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The Washington Post: Putin moves to reassure West on EADS, energy

By James Mackenzie and Christian Lowe
Reuters
Saturday, September 23, 2006; 11:22 AM

COMPIEGNE, France (Reuters) – Russia sought to reassure France and Germany on Saturday on its plans for Airbus parent EADS and held out the prospect of more gas for Europe to ease fears over Moscow’s leverage of its growing economic clout.

Putin’s remarks at a joint news conference with his French counterpart Jacques Chirac and German Chancellor Angela Merkel followed a meeting which took place against a background of renewed Western concern on energy security and aviation.
 
The meeting in an 18th century chateau, close to the spot where the armistice after World War One was signed, was billed by France as a chance to exchange views.

But Russia’s acquisition earlier this month of a 5 percent stake in Europe’s flagship aerospace group EADS and standoff between Moscow and Western oil firms put a sharp focus on Moscow’s ambitions to use its huge energy reserves to increase its global influence.

Putin tried to allay concerns about the investment in EADS, saying Russia’s intentions were not “aggressive.”

He also said Russia was a reliable energy partner and said gas giant Gazprom was considering rerouting to Europe some of the 70 billion cubic meters of gas expected to come from the huge Shtokman field when production starts.

Shorn of Soviet-era debt and flush with oil revenues, a newly confident Moscow has sought to create industrial champions and expand in energy and other strategic sectors in the European Union, notably aerospace and defense.

Europe is keenly interested in partnership with Russia, the world’s second biggest oil exporter and holder of a mass of strategic mineral deposits, but there has been unease about the influence of the Kremlin in the economy.

PARTNERSHIP

EADS bosses have welcomed technical cooperation but firmly rebuffed talk that Russia might become a core shareholder.

Standing alongside Chirac and Merkel, Putin said the West had nothing to fear but he reiterated Russia’s interest in developing a partnership in the aerospace sector.

“As far as the 5 percent stake is concerned, it is not a sign of some sort of aggressive behavior by the Russian side; it is a play on the share market and the Russian bank saw a favorable deal and took advantage of it,” Putin said.

“We do not intend to use these shares to change the institutional situation in EADS but we are ready for partnership,” he told the news conference.

Speaking to Russian reporters afterwards, he struck a more assertive tone, saying Russia wanted a deeper role in EADS under clear “rules of the game,” and holding out the possibility Russia could buy more of the consortium’s shares.

Russia, which caused deep alarm in Europe last winter by cutting off gas supplies to Ukraine, has put the brakes on energy projects in Russia operated by Royal Dutch Shell and Exxon Mobil. Some in the market see the move as an attempt to increase the Kremlin’s stake in those projects.

But Putin said that Russia was a reliable partner and said natural gas giant Gazprom was considering exporting big volumes of gas to Europe from its giant Shtokman gas project.

“I can inform you that Gazprom is looking at that and the decision to do that could be taken in the near future,” he said.

Most of the 70 billion cubic meters of gas the field is expected to produce each year once it comes on line is earmarked for the United States. But Putin said a big part of total output could end up in Europe.

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