"There has been a strong element of 'sleep-walking' into the current crisis, with Member States being taken by surprise by events in Ukraine," the report said.
The committee noted that EU member states had lost collective analytical capacity and lacked understanding of the situation in Ukraine.
The report said that the EU's engagement with Russia would likely focus on the Ukrainian crisis and Crimea, which seceded from Ukraine and reunified with Russia in March 2014.
In the long term, the report said, the EU and Russia must learn to live as neighbors and have dialogue on the issues of shared strategic interest, including a common economic space and a new European security architecture.
The committee also encouraged links between Europe and Russia in the areas of culture, education and science.
The report was written in January and February, 2015 based on the data collected between July and December 2014.
The European Union, alongside the United States and several other western nations, has accused Russian authorities of escalating the crisis in Ukraine. Moscow has denied any involvement in the hostilities in eastern Ukraine and urged for a peaceful settlement of the confrontation.