The European Union must become "more robust and resilient" against Russia's attempts to undermine it and respond to threats in a more systematic and unified manner, the Commission said on Wednesday.
The bloc's top diplomat, Josep Borrell, presented the Commission's proposed policy options on EU-Russia relations on Wednesday, entitled "Push back, constrain and engage."
He said that "the deliberate policy choices of the Russian government over the last years have created a negative spiral in our relations" and warned that the EU "needs to be realistic and prepare for a further downturn of our relations with Russia, which are right now at the lowest level."
"This further downturn is the most likely outlook for the time being," the High Representative for Foreign Relations said.
Commission chief Ursula von der Leyen described relations with Moscow in a statement as "complex", adding that in response to the "key strategic challenge" Russia presents, "the EU needs to continue to act in unity and with consistency, defending our fundamental values and interests."
The policy comes months after a meeting between Borrell and Russia's Foreign Minister described as a "complete disaster" by European lawmakers during which Sergey Lavrov criticised the bloc as an "unreliable partner".
Earlier this week, NATO members highlighted Russia as one of several common challenges facing their countries' security.
'Russia can talk to the EU or no one'
The bloc's new strategy, outlined in a 14-page report, stresses that managing the relationship with Moscow is a "key strategic challenge" for the bloc because of its attempt to interfere in and destabilise member states as well as neighbouring countries but also because "the potential for EU-Russia cooperation is very considerable".
It plans for the bloc to more systematically push back against human rights violations and defend democratic values; to continue to raise Russia's consistent breaches of international law in Ukraine, Georgia and elsewhere; to reaffirm its support to Ukraine's territorial integrity, sovereignty and independence and to the Russian civil society.
To constrain Russia's assertiveness, the EU must strengthen its "counter-hybrid toolbox", the Commission said.
This involves the bloc becoming "more robust and resilient" and responding to malign actions "more systematically and in a joined up way" that would also include coordination with like-minded partners such as NATO and G7.
Presenting a united front is critical, Borrell said, acknowledging that at the moment "Russia is not interested in engaging with the EU and it prefers to do directly and talk to member states" to secure bilateral deals.
The policy aims to eliminate this option. "If everybody says you have to talk to the EU then Russia will have to talk to the EU or talk to no one," Borrell said.
It would also require the EU to further develop its cybersecurity and defense capacity as well as its strategic communications o defend itself not only against cyberattacks but also disinformation campaigns originating from Russia.
Finally, it proposes engaging with Moscow on several key challenges such as public health and climate change and to further its own interests. To do so, it says the EU should leverage its "competitive advantage."
Russia is the EU's fifth-largest trade partner, representing 4.8% of the EU’s total trade in goods with the world in 2020 while the EU is Russia's biggest trade partner, accounting for 37.3% of the country’s total trade in goods, according to the Commission.
Borrell also flagged the "advantage provided by our energy transition". "What is clear that if we do apply what we said we are going to apply in the area of climate and energy then consumption of hydrocarbons is going to go down significantly" including oil and gas.
This "will affect Russia because it is one of our suppliers," he said.
Russia currently supplies just over a quarter of EU oil imports and 40% of gas imports. This amounts to two-thirds of total Russian oil and gas exports.
The Commission said in its strategy that "energy exports are also critical for Russia’s business model, representing 60% of its total exports, 40% of its budget revenue and 25% of its GDP."
The policy will be presented to EU leaders at the next Council meeting later this month.