Putin scraps with EU over energy, trade

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MAFRA, Portugal, Oct 26 (Reuters) President Vladimir Putin scrapped with European Union leaders today over Brussels' plans to limit foreign investment in energy markets at a summit that achieved little on key sticking points.

Putin, in his final EU summit as president, took a swipe at proposals from Brussels that could prevent gas monopoly Gazprom from buying up power grids and pipelines while the 27-nation bloc revamps its gas and electricity markets.

He also drew a parallel between US plans for a missile shield in eastern Europe and the Cuban missile crisis in 1962, widely regarded as the closest the world came to nuclear war.

''I would remind you how relations were developing in an analogous situation in the middle of the 1960s,'' he said.

''Analogous actions by the Soviet Union when it deployed rockets on Cuba provoked the Cuban missile crisis.'' European Commission President Jose Manuel Barroso voiced confidence that the EU could endorse Moscow's bid for membership of the World Trade Organization, a long standing bone of contention in EU-Russia relations.

''I am confident that those issues are solvable and both sides need to make rapid efforts to solve them,'' Barroso told reporters, referring to the two last issues preventing Brussels from signing of on Russian WTO membership.

Putin said ''talks are not easy but constructive'' on WTO.

EU officials had played down expectations for the one-day summit, saying no major breakthroughs were expected on key issues such as a new partnership and cooperation agreement between Moscow and Brussels.

The Russian leader urged Europe not to be concerned by Russian companies investing in Europe, saying that European investment in his country far outstripped investment in Europe.

'HORRIBLE MONEY' ''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 EU officials, including Barroso and Portuguese Prime Minister Jose Socrates, at the one-day meeting.

''A total sum of European investment in Russia is 30 billion euros (43 billion dollar). 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.'' Barroso denied the energy draft laws would discriminate against Moscow and said Russian companies must play by the same rules as anyone else.

Socrates, whose country holds the EU's rotating presidency, said there were ''important'' advances at the summit.

Russia and the EU signed deals on cooperation in drug trafficking and boosting steel trade.

Russia is the bloc's third biggest trading partner after the United States and China. Business leaders urged the politicians to improve relations.

''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 business leaders met Putin and the top European officials.

He said Russian investment in the EU was comparable or near European investment in Russia, contradicting Putin's assessment.

A dispute over Russia's ban on Polish meat imports 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 have haggled over Russia's export duties on timber, which the EU wants resolved before blessing Moscow's entry into the WTO.

REUTERS GT PM2355

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