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Last Updated: Saturday, 11 February 2006, 04:44 GMT
G8 Moscow talks focus on energy
Central European gas hub in Baumgarten near the Austrian-Slovakian border
Many countries in Europe depend on Russia for gas supplies
Finance chiefs from the world's leading industrialised countries are meeting in Moscow this weekend with energy security at the top of their agenda.

Russia takes its turn at the helm of the "Group of Eight" (G8) with its economic clout at an all-time high.

Its huge gas and oil reserves are powerful assets when world markets are beset by fears over energy supplies.

But the G8 nations want to allay fears that Russia is using these resources as political and economic weapons.

Russian economy

As energy importers, most of the G8 members are alarmed by the way oil and gas prices have been sent rocketing by record demand and political instability in places such as Iraq, Iran and Nigeria.

They have seen rising fuel prices stoke inflation, pushing up business costs and dampening consumer spending.

A man walking across a bridge over the Moskva river
These are bright times for the Russian economy

And they have noticed that rising energy prices have been good for Russia, which has big reserves of oil and gas.

Energy exports helped its economy grow by more than 6% last year.

These exports, and the other G8 nations' reliance on them, are increasingly enabling Russia's President, Vladimir Putin, to take a more aggressive stance on how the Russian economy is run.

This was reinforced last month by Russia's dispute with Ukraine over gas supplies.

It led to supply disruptions to other nations downstream from Ukraine on the gas pipeline used to bring Russia's gas exports to the West.

Feeling confident

Russia's earlier dismantling of oil giant Yukos and trial of its founder Mikhail Khodorkovsky on tax evasion charges is also fresh in many people's minds.

Concerns over Russia's tight control of energy resources and the linkage to politics will be put to the host nation's representatives this weekend.

But Russia is under no real pressure to back down, according to one economist.

"Russia is feeling more confident that it has a lot to offer the West," said Yaroslav Lissovolik, chief economist at United Financial Group, a leading Russian investment bank.

President Putin outside Kremlin
President Putin has put energy security at the top of the G8 agenda

"The government seems to have an attitude that the scales are shifting and the West has less to offer Russia now.

"Energy security is the number one problem facing the world economy and Russia knows it can offer part of the solution," he said.

"Perhaps it is feeling that now is the time to take advantage of that."

Foreign investment

The finance chiefs in Moscow this weekend may well offer Russia long-term gas supply contracts and the investment needed to build more pipelines to the West.

But they will also be asking for Russia to liberalise its energy sector, allowing foreign companies to invest in assets that aren't considered too "strategic" for private ownership.

This weekend's agenda is also likely to include other topics such as world trade, further debt relief for poor countries, and tackling infectious diseases.

Yet no one is pretending that most of the delegates' attention won't be devoted to energy.

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