ABSTRACT
This chapter describes the energy policy aims of Russia and explores their wider security implications from the perspective of the Baltic States. Russia's energy policy is a central element in the federal budget process and the main source of both domestic and foreign investment flow. The chapter begins with a presentation of the main tendencies and figures of the Russian energy and defence sectors, and discusses the official energy policy aims of Russia and the role that the energy sector plays in the Russian economy. It explains the existing interrelation between geopolitical goals, energy income and the development and use of military force. The chapter focuses on the reaction of the Baltic States to the application of 'energy diplomacy' tools by Russia and an evaluation of their effectiveness. It concludes with the future interrelation of Russian energy and security aims in the light of projected increases in both, the price of energy supplies and military expenditure.
