Berlin and Moscow Move to Strengthen Ties

The leaders painted a picture of cordiality and close political friendship, as they met in the Russian industrial city of Yekaterinburg in the Ural mountains for the sixth intergovernmental meeting between the two countries. Speaking at the end of the two-day meet Schröder said the bilateral relationship was based on both mutual interest and personal trust.

"There is a measure of common interest and also personal trust, at least from my side, I can’t speak for the president," Schröder said. "But I have the impression from our discussions that a trust-based cooperation is important to both sides."

Underscoring the deepening trust between Berlin and Moscow were a number of important business and political agreements. That harmonious note was apparent on almost all issues that Putin and Schröder, accompanied by high-level ministerial and business delegations, touched upon.

Berlin-Moscow harmony

Whether setting up a working group to counter terrorism, pushing for a stronger U.N. role in postwar Iraq, urging a quicker transfer of power to the Iraqis, or the situation in the Middle East and Iraq, Schröder and Putin -- both of whom staunchly opposed the U.S.-led Iraq war -- appeared in complete agreement.

But the two leaders agreed to disagree on the timeframe for a coming donor conference in Madrid meant to raise money for the reconstruction of Iraq. Schröder hinted it would be in Germany’s favor if the Spanish government postponed the conference scheduled for October 23, in light of Germany’s budgetary constraints and the fact there was still no clear picture of how much money an oil-rich Iraq would actually need to recover. "The Spanish government is the one to take a decision," Schröder said, however.

Putin, who recently announced Moscow would participate in the conference as an observer, said the donor conference should be put off until a new U.N. resolution is passed in the Security Council. "Iraq needs funds, but only on condition that all political matters are settled," he said.

Groundbreaking troop transit treaty

One of the most important political deals that emerged from the summit was the signing of a troop transit treaty between Berlin and Moscow, the first of its kind that Russia has signed with a NATO member.

The treaty allows the German army to transport soldiers and equipment through Russian territory to Afghanistan. The deal is especially significant for Germany as it prepares to expand its ISAF peacekeeping troops from Kabul to Kunduz, which lies close to the Uzbek border.

Further political agreements included hammering out an accord for easing visa regulations for students, businessmen, scientists, artists and sportsmen from both countries, intensifying bilateral student exchange and promoting the learning of both the Russian and German language.

Big business scores

But one of the most high-profile aspects of the meeting was a number of financial deals struck amounting totalling €1 billion, including an agreement for German energy giant E.ON to build a power plant south of Moscow and a separate deal for Essen-based Ferrostaal to construct an ammonia plant to produce fertilizers. The two sides are also drawing up a blueprint for the construction of a Baltic Sea natural gas pipeline to bring Russian natural gas to Western Europe.

Chancellor Schröder, who lauded Russia’s "breathtaking pace" of economic growth and Putin’s "reform course under the leadership," said bilateral trade could reach record levels in 2003.

With a volume of €25 billion last year, Germany remains Russia’s largest economic trading partner. Germany is also easily the largest foreign investor in Russia, with private companies such as Siemens alone investing over €8 billion.

Hartmut Mehdorn, chairman of Germany's national railways operator Deutsche Bahn, signed a transport treaty with the Russian railway to speed up train travel between Berlin and Moscow. He also praised Russia’s economic attractiveness.

"The Russian economy is booming, it’s almost exploding, it always has more to offer to the West," he said.

Problems remain

But business euphoria at the Yekaterinburg summit covered over tougher issues including the human rights situation in the breakaway Russian republic of Chechnya and the emotionally sensitive matter of art looted from Germany by the Soviets during World War II.

Specifically, the fate of a recently found painting by Flemish master Rubens was not resolved. Confiscated by Russian authorities in September from a Russian businessman, the €90 million-painting was taken as war booty by the Red Army.

''I'm very happy that the picture was found. It is now a lot less problematic than if it hadn't been found,'' Schröder told a press conference.