Putin visits Paris as Russia flexes muscle

PARIS, Sep 22 (Reuters) Russian President Vladimir Putin arrives in Paris today on a visit that will test Western responses to Moscow's push to use its booming oil and gas revenues to gain a foothold in some of Europe's key industries.

Putin is due to dine with French President Jacques Chirac before the two leaders join German Chancellor Angela Merkel for a three-way meeting tomorrow where Moscow's aim of joining the core of aerospace group EADS will be a top issue.

That will add an extra twist to the familiar themes of energy policy and Iran's nuclear programme that have dominated recent diplomacy between Russia and the West.

Moscow has caused concern in the West by flexing its economic muscle with such firms as Royal Dutch Shell over huge oil and gas projects in the remote Sakhalin region.

Ominously for Paris, the dispute has also threatened to affect French oil group Total over production sharing at its Kharyaga project in West Siberia.

Part of the aim of the meeting will be to defuse such tensions, which have been simmering since Russia cut off gas supplies to Ukraine last winter.

''They want to tie Russia in far enough to make it difficult for Moscow to make a political issue out of energy policy,'' said Josef Janning, of the German Bertelsmann Foundation.

But the world's second biggest oil exporter and holder of the largest reserves of natural gas appears determined to use its assets to back its claims as a global economic power.

''Russia today considers itself a financial power capable of making very significant acquisitions in the European Union and not just in the energy sector,'' Thomas Gomart, at the French Institute of International Relations in Paris, said.

''The European Union has still not understood how completely that has changed their attitude,'' he said.

AMBITIONS The oil fields dispute has underlined Russia's belief that it is in a position to extract major concessions from the West.

''It's not fair that when you have an oil price above 60 dollar a barrel that Russia should be practically paying extra to the operator for the development of the project,'' the Vremya Novostei newspaper quoted a source close to Russia's Natural Resources Ministry as saying of Total. ''They have to understand that you cannot behave like that with Russia.'' Russian gas giant Gazprom, the world's biggest producer, has already made clear its ambitions to expand globally but Moscow's goals plainly go beyond energy into strategic industrial sectors.

A failed attempt by Russian steel group Severstal to buy European steel giant Arcelor was followed this month by Russia's acquisition of 5 per cent of EADS, and the Kremlin said it wanted to up its stake to a blocking minority.

EADS rebuffed the approach last week but the move has set alarm bells ringing.

''Can one trust Putin?'' asked business daily Les Echos in an editorial. ''He is attempting to set up completely asymmetrical economic relations with the Europeans, taking advantage of their divisions and fragility, as one can see in the EADS dossier.'' A European official who declined to be named said Russia's entry into EADS was a source of ''major concern'' given its drive to enter the US market.

The sensitivity of these economic issues has overshadowed the Iran question. Merkel, a close US ally, will also be keen to ensure the encounter's symbolism does not reawaken past tensions the other two leaders have had with Washington.

Reuters DKA VV1600