A command performance for EU heads

Posted in Russia , Europe | 27-Jun-08 | Author: Stephen Castle| Source: International Herald Tribune

In Khanty Mansiysk on Thursday, both Russias - the thriving and ambitious, the deprived and downtrodden - were on display.

KHANTY-MANSIYSK, Russia: Along Lenin Street on Thursday, they were spraying the road clean. Outside the center of this west Siberian city, population 60,000, an apparently new, large, green fence had gone up, concealing the rundown wooden dwellings behind it.

Two time zones east of Moscow and a six-hour flight from Brussels, Khanty-Mansiysk was putting its best foot forward for a much-touted summit meeting between Russia and the European Union - a gathering both sides say should define a new relationship between the global energy giant and the 27 European countries that are among its best clients.

Rarely can the choice of venue have said more about a nation's state of mind.

At the behest of Russia, the meeting is actually taking place outside Europe - east of the Urals. Its streets may be named after Soviet heroes, but this city boasts an array of shiny new buildings, the fruits of booming oil prices in this capital of the Yurga region, which produces 7.5 percent of global output.

Ten years ago, this was a backwater. With oil prices soaring (predictions of $175 a barrel were rife in markets Thursday), the Russian hosts were calling the shots.

European officials look with hope at their host, the 42-year-old new president of Russia, Dmitri Medvedev, seeking a thaw in the icy relations that characterized the tenure of his predecessor, Vladimir Putin.

Putin is now prime minister, but is not expected to attend the meetings.

Medvedev kept European leaders lingering over dinner Thursday night, and a spanking-new concert hall full of other guests chafed, waiting for the dignitaries to show.

It was also Medvedev, European officials said, who asked that the meetings Friday - the substantive part of this journey to Siberia - start late. He planned to watch Russia's soccer heroes play their Euro 2008 semifinal against Spain, a match that was to start only shortly before 1 a.m. on Friday, local time.

According to the provincial governor, Aleksander Filipenko, the Yugra region accounts for 57 percent of Russian oil output. Asked how he felt about Yugra being compared to Dubai, Filipenko joked Wednesday that this was an insult, because Yugra produces much more oil.

Filipenko has ambitious plans for Khanty-Mansiysk, including the construction of a 280-meter, or 920-foot, diamond-shaped tower, described by its British architect, Norman Foster, as "an elegant and crystalline landmark" in the Siberian landscape.

The governor wants Europeans to be as crystal clear about their energy supply. "This is the source of the river of energy that flows to Europe and brings light and heat to flats there," he said, according to the RIA Novosti news agency.

When the leaders surface Friday after the soccer match, they are due to start talks on what official parlance terms a new Partnership and Cooperation Agreement, an overarching treaty to replace an old accord that expired last year.

Although the old agreement renews automatically, both sides agree that a new pact is needed to replace one forged in the very different conditions of the 1990s, after the collapse of the Soviet Union.

It was the Europeans who blocked talks for 18 months as Poland, and later Lithuania, both former Soviet vassals suspicious of Moscow, blocked agreement on the negotiating mandate because of trading and other disputes.

Negotiations are expected to be prickly, not least because Russia seeks a broad accord, with details left until later, while some Europeans say that would reduce their leverage.

The summit meeting is the first test, though, of whether the EU can fashion a healthier relationship with Medvedev than it had with Putin.

In Brussels on Monday, the Russian envoy to the European Union, Vladimir Chizhov, played down expectations. "If we speak about improvement," he said, "I would relate it not to a change in the President of Russia but in the recently-attained ability of the EU to find a mandate for the negotiation."

That glossed over a panoply of tensions, from restrictions over Russian timber exports to Finland, to the Kremlin's relations with Georgia and Ukraine and policy toward Kosovo, the Serbian province whose ethnic Albanian majority declared independence in February with backing from most of the EU.

The EU has pressed in vain for Russia to open its oil and gas pipeline network to foreign companies, while Moscow has complained about efforts to restrict investments by its state-run monopoly Gazprom within the EU.

Money may speak louder than words. These two partners depend on each other: the EU consumes roughly two-thirds of the gas that Russia exports and accounts for more than half of Russia's foreign trade. Russia is the EU's third-most-important trading partner, after the United States and China, accounting for 6.2 percent of EU exports and 10.4 percent of EU imports in 2006.

In a paper for the Center for European Reform, a London-based research institute, Katinka Barysch argued recently that, for a new agreement to have any substance, Russia needed to join the World Trade Organization and the EU needed to overcome internal divisions over energy to prevent Moscow dividing European member states.

She noted that Medvedev has promised ambitious reforms - which may secure, for example, the property rights of big European companies and investors - but might need valuable EU assistance in carrying them out.

In Khanty-Mansiysk on Thursday, both Russias - the thriving and ambitious, the deprived and downtrodden - were on display. In the main square, Nadezhda Shlikova, an administrator at a local TV station, recounted how immeasurably life had improved. "I was born in 1955 and brought up near here in the country - it was very poor," she said. "We had nothing."

Shlikova left for Belarus and Ukraine for a while, then returned. "Now I like living here very much," she said. "The town is rich - there is also sport, tourism and the countryside."

"Yes," interrupted an elderly woman who declined to give her name. "Of course it's a rich town and it's good for bureaucrats.

"But I live in a one-bedroom flat with eight people. We are poor, and life is hard."