Friday August 14, 2009

Merkel-Medvedev to discuss investment, rights

By Denis Dyomkin

SOCHI, Russia (Reuters) - Boosting Russian investment in Germany and human rights in Russia will be high on the agenda when the leaders of the two countries meet in the Black Sea resort of Sochi on Friday.

German Chancellor Angela Merkel poses for a picture before a TV interview in a park in Berlin, August 11, 2009. (REUTERS/Thomas Peter)

Russian President Dmitry Medvedev has invited German Chancellor Angela Merkel to his official vacation residence of Bocharov Ruchei for their third meeting this year in a gesture showing close ties between Berlin and Moscow.

A senior Russian official told reporters that a bid by Canadian car maker Magna and Russia's Sberbank to buy a stake in Opel, the European unit of General Motors, and a number of other investment projects would be discussed.

"In Sochi, the leaders will discuss details of joint steps to stimulate the diversification of trade and economic ties to make them more stable and resistant to the fluctuations of global markets," a senior Kremlin official told reporters.

"Promoting existing high-tech investment projects and starting new ones is an important part of these efforts," he added.

Trade between Russia and Germany, Russia's biggest trading partner in Europe, reached a record $67.2 billion in 2008. That figure has been cut by more than half in the first five months of 2009, the Kremlin official said, without giving a precise number.

Russian leaders have said the global crisis provided a good opportunity to review the structure of bilateral trade and economic cooperation.

Merkel has backed the Magna-Sberbank bid over a competing offer from Belgian private equity firm RHJ International.

On Thursday, a senior Magna executive said agreement in principle had been reached with General Motors to buy the stake. But a GM official later said the race was not over.

"We plan to discuss in detail the conditions under which the Magna-Sberbank consortium can purchase the Opel assets with benefits for Germany and Russia," the Kremlin official said.

He said Medvedev and Merkel would also discuss finding Russian investors for struggling firms like Dresden chipmaker Qimonda and Germany's fifth biggest shipbuilder, Wadan.

Kommersant daily reported on Friday that Russian services conglomerate Sistema was seeking to take an equity stake in Infineon, a German chipmaker which holds a 77.5 percent in insolvent Qimonda.

Wadan is owned by Russian investor Andrey Burlakov, who is looking for ways to save the insolvent shipyard.

"Given proper social and economic reasons and commercial guarantees, such projects can become springboards for strategic alliances between Russian and German hi-tech companies in car making, shipbuilding and electronics," the Kremlin official said.

"This will complement the existing and emerging alliances in the energy sector," he added referring to Nord Stream, an ambitious project to deliver Siberian gas under the Baltic Sea to Europe.

Russia wants to boost German support for the project in the face of the concerns of some European states that it could harm the Baltic Sea and strengthen Russia's grip on the continent's energy supplies.

Merkel has earlier backed the Magna-Sberbank bid for Opel and has welcomed Russian investment in Germany. But she made clear before fresh talks she had her own agenda.

Germany regularly voices concern over human rights in Russia, an issue which returned to the limelight after the killing of several rights activists in Russia this year.

Merkel said she would raise the issue with Medvedev.

"I do believe that the subject lies close to his heart. But actions must also follow," she told a conference in Berlin on Thursday.

Merkel said she would specifically raise the killing of a children's charity head Zarema Sadulayeva and her husband in Chechnya earlier this week.

"It is absolutely inacceptable," she said.

(additional reporting by Andreas Moeser in Berlin)

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