The tension between Russia and Ukraine over natural gas, which briefly sliced into Europe's supplies at the start of the year, provided stark evidence of the Continent's political interdependence and fragility when it comes to energy.

The episode also showed how sharply power has shifted from energy consumers to energy producers and suppliers in the past three years.Russia and other emerging countries' growing ability to assert their national interests has created new uncertainty within international energy markets.

Those supplying countries operate with the full backing of a strong central state that can bend the rules in their favour and skew competition in the free market. The crisis between Kiev and Moscow should not be seenas an isolated situation: there will be others.

In the case of Italy, the Russia-Ukraine dispute was more threatening than for many countries because Italy - where nuclear power is banned - has even more dependence on gas than oil. For some years now Italy has chosen gas as the main fuel for all consumption not linked to transport. Three homes out of four use gas, many core industries use gas and more than 50 per cent of our electricity is produced using gas.

European nations must identify their national energy interests and decide how they are to assure secure supply. In the face of more assertive policies by suppliers, Europe risks finding itself being relegated to a weak and vulnerable condition.

European energy markets arederegulating and opening up to competition. The priority of governments and regulators has been to create competitive conditions by increasing the number of players in each market. In Italy, Eni and Enel have relinquished market share to other producers and importers.

However, with the oil price today remaining steadily above $50 a barrel, government-controlled oil and gas companies of producing countries now have price on their side and are understandably seeking to maximize the value of their energy throughout the supply chain. In gas, for example, state companies from the big gas suppliers such as Russia and Algeria aim not only to sell to their European clients at the border, but to enter end-user markets directly and possibly reach the consumer's home.

Consequently, in Europe, every new drive to reduce further the influence of the former domestic monopolists or dominant operators will open up new opportunities for those big suppliers that already rule the market up to European borders. In short, if supply monopolies move in to consuming markets as retailers they will wield considerable competitive power.

I therefore believe Europe needs to adapt to this new reality. To continue a pure application of deregulation appears inadequate to guarantee the security and independence of gas supply. This does not mean turning our back on deregulation, but competition must be balanced against the priority of ensuring domestic energy security.

The measures needed to achieve greater energy independence and diversity of supply in the coming years all require a decisive political commitment. There are at least four essential steps required to achieve this.

First, Europe will have to increase its diversity of supply by removing bottlenecks in existing pipelines and building new ones.

Second, more liquefied natural gas (LNG) terminals must be built so that liquid gas can reach Europe from countries further afield, such as Nigeria, Qatar, Egypt and Trinidad. Only by increasing the pool of suppliers can really competitive market conditions be created without compromising the security of supply.

Third, national energy transport infrastructures will have to remain under national control to guarantee ultimate security of supply to the customer.

Finally, we need to debate whether it is in consumers' best interests for regulators to dilute further the influence of big European operators. Creating an array of gas distributors through further deregulation will do little to protect consumers from higher prices when two or three large foreign suppliers dominate imports.

The events at the start of 2006 should be seen as a wake-up call. European political leaders who do not responsibly face up to the question of energysecurity today will be failing to fulfil their obligations to the Europeans of tomorrow.