Putin scoffs at EU fears over Russian investment

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MAFRA, Portugal, Oct 26 (Reuters) Russian President Vladimir Putin took a swipe today at European Union plans to limit foreign investment in its energy networks.

Speaking at the start of an EU-Russia summit, Putin said European investment in his country far outstripped Russian investment in Europe.

''When we hear from some European capitals that 'the Russians are coming with their horrible money to buy everything', that makes me laugh,'' Putin told Portuguese Prime Minister Jose Socrates and European Commission President Jose Manuel Barroso.

''A total sum of European investment in Russia is 30 billion euros (43 billion dollars). I don't know whether it is big or not, but Russian investment in the European Union is 10-fold lower, just 3 billion euros.'' The European Commission recently proposed rules that would prevent Russian gas monopoly Gazprom and other foreign firms from buying up European pipelines and power grids while the EU revamps its gas and electricity markets.

Differences over energy and Europe's reluctance to endorse Russia's bid to join the World Trade Organisation are sticking points at the one-day summit, Putin's last as president.

Socrates, whose country holds the EU's rotating presidency, sought to smooth over the conflicts between the 27-nation bloc and its biggest gas supplier.

''Our desire is to face the challenges of the times, and the challenges of the times demand cooperation and development of the EU's relations with Russia,'' he said.

Russia is the bloc's third biggest trading partner after the United States and China.

''There are two trends: economic ties go up, while political ties go down,'' Anatoly Chubais, head of Russian electricity grid RAO UES, told reporters after EU and Russian businesses leaders met Putin and the top European officials.

A dispute over Russia's ban on the import of Polish meat has stopped the EU and Russia starting talks on a new partnership and cooperation agreement (PCA) to replace one which expires in December.

''The new PCA is one of the acute problems... I expect talks on the new treaty will start in the near future,'' Putin said.

Russian officials say they hope a new government in Poland, following an election, could become friendlier to Moscow.

Brussels and Moscow are also haggling over other trade issues, including Russia's export duties on timber, which the EU wants resolved before blessing Moscow's entry into the WTO.

Political issues to be discussed include Iran and Kosovo.

Moscow has said it will not support independence for the breakaway Serbian province unless it is agreed by Belgrade.

Brussels fears that if UN-sponsored talks fail before a Dec. 10 deadline Kosovo will declare independence unilaterally.

REUTERS SS RK1758

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