Europeans Broach Idea of Trade Pact With Russia
MOSCOW, July 3 — Two European Union officials unexpectedly floated the idea on Monday of opening talks with Moscow on forming a free trade area encompassing Europe and Russia and expressed the hope that member countries would approve of the idea.
A European Union spokesman, however, later backpedaled on the comments, which were made by the group's president and commissioner, saying a free trade deal with Moscow is a more distant prospect, though one that cannot be ruled out as Russia's economy improves on the back of high energy prices.
The European Union is pressing Russia to open its domestic energy industry to foreign investment and independent access to pipelines. In exchange, Moscow is asking for access to European Union markets — though there had not previously been any mention of a free trade pact spinning out of this energy dialogue.
The positive statements could be a sign of Russia's success in leveraging its energy resources to win wider economic and political concessions from Europe, Chris Weafer, chief analyst at Alfa Bank, said.
"It's part of the negotiations. Europe wants an energy deal with Russia," Mr. Weafer said. "It's keeping the carrot dangling; it's the positive spin on negotiations. We won't see a free trade deal with Europe that quick. But it's a possibility if Russia's economy continues to improve."
Speaking at a news conference in Helsinki, Prime Minister Matti Vanhanen of Finland, whose country holds the rotating European Union presidency, said he would like to see talks open this fall.
"Our aim is that in November, when we have this E.U.-Russia summit, to make a decision to start official negotiations," Mr. Vanhanen said, according to Reuters.
"Negotiations would be done during 2007," he added.
The European Union is eager to seal an energy deal with Russia to avoid a repeat of events last winter, when Gazprom, the Russian natural gas monopoly, briefly halted supplies of natural gas to Ukraine. Gazprom also ran short of fuel during a cold snap in January, raising concerns that the company is not investing enough in its aging gas fields in the Arctic. Europe relies on Russia for about a quarter of its natural gas supplies.
José Manuel Barroso, the president of the European Commission, speaking at the same news conference, said Moscow would first have to join the World Trade Organization before striking any other deals on preferential trade.
"We propose to move toward a free trade agreement to be completed once Russia accedes to the W.T.O.," Mr. Barroso said, Reuters reported.
Still, a free trade deal is not on an agenda for talks with Russia this fall. The agenda for those negotiations, to replace a 10-year-old accord that expires this year, was approved just on Monday. A statement from the union said, "The mandate does not cover any preferential agreement with Russia."
Peter Power, the European Union trade spokesman, said in a telephone interview from Brussels: "This is a long-term issue. It is not on the agenda now. It will not be on the agenda until Russia is a member of the W.T.O. in the first instance, and then perhaps not immediately."
Russia, which applied to the W.T.O. in 1993, has won approval from most countries in the 149-member trade group and diplomats say final approval is imminent. But Moscow is still tied up in negotiations with the United States over spread music and movie piracy, aircraft tariffs and banking regulations. The European Union too has objected to Russian fees for airlines that fly over Siberia on flights from Europe to Asia.