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EU, Russia seek to bridge rifts on energy, trade

THE leaders of the European Union and Russia failed to heal deep rifts on energy supplies and trade at a summit today near the Chinese border.

Russia and the EU say they want to improve ties after rows over gas supplies via Ukraine and last year's war with Georgia. But discord was simmering just below the surface.

President Dmitry Medvedev said Russia doubted Ukraine's ability to pay for gas supplies, opening up the spectre of a repeat of January's gas dispute which left EU consumers without gas for almost two weeks in the dead of winter.

"We have doubts about Ukraine's ability to pay," said Medvedev, who also challenged the EU to help Ukraine get a loan for gas payments.

European Commission President Jose Manuel Barroso said that confidence could be restored but warned there should be no more disruptions to gas supplies from Russia, which provides more than a quarter of the 27-member bloc's gas needs.

"Disruption in the export and transport of gas must not be allowed to occur again," Barroso told reporters at a news conference in Khabarovsk, a city 8,000 km (5,000 miles) east of Brussels.

Some EU members had hoped for a new start to relations after Prime Minister Vladimir Putin stepped down as Russian president last year, but a growing list of grievances remain on both sides.

European External Relations Commissioner Benita Ferraro-Waldner accepted that EU-Russian relations had been damaged by last year's Georgia war and the Ukrainian gas dispute.

"There was indeed a rough patch in our relations," she told Reuters, adding they were now on better terms, a view echoed by Russian officials.

The gas dispute with Ukraine this winter raised concerns about Europe's reliance on Russian gas giant Gazprom, the world's biggest gas producer and state-controlled export monopoly, for its supplies.

"We ask Russia and Ukraine to do everything in their power to prevent another crisis next year," Barroso told reporters. "European consumers that are not responsible for these problems are suffering the negative consequences."

Russia was angered this year when Brussels announced a deal with Ukraine to refurbish ageing Soviet-era pipelines, a move Moscow felt had been taken without due regard for its interests.

Medvedev held formal talks on Friday with Barroso and Czech President Vaclav Klaus after an informal dinner and short boat ride down the Amur river on Thursday.

Trade was high on the agenda and a Kremlin foreign policy adviser warned Russia was losing patience over its WTO bid after more than a decade of attempts to join the 153-member body.

The European Union's trade commissioner ruled out finalising a strategic pact with Russia before it joins the WTO and warned Moscow against introducing protectionist measures.

"WTO accession paves the way to the broader free trade agreement we need," Catherine Ashton told Reuters in an interview. "Russia needs to demonstrate it really is keen to move to WTO accession and part of that is not imposing any new duties, which in any event damage business."

The wide-ranging strategic deal, intended to replace a 1994 pact, puts trade as a cornerstone of relations and is still under negotiation. (Editing by Richard Williams)


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