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Page last updated at 08:46 GMT, Thursday, 26 June 2008 09:46 UK

Fuel woes overshadow EU-Russia talks

By James Rodgers
BBC News, Moscow

They often admit that they don't see eye-to-eye, but Russia and the European Union are neighbours who know that being next door to each other can bring massive mutual benefits.

View of central Khanty-Mansiysk
The summit venue is in the heart of an energy-rich region

Russia is the EU's third biggest trading partner and half of all Russian exports go to the EU.

The two-day summit opening on Thursday will launch negotiations on a new partnership and co-operation agreement.

"It's most important that we start now, and have a speedy process. But it's of course a complex negotiation," admitted the EU's Commissioner for External Relations, Benita Ferrero-Waldner, on a visit to Moscow earlier this month.

No one is willing to say for sure how long it will take to reach a final agreement.

New wealth

Energy supplies are a key issue. Russia supplies around a quarter of the EU's gas. Past gas rows with its former Soviet neighbours - especially Ukraine - made Europe nervous.

The choice of the summit venue, Khanty-Mansiysk in Siberia, is no accident. Russia's European guests will find themselves at the heart of the region which is making Russia rich and powerful.

Russian President Dmitry Medvedev
President Medvedev symbolises the power of Gazprom

Russia wants to build further on that - by expanding westwards. So far, that has proved difficult.

"I think the key word is motivation. Russia wants to get as much of a role as possible in distribution and assets in Europe. The role of just a provider of gas and oil is not sufficient," says Mikhail Kroutikhin of the energy information group rusenergy.com.

As well as highlighting Russia's resource wealth, the Siberian summit venue also points to one of the challenges.

"Reserves are very costly to develop because they are scattered in the middle of nowhere," Mr Kroutikhin explains. "This is why Russia is more interested in getting something of value abroad than in developing these costly reserves, until prices are even higher than now."

The Kremlin is putting its weight behind those efforts. As a former chairman of Russia's energy giant, Gazprom, President Dmitry Medvedev is well acquainted with the business.

His foreign affairs adviser, Sergei Prikhodko, says the question of what he terms "the unfair prevention of Russian investment" in Europe will feature at the Siberian summit.

Mr Medvedev's recent arrival in office marks a new phase in the Russia-EU relationship.

How democratic is Russia?

Vladimir Putin, Mr Medvedev's predecessor in the Kremlin, and now Russia's prime minister, is not expected to attend the summit.

Western Siberian oilfield
Western Siberia's oil is very expensive to extract

Differences during Mr Putin's time as president focused on Western concerns that Russia was moving away from the democratic path it chose following the collapse of communism.

"The new agreement should, of course, have a strong mention of democratic values and human rights," Ms Ferrero-Waldner told the Russian parliament during her visit.

Russia would insist that should include the question of "revision of history and the situation of our compatriots," as Mr Prikhodko puts it - a reference to Russia's recent rows with the Baltic States.

Russia was especially angered by the relocation of a Red Army war memorial in Estonia - and by the alleged ill-treatment of Russians still resident in the former Soviet republics.

The westward political and military movement of former members of the Soviet bloc has frustrated many in Moscow. The expansion of Nato has infuriated some.

Those sorts of concerns are expected to be played down at this summit. There is a sense in diplomatic circles here that whatever disagreements Russia may have with the West, Russia has to have a good working relationship with the EU.

"These questions aren't decided in Brussels, but in Washington," says a Kremlin source of Nato membership.

"The European Union isn't the initiator of the expansion of Nato."





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