Page last updated at 11:57 GMT, Wednesday, 29 October 2008

Mandelson urges end to Russia row

Peter Mandelson says he will not be distracted by "media squalls"

Peter Mandelson has said he believes there is a "thawing" of Russian-British relations but regretted that trade was bound to be affected by political rows.

The business secretary, on a trade visit to Moscow, said the rows made it "that much harder" to strengthen ties.

Relations between Moscow and London have been strained since the murder of Alexander Litvinenko in London in 2006.

Lord Mandelson also refused to answer questions about his meetings with Russian billionaire Oleg Deripaska.

The new business secretary is on a trade visit to Moscow. He said he was the first cabinet minister to visit Russia since early 2007.

Litvinenko row

Relations soured after Mr Litvinenko, a fierce critic of Vladimir Putin who had been granted UK citizenship, was poisoned in London in November 2006.

Britain's extradition request for suspect Andrei Lugovoi, a former KGB agent who denies involvement, has been refused by Russia.

At the height of the row, four diplomats were expelled from each country, Russia ordered the closure of British Council offices and talks on visas and counter-terrorism co-operation were called off.

To the extent that these political difficulties persist, our economic ties will be that much harder to strengthen and to deepen
Lord Mandelson
Business Secretary

In a BBC interview Lord Mandelson said there was a "substantial" trade agenda between the two countries and a 100bn "investment relationship" which could be strengthened further.

He said it would be "much better" if political differences could be resolved, as they would otherwise "operate some constraint".

"I think you have seen in the decision, and it's a deliberate choice by both governments, to hold this steering committee concerned with trade and investment this week ... you have seen a desire to re-engage, to bring some thawing and hopefully in that context not only advance our economic relationship ... but also to see a chance to resolve some of our political differences as well."

'Two-way trade'

But he would not say that Britain would drop its efforts to extradite Mr Lugovoi, saying the disputes "remain to be resolved".

"In the meantime life goes on, life goes on not in order to brush aside and push under the carpet the very serious issues that remain between us, but life goes on in the sense that we do have economic ties ... we are seeking larger two-way trade and that's what I've had to focus on this week."

"To the extent that these political difficulties persist, our economic ties will be that much harder to strengthen and to deepen and I regret that."

He said the problems with the British Council "seem to have been normalised" which appeared to be a sign that relations were "thawing" but he hoped that would spread to other areas.

Lord Mandelson's meetings with Mr Deripaska when he was EU trade commissioner have prompted accusations he may have intervened in EU policy on the aluminium tycoon's behalf.

Asked whether he had discussed aluminium tariffs with Mr Deripaska, he said that the European Commission had already "cleared up all those questions" and had "confirmed there was no conflict of interest, no impropriety".

Lord Mandelson said he was focusing on promoting British interests in emerging markets like Russia, adding: "What I have got to make sure is that I'm not distracted by media squalls."

Shadow chancellor George Osborne, who also met Mr Deripaska over the summer, has strongly denied claims he tried to solicit a 50,000 donation for the Conservatives from the billionaire.

But he said on Monday he had "made a mistake" in his handling of the meetings, which, he said "didn't look very good".

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