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Reuters: EU vows united front to press Putin on energy

Putin

Fri Oct 20, 2006 1:16 PM ET

By Rex Merrifield and Ingrid Melander

LAHTI, Finland (Reuters) – European leaders agreed on Friday to deliver a blunt message to President Vladimir Putin that Russia must give European firms more chance to exploit its huge energy resources or risk an investor exodus.

Putin arrived as guest at a potentially fraught EU summit dinner, with bloc president Finland pledging to raise the killing of journalist Anna Politkovskaya and the Kremlin’s heavy handed treatment of the former Soviet republic of Georgia.

The Europeans are dismayed by Russian moves to impose punitive sanctions on firms such as Royal Dutch Shell and Total that signed contracts in the 1990s, and to shut out foreign capital from development of the giant Arctic Shtokman gas field.

“The European Union hopes Russia will pursue a policy of partnership, especially regarding European investment. That is the message we will pass to Mr Putin,” French President Jacques Chirac said after EU leaders agreed tactics for the encounter.

British Prime Minister Tony Blair said the 25-member bloc, which imports a quarter of its gas from Russia, would tell Putin ties had to be based on “clear rules and clear principles”.

“Foreign investment is not going to go into Russia if there are question marks about whether that investment is going to be treated in a fair and equitable way,” Blair’s spokesman said before Putin’s arrival in the southern Finnish town of Lahti.

German Chancellor Angela Merkel, whose country is the biggest customer for Russian gas, said: “We offer security in contracts and we expect the same from Russia, namely also legal security in contracts and access to the Russian market.”

ENERGY CHARTER

Merkel said she had not abandoned efforts to get Moscow to ratify an energy charter that would open Russian pipelines to others, but indicated the EU would shift focus to putting the principles of that treaty into a planned partnership agreement.

EU countries were anxious to play down their own differences on whether the bloc should treat Moscow more as a strategic partner and supplier of a quarter of its gas, or as a bully that used energy as a political weapon.

Former Soviet satellites in the Baltic states and central Europe sought a tougher EU line, while others such as France and Germany stressed the need to find common ground with Moscow.

Polish President Lech Kaczynski, a critic of Moscow, said EU leaders had agreed to speak to Russia “with one voice but firm”.

European Parliament President Josep Borrell said the EU would lose face if it shied away from raising concerns with Putin and that the huge European market for Russian energy was a bargaining chip.

“There is gas flow and there is cashflow,” the Spanish Socialist said. “Russia needs cashflow, you can’t eat gas.”

EU countries are above all irked by Russia’s refusal to ratify an energy charter which would open its pipelines to third parties and by its growing hostility toward foreign investors.

But with Putin buoyed by high energy prices and popularity at home, analysts doubt the EU has the leverage to influence Kremlin policy on energy or democracy at home.

The EU this week issued unusually stern criticism of Moscow over its blockade of Georgia and harassment of Georgians in Russia. U.S. Assistant Secretary of State for European Affairs Daniel Fried said Washington also found it “deeply troubling”.

But Russia said Georgian President Mikhail Saakashvili was exacerbating tensions with inflammatory rhetoric and a military build-up round Russian-backed breakaway regions in Georgia.

Several dozen protesters, some waving Georgian or rebel Chechen flags demonstrated peacefully against Putin about 100 meters (yards) from the summit center.

(Additional reporting by Paul Taylor, Christian Lowe, Jeff Mason and Terhi Kinnunen in Lahti, Kerstin Gehmlich in Paris and David Brunnstrom in Brussels)
 
© Reuters 2006. All rights reserved.

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