German Chancellor Angela Merkel and Russian President Dmitri Medvedev are scheduled to meet privately July 19 on the sidelines of a two-day bilateral summit in Hanover aimed at bolstering economic ties between Moscow and Berlin. A number of issues are expected to be discussed during the talks, but the discourse will center on the recent increase in Russo-German energy cooperation. This cooperation is categorized by Russian energy giant Gazprom's interest in engaging in joint ventures with German utility companies, the expansion of the Nord Stream natural gas pipeline project, and efforts to deal with the European Union's third energy package. The new EU mandates are a series of reforms that would require energy retail and production assets be unbundled, a requirement that could pose a threat to future bilateral cooperation. The deals under discussion in Hanover hold significant strategic importance to Moscow and could be a financial boon for Germany. The energy cooperation agreements that Merkel and Medvedev will be discussing are an indicator of the rapidly strengthening ties between Russia and Germany as well as of Berlin's willingness to stand as an unconcerned actor in Moscow's efforts to increase its influence in its periphery and in Central Europe. A major point of discussion between Merkel and Medvedev will likely be the July 14 preliminary agreement on a potential joint venture between Gazprom and RWE. State-owned Gazprom's interest in RWE stems from a variety of strategic reasons. First, Gazprom stands to make inroads into the increasingly lucrative German electricity market, where natural gas-fired power plants are expected to increase production to compensate for the loss of electricity generated by the nuclear reactors that Berlin has decided to phase out. Second, Russia would gain access to Germany's technological expertise in the construction and operation of natural gas-fired plants. Such knowledge is particularly valuable given Russia's own faltering electricity sector. Finally, Moscow seeks to acquire major Central European energy and electricity assets held by German utility companies. A successful joint venture would grant Russia influence over the energy and electricity sector of the region. Moscow is willing to supply the German companies that agree to a joint venture with lower prices for natural gas, making such a deal financially appealing to Berlin. Other deals between Russian natural gas suppliers and German utility companies will also be on the meeting's agenda. Gazprom has shown interest in acquiring power plants and shares from E.On, Germany's largest utility provider, which also holds significant assets in Central Europe. Thus far, RWE has countered this possibility by including a negotiation exclusivity clause for the next three months, signaling the Essen-based company's strong interest in the deal. In addition to Gazprom, Russia's largest independent natural gas provider, Novatek, is negotiating an 800 million euro (about $1.1 billion) cooperative venture with German utility company Energie Baden-Wuerttemberg. Despite the mutual interest in expanded energy cooperation, the European Commission's unbundling directive is poised to become a major obstacle to additional Russo-German energy collaboration. A key topic of the Hanover talks will be the ongoing legal battle between Lithuania and Gazprom wherein Gazprom stands accused of violating the unbundling directive. The current energy utility deals are almost certain to encounter vehement opposition from the European Commission and Central European countries. However, Berlin and Moscow established a precedent of sidestepping the EU directive, which forbids energy companies from establishing a producer-to-consumer supply chain, during the creation of the Nord Stream pipeline. Merkel and Medvedev likely will want to replicate this exception and avoid repeating Lithuania's situation. The recently completed Nord Stream pipeline will also likely be a matter of discussion, with the two leaders discussing its operational timeline as well as tentative plans for expanding its capacity and output. Nord Stream is one of the main pillars of Germany and Russia's deepening economic cooperation and a fundamental part of Moscow's strategy toward its periphery. The direct link between Gazprom's natural gas fields and Germany's shoreline via an underwater pipeline in the Baltic Sea allows Russia to sidestep Belarus, Ukraine, Poland and the Baltic countries in natural gas delivery. This bypass ensures Russia can pursue more aggressive energy policies toward its periphery if it so chooses without affecting Germany's downstream supply.