Putin heads to Portugal ahead of EU-Russia summit

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LISBON, Oct 25 (Reuters) Russian President Vladimir Putin arrives in Lisbon today to try to charm Portuguese leaders in a prelude to an EU-Russia summit on Friday that could be soured by bickering over energy and trade disagreements.

The beginning of Putin's two-day trip to Portugal, which holds the EU presidency, comes as a Russian official said an EU proposal on restricting foreigners' ownership of pipelines and energy grids could be ''discriminatory.'' Putin is due to arrive in Lisbon around 1900 hrs (IST) and will meet Portuguese President Anibal Cavaco Silva and Prime Minister Jose Socrates in the afternoon.

Lisbon will also host today an EU-Russia meeting of industrialists, bringing together leading businesses.

Russian officials have said Russia is hoping to secure contracts to sell aircraft to Portugal that can be used in the fight against forest fires.

A Kremlin source said Russian bilateral relations with Portugal were ''stable and dynamic,'' contrasting with shaky political ties with some key EU members such as Germany, which held the EU presidency in the first half of 2007.

Portuguese officials say Socrates and Putin enjoy friendly personal relations, which could smooth some of the biggest headaches in EU-Russian ties during the summit.

At the summit tomorrow, a key concern of Russia's will be the European Commission's proposal to break up big utilities that control power supply, generation and transmission.

In last month's proposal the Commission also included a clause to prevent foreign firms from buying pipelines and power grids if their home countries do not have similarly open markets and an agreement with Brussels. That was seen as targeting Russian state energy giant Gazprom.

Sergei Yastrzhembsky, the Kremlin's top adviser on EU issues, said yesterday the plan could hurt competition and raise the price of gas. Russia is Europe's main gas supplier.

Yastrzhembsky told Reuters that the proposals ''could become the basis for a discriminatory approach to, say, Gazprom, which could restrict the principle of free competition.'' European Commission President Jose Manuel Barroso will discuss the proposal with Putin on Friday.

Portuguese officials say other key issues on the agenda tomorrow are Russia's bid to join the World Trade Organisation while hotspots like Kosovo and Iran will also be discussed.

Reuters AK VP0600

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