic space", quite a nebulous notion for the moment and whose goal is anyway not for tomorrow. In Moscow, at the final press conference, the President of the European Council, Goran Persson said that the deadline for such a realization was between five and ten years. more like five, answered Vladimir Putin, but we know what such predictions are worth. To begin with, let's wait and see if energy cooperation materializes on the desired scale. That would already be a good start. (F.R.)