Officials of the Putin/Medvedev administration routinely deny that Russia employs its energy resources for political purposes. But Russia’s actions demonstrate again and again that the Kremlin leadership will use its enormous energy wealth to increase its political and economic influence in Europe and the wider world. This should not come as a surprise to European officials.Many European policymakers have come to believe that their countries are so dependent economically on Russia that they have no choice but to defer to Moscow in order to ensure future supplies of Russian oil and gas. This opinion prevails in spite of the fact that today’s Russia is significantly weaker economically than any large European state, with the exception of Ukraine. With its huge energy resources, Moscow appears to be playing with a stronger hand in East-West economic relations than Brussels, Berlin, or Paris. Europe’s “soft power” has turned out to be less influential with Moscow than many expected. And neither Europe nor the United States has been able to reverse the rush toward authoritarianism in Russia.The purpose of this report is to encourage greater European and American cooperation on issues of energy security, particularly as they relate to Russian suppliers, and to highlight Moscow’s policies regarding the use of its enormous energy potential to affect political and security events in Europe. The war in Georgia, whatever the arguments concerning who shot first, is part of a Kremlin strategy to discourage the building of gas pipelines from Caspian countries to Europe, in the process bypassing Russian territory and Russia’s control of Central Asian supplies. Without a more aggressive competition policy, Europe will lose much of its ability to lead the Continent toward greater integration and cooperation.The present situation only reinforces the impression in Moscow that transparent, competitive energy trade policies are unnecessary and would curb the extremely high rents now collected by Russian elites. In the long run, however, the current policies of the Kremlin will lead to greater suspicion of its motives, delay the development of a modern energy sector in Russia, and as a result, delay the country’s integration into a democratic league of nations within Europe.