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The leaders of Russia and Germany will hold a joint cabinet meeting this week amid growing German dependence on the gas-rich country due to Berlin’s recent decision to scrap nuclear power.

German Chancellor Angela Merkel will host the 13th annual such get-together Tuesday with Russian President Dmitry Medvedev in the northern city of Hanover joined by major business delegations from both sides.

The so-called government consultations were launched with the aim of deepening ties between the wartime foes and advancing the “modernisation” of Russia after the fall of communism.

Trade has exploded during that time despite criticism of Moscow’s human rights record and accusations that Moscow uses state-controlled energy giant Gazprom for political purposes.

The close relationship was underlined Thursday with the announcement of an envisaged strategic tie-up between Gazprom and Germany’s number-two utilities group RWE to construct power plants in Europe.

When asked if Berlin would promote such deals with foreign firms to meet its energy needs as it scraps its nuclear reactors by 2022, government spokesman Steffen Seibert said it was up to firms to plot their own strategy.

But he acknowledged: “We will need additional power plants, particularly gas-fired ones, to close the gap left by the elimination of nuclear power plants.”

Weekly newspaper Die Zeit writes in its current issue that key partners such as France, Britain and the United States, already sceptical about the nuclear phaseout, are uneasy about greater German reliance on Russian gas.

Medvedev will arrive for an informal dinner with Merkel late Monday ahead of a welcome by a military guard Tuesday at a Baroque garden ensemble.

More than a dozen agreements on economic and environmental cooperation are to be signed, as well as business deals “covering the range of German-Russian cooperation,” a German source said.

Germany is Russia’s most important single trading partner. Russian exports to Germany reached 31.8 billion euros ($45.0 billion) last year with 26.4 billion euros’ worth of goods going the other way.

The senior official, who spoke on condition of anonymity, said the talks would also cover “unresolved” human rights cases including the murder of reporter and activist Natalya Estemirova.

Germany, which currently holds the presidency of the UN Security Council, also hopes to convince Russia to drop its opposition to action against Syria over its bloody crackdown on protesters.

Berlin would also like to see Moscow toughen sanctions against Iran over its disputed nuclear programme.

Merkel, who grew up in communist East Germany, enjoys a warmer relationship with Medvedev than she did with his predecessor, current Prime Minister Vladimir Putin, who served as a KGB officer in East Germany in the 1980s.

“I think Putin reminds her of the Stasi (secret service) people with whom she had her problems in the GDR,” Russia expert Alexander Rahr of the German Council on Foreign Relations told AFP.

“She has sort of pinned her (modernisation) hopes for Russia on Medvedev.”

On Saturday, the jury behind a prominent German political prize bowed to mounting pressure and reversed a decision to honour Putin this year.

A spokesman for Putin, who was not to attend the Hanover talks, insisted the move would not harm bilateral ties.

Fyodor Lukyanov, editor of the journal Russia in Global Affairs, said the meeting would unlikely to be more than “routine” because Germany was distracted with the eurozone crisis and Russia was in political limbo.

“The internal political situation in Russia is unclear” because neither Putin nor Medvedev has said which of them will stand in presidential elections scheduled for March, he said.

“And this uncertainty is discouraging for Berlin and all other foreign partners who are tired of guessing” who will take the reins.

AFP, 17 July 2011


German and Russian energy giants agree on strategic partnership

German energy utilities group, RWE, and the Russian gas giant, Gazprom, have agreed to form a strategic partnership to jointly build gas and coal-fired power plants in Europe.

Germany’s largest electric utility, RWE, and the Russian gas company, Gazprom, have signed a memorandum of understanding to form a strategic partnership in the energy sector and jointly construct new, or expand existing, gas and coal power plants in several European countries.

The deal was inked in Rome and comes only days after the German company said it planned to move away from conventional power generation to focus more on renewable energy sources.

“The memorandum of understanding, when put into commercial reality, could secure a safe and competitive natural gas supply to RWE,” said Jürgen Grossmann, the head of RWE, adding that it could also “provide for potential partnerships in coal and gas-fired power plants in and outside of Germany and thus lead to mutually fruitful common growth opportunities.”

“The signed memorandum provides RWE with exclusive rights for negotiations with Gazprom on the implementation of energy projects in Germany, the UK and the Benelux countries for a period of three months,” said Gazprom’s chief executive Alexei Miller in Rome.

Cartel Office concerns

Gazprom signaled several months ago that it was interested in playing a larger role in the German market as an operator of gas-fire power stations, prompting Germany’s Federal Cartel Office to voice its concerns about any such deals.

German Cartel Office President Andreas Mundt warned that when a large producer and a larger provider, like Gazprom and RWE, get together that is not unproblematic for competition in the marketplace.

“A connection between Gazprom and RWE would have to be examined very closely,” said Mundt.

RWE, however, is under immense pressure, since the forced end to nuclear energy in Germany by the government, to get a grip on its outstanding debts and find new investors with deep pockets.

Commercial ties between Germany and Russia have grown strongly in recent years, despite criticism of Moscow’s human rights record and accusations that the Kremlin uses state-controlled companies, like Gazprom, for political purposes.

The RWE-Gazprom announcement comes ahead of talks in Hanover early next week between Russian President Dmitry Medvedev and Chancellor Angela Merkel.

Deutsche Welle, 14 July 2011