Putin pledges Soviet debt payment

Mr Putin and Mr Schroeder took time out to enjoy the Russian winter

Russian President Vladimir Putin has said that Russia will repay all its debts inherited from the Soviet Union.

Speaking to reporters at a Moscow airport where he was seeing off German Chancellor Gerhard Schroeder, Mr Putin reiterated that a quarter of all budget spending for 2001 had been earmarked for debt payment.

Russia intends paying, and it is going to pay debts inherited from the USSR

Vladimir Putin

Russia announced on Friday that it plans to delay its scheduled payments to the Paris Club of industrial nations.

But Mr Putin promised to meet all financial obligations while indicating that Russia wanted the payments restructured.

"Russia intends paying, and it is going to pay debts inherited from the USSR," he said.

"It wouldn't be good for anyone if Russia didn't fulfil its international debt obligations."

Mr Schroeder arrived in Moscow on Saturday to celebrate the Orthodox Christmas, as part of a visit that has been billed as private.

Leisurely weekend

Discussions of the debt were expected to dominate the visit, as Russia owes 40% of its almost $50bn debt to German banks.

Mr Schroeder's visit was billed as private

But the two leaders and their wives spent Sunday as they did Saturday, enjoying the Orthodox Christmas celebrations and the Russian winter.

They took a sleighride through a historic museum estate in Moscow's Kolomenskoye suburb.

Later they attended a Christmas reception hosted by Patriarch Alexy II at the Trinity-St Sergius Monastery, the spiritual centre of Russian Orthodoxy.

Personal ties

Both leaders insist the visit is part of an important process of strengthening their personal ties.

Mrs Putin showed Mrs Schroeder the sights

BBC Russian affairs analyst Stephen Dalziel says Mr Putin's relations with Mr Schroeder are becoming almost as close as his friendship with UK Prime Minister Tony Blair.

But, while both Britain and Germany are keen to encourage greater trade with Russia, the Berlin government has a more acute economic interest in Moscow.

Germany is owed a greater share of Russia's foreign debt than any other creditor, and Russia has announced that it is unilaterally delaying payment of the next tranche of $3.5bn, which it was due to meet this year.

Moscow insists that negotiations are in progress with the Paris Club, and that this is not a default on its payments.