Russia's President Vladimir Putin (C), EU Comission President Jose Durao Barroso (L) and Portuguese Prime Minister Jose Socrates talk during their family photo at Mafra monastery on the outskirts of Lisbon October 26, 2007. (Xinhua/Reuters Photo)

 

Leaders of the European Union (EU) and Russia wrapped up their one-day summit here Friday after reporting progress on energy cooperation and Moscow's WTO accession, but failed to make breakthrough on the lingering issue of starting the process on a new partnership deal.

 

Both sides agreed to set up an energy early warning mechanism and to boost steel trade at the summit, where the EU also pledged full support for Russia's entry into the WTO.

 

At the post-meeting press conference, Putin said he was satisfied with the results of the meeting.

 

"It was held in a meaningful and fruitful atmosphere. I think it was quite productive," he added. "We discussed the things we managed to do of late and also mapped out short-term and long-term prospects for our relationship," Putin said.

 

Under the early warning mechanism, Russia would give Europe advance alert should Moscow cut off gas supplies. The system is meant to help restore Europe's confidence in Russia as a reliable energy supplier.

 

The EU wants to avoid a repeat of the events of late 2005 when the Russian state-owned energy giant Gazprom cut gas supplies to the Ukraine in a pricing battle that led to shortages across the European continent.

 

A dispute between Russia and Belarus last December and January also affected oil supplies to some European countries.

 

Russia is the most important energy supplier to the EU, supplying 42 percent of the EU's natural gas imports, and over 30 percent of the EU's crude oil imports in 2005. Most of the Russian gas reaches the 27-member bloc through Ukraine and Belarus.

 

Both sides also discussed the thinking behind the EU's recent proposal on energy liberalization.

 

According to the proposal submitted by the European Commission, on-EU companies would be barred from owning a majority stake in gas pipelines or electricity power grids unless their home country signs a reciprocal agreement with the EU.

 

In Mafra, the EU pledged its full support to Russia's early accession to the WTO.

 

Jose Socrates, prime minister of Portugal, which holds the rotating EU presidency, told reporters that the EU fully supports Moscow's WTO bid, saying Russian membership would be beneficial not only to Russia, the EU, but also the rest of the world.

 

European Commission President Jose Manuel Barroso said that both sides have narrowed down their differences concerning Russia's accession to the WTO, but cited difference over Russia's policy of timber export duties.

 

He said such difference is "resolvable" with joint efforts from both sides.

 

The EU is yet to conclude negotiations with Russia on its WTO bid. The country hopes to conclude WTO talks by the end of this year.

 

Both sides also promised to promote investment and trade, which has increased rapidly over the past years. Russia is now the EU's third largest trade partner.

 

Both sides signed an agreement on promoting trade of steel and steel products, and also a referendum of understanding on drug control.

 

Meanwhile, on the political level, Putin announced that he had proposed the EU send observers to monitor the Russian parliamentary elections in December, a move which had been previously turned down by Moscow.

 

On human rights, Putin also proposed the establishment of a joint Russian-EU institute to promote dialogue and cooperation in the field.

 

Despite all smiles at the post-meeting press conference, both sides had failed to bridge differences over some contentious issues, notably the process toward a new deal to replace the 10-year-old EU-Russian Partnership and Cooperation Agreement (PCA), Kosovo and Iran.

 

Putin said that Russia wanted the negotiations to start "as soon as possible," but it was up to the EU to decide when to launch the process.

 

He expressed the hope that the newly adopted EU reform treaty would give an impetus to the issue.

 

Earlier Friday, EU Commissioner for External Relations Benita Ferrero-Waldner said talks on the new deal, which expires in December this year, could start at the EU-Russia summit next spring.

 

She said that the possibilities of opening such negotiations could come only after the Russian parliamentary elections in December and presidential vote next March.

 

The current PCA was signed in 1997 and expires in December this year. Both sides agree that there should be a new agreement to replace it, but talks on the future deal have been blocked by Poland, on which Russia imposed a ban on meat imports.

 

Russian officials are counting on a new government in Poland to soften its position to unblock such negotiations.

 

Unless either side declares its intention to terminate it, the PCA will automatically be renewed every year until a new deal has been signed.

 

On the issues of Kosovo and Iran on which the positions of the EU and Russia differ sharply, both sides failed to narrow the gap.

 

Both sides had little to report on the two issues at the press conference. Putin pledged that Russia would coordinate with the EU on these issues.

 

This was the last summit for Putin as he will automatically step down next Spring. The EU leaders paid a tribute to Putin for his efforts to promote bilateral relations.

 

Putin reaffirmed that he would not run for re-election under Russian constitution, and had not decided on what to do after his presidential term expires.

 

The next EU-Russia summit will be held in Russia in the first half of 2008, with the date and venue yet to be decided. Putin said it would most likely be in June.

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(Xinhua News Agency October 27, 2007)