EU weighs new approach towards Russia in wake of Ukraine crisis

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* Fears further tensions over former Soviet republics' allegiance

* Future energy policy, trade links at stake

By Justyna Pawlak

ATHENS, April 5 (Reuters) - European Union foreign ministers tried to map out a new strategy towards Russia at talks in Athens on Saturday, pledging to keep a tough stance over its tensions with Ukraine, while steering clear of provoking Moscow into further conflict.

Since Russia's annexation of the Ukrainian peninsula of Crimea, the European Union has imposed sanctions against the closest allies of President Vladimir Putin, and Group of Seven governments have suspended top-level contacts with Russia.

Further sanctions are being prepared in case the conflict escalates. But in the near term, the EU's 28 governments will have to balance the need to preserve stability to east of the bloc, while strengthening ties with former Soviet republics, a process that has drawn ire from Moscow.

Polish Foreign Minister Radoslaw Sikorski said it was not in the European Union's interest to fuel confrontation with Russia, already at its highest since the Cold War.

"Unfortunately, Russia is forcing us to revise our approach, because of its actions," Sikorski told Reuters after the two-day meeting in the Greek capital, focused on EU's relations with Russia and neighbours to the east and south.

"We used to negotiate through peaceful means ... But Russia has moved beyond this framework, by its aggression towards Ukraine."

Swedish Foreign Minister Carl Bildt said further tensions with Russia were inevitable, as the EU prepares to sign trade deals with Georgia and Moldova by June, and to finalise closer economic ties with Ukraine.

Ukraine's plans to sign such a deal last year led Russia to persuade former Ukrainian president Viktor Yanukovich to abandon them, causing popular protests in Kiev and the ousting of the pro-Russian president in February. Russia later seized Crimea.

Bildt said he was "quite certain" Putin would try to force Georgia and Moldova to drop plans for closer trade ties with Europe, just as he prevented Armenia last year from moving forward with a trade pact.

"There is no question whatsoever, and he will do the same with Ukraine. The plan is I think to sign these (pacts) in June.

"Russia later seized Crimea.Bildt said he was "quite certain" Putin would try to force Georgia and Moldova to drop plans for closer trade ties with Europe, just as he prevented Armenia last year from moving forward with a trade pact."There is no question whatsoever, and he will do the same with Ukraine"I don't that there is going to be applause in the Kremlin. There might be something else ... thunder," he told reporters.

The EU's foreign policy chief Catherine Ashton said diplomatic efforts to soothe tensions between Ukraine and Russia would continue.

"You will see over these coming days that we continue to engage with Russia, with the Ukrainian colleagues and the United States in making sure that we have a strong way forward," she told a news conference.

EUROPEAN FRUSTRATION

The EU has held bi-annual summits with Russia for years, in hopes of forging closer trade relations, easing tensions over energy supplies and working out better cooperation on diplomatic issues such the Middle East, Syria or Iran.

But the summits rarely yielded much progress and the EU has grown frustrated over the state of democracy in Russia more than two decades after the collapse of the Soviet Union. Relations were further strained by Moscow's war with Georgia in 2008 and its willingness to disrupt energy supply to Europe via Ukraine.

In the wake of the latest Ukraine crisis, the EU has already decided to accelerate its quest for more secure energy supplies, reducing dependence on Russian oil and gas.

Russia provides around one third of the EU's oil and gas and some 40 percent of the gas is shipped through Ukraine. It is also the EU's third biggest trading partner, importing some 123 billion euros' worth of goods.

But it is unclear how the conflict will affect other pressure points, such as a regulatory dispute with Russian gas export monopoly Gazprom over its activities in central and eastern Europe or tensions over EU energy policy reforms which affect Gazprom's use of gas pipelines.

Bildt said that with Russia becoming more confrontational, the EU was forced to rethink how it deals with its powerful neighbour but it was unsure how to proceed for now.

"There is a new political mentality from the Kremlin.

They are intending to build up what I sometimes call a bastion against the west, the muscular east against the decadent west," he said. "We are having a profound debate about what is the nature of Russia that we are faced with ... We will take it step by step."

Bildt's German counterpart Frank-Walter Steinmeier said Europe would need to wait to understand how Russia was developing and what its strategy towards former Soviet republics seeking closer ties with Europe would be.

"You need strategies, but history is not doing you the favour of allowing you to follow those strategies," he told reporters. "Of course we have to think about how our relationship with Russia should look like in the future. We should do that without any illusion.

But we must also not talk ourselves into a deadlock from which you not get out." (Additional reporting by Tom Koerkemeier; Editing by Stephen Powell)

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