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AFP News: Russian Economic Forum opens under boycott cloud

by Lucie Godeau

A boycott by top Moscow officials cast a cloud over the opening Sunday of a showcase event for Russian businesses.

The blow fell after a Russian press report suggested that the Kremlin ordered the no-show because of increasing strains between Moscow and London.

Missing from the 10th annual Russian Economic Forum will be Alexander Medvedev, deputy chairman of Russia’s energy giant Gazprom and the president of the country’s oil company Rosneft, Sergei Bogdanchikov.

“There won’t be any high officials this year at the forum,” said Jonti Small, spokesman for event organisers Eventica, on Friday.

According to three sources close to the Kremlin quoted Friday by the Russian newspaper Kommersant, the sudden decision to boycott the event was “an order from above.”

One of the sources said that the move came after a dispute with the British Foreign Office.

Russian businessman Boris Berezovsky, who was granted political asylum in Britain in 2003, provoked fury in Moscow last week when he called for the overthrow of Putin.

Ties between London and Moscow have also been strained since the assassination by radioactive poisoning of former Russian spy Alexander Litvinenko in November.

His associates accused Moscow of poisoning Litvinenko because of his opposition to Putin, a claim rejected by the Kremlin.

Before the forum opened, the head of the European Bank for Reconstruction and Development (EBRD) called on Russia and the European Union, of which Britain is a leading member, to iron out their political and economic differences.

“It is necessary (for them) to engage, to discuss, to treat political issues, but increasingly there are matters that can be tackled concerning business matters,” EBRD chief Jean Lemierre told AFP.

“Relations between Russia and the European Union have never been as intense as they are currently, since the end of the Cold War,” he added.

The EBRD, which since 1991 has helped former Soviet bloc countries make the transition to market economies, last year doubled investment in Russia to 1.9 billion euros (2.6 billion dollars).

Frenchman Lemierre is scheduled as one of the official speakers at the forum, which opens late Sunday with an informal gathering of delegates, and continues with speeches and presentations on Monday and Tuesday.

The EBRD turned down in January a request from Gazprom for a 400-million-dollar (294-million-euro) loan.

The loan was for the Sakhalin-2 liquified gas project in eastern Russia, but after Gazprom became a majority shareholder in the undertaking, the EBRD said Sakhalin no longer fitted the category of projects usually financed by the bank.

Gazprom’s dramatic entry into the giant Sakhalin-2 energy project has raised serious questions about the safety of foreign investments in Russia, analysts contend.

They believe that the state mounted a campaign to force Anglo-Dutch energy giant Royal Dutch Shell to relinquish its grip on Sakhalin-2, using a series of tough environmental checks as a negotiating weapon.

The EU, meanwhile, is facing a number of other economic problems owing to Russia’s rising power since the end of the Cold War.

Late in 2006, when Ukraine refused to pay inflated prices for Russian gas, Moscow briefly halted supplies to its geographical neighbour, which led to a knock-on disruption of supplies across Western Europe.

Filled with new wealth, meanwhile, Moscow is seeking to invest in and take over leading Western companies, while attempting to prevent them having interests in Russian enterprises.

Last September, the Russian state bought a 5.02 percent stake in European aerospace giant EADS via Vneshtorgbank (VTB), sparking fears that the oil-rich country was seeking to exert control over the company, whose principal unit, aircraft manufacturer Airbus, is grappling with major financial woes.

Elsewhere, Russian steel firm Severstal struck a deal in 2006 to buy European rival Arcelor before the latter decided instead to merge with Mittal Steel.

Looking to grow by other means, Severstal partly floated on the London Stock Exchange in November. A total of 23 Russian companies are presently traded on London’s main stock markets.

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