Russian Foreign Minister visits London to seek a strategically stable tie with United Kingdom; Russian President on an official visit to Italy; Ukraine to pay more for Russian natural gas; Russia plans food fund to combat rising inflation and regulate
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    • The Foreign Minister of Russia Sergey Lavrov paid an official visit to the United Kingdom and called upon to revive their bilateral relationship which has apparently stagnated on account of the controversial fallout of the Litvinenko murder case of 2006. Lavrov is the first senior Russian government official to come to Britain since the death from radiation poisoning of Alexander Litvinenko, a former Russian agent, in London, in November, 2006.1

    In addition to trade and economic relations, the two sides discussed a wide range of international and regional issues, including the Middle East, Afghanistan, European security and the controversy surrounding Iran's nuclear plans. Special focus was laid on anti-terrorist cooperation and visa free regime between Russia and Europe. Lavrov named six priority areas of cooperation with Britain in his talks with Foreign Secretary William Hague. These include trade and investment, finance, high-tech, energy, business ties, and building up infrastructure for forthcoming Olympic events. The dialogue was termed ‘very positive’ with both sides agreeing to overcome serious disagreements and move towards a ‘steady and patient rapprochement’. It would be worth noting that Russia is one of Britain's main trading partners. Over 1,000 British companies are currently operating in Russia. According to experts' estimates, the two countries' trade exceeds 17 billion US dollars. Moreover, Britain is one of Russia's largest foreign investment partners.2

    Russian President Medvedev paid a two days visit to Italy. During the visit, he sought support of Prime Minister Silvio Berlusconi for cooperation on energy projects and development of a new regional aircraft. Russia plans to develop its ties with Italy in gas and other energy resources, as well as cooperate in nuclear energy. Some of the main documents signed included Gazprom’s agreement with Eni to jointly develop an oil field in Northern Africa, an agreement between Vneshekonombank and Italy's Cassa Depositi e Prestiti bank and a document on military transit over Russian territory. The year 2011 was declared as the year of Russian culture in Italy and 2012 vice versa. Italy is one of Russia's biggest business partners, with bilateral trade reaching $36.8 billion last year.3

    In an apparent sign of Russia and Ukraine being able to resolve their long standing differences over the pricing of natural gas, Ukraine has agreed to pay $280 per 1000 cubic metres of gas starting from April 2011 .4 It would be worth recalling the long standing gas pricing dispute which had led Russia to cut off gas supplies to Ukraine in the year 2009. This also resulted in South Eastern Europe being deprived off their main source of fuel in one of the harshest winter’s which Europe had ever experienced.

    In order to tackle the problem of rising inflation, Russia’s First Deputy Prime Minister Igor Shuvalov has ordered the Agriculture, Finance and Economy ministries to formulate mechanisms to regulate food prices and create a fund to buy and sell food products .5 The first major initiative could be the plan to regulate the prices of potatoes which have witnessed an upward jump of close to 25%.

    Reports noted that Russia’s GAZ and Germany’s Volkswagen plan to form a joint venture in order to produce 300,000 cars per year in Russia .6 The joint venture will produce a range of Volkswagen brands including the Jetta, Skoda Octavia and Skoda Yeti models. GAZ would use its plant in Nizhny Novgorod for the joint-venture project, while VW would use its Kaluga facility in Russia.

    Meanwhile, Russia's foreign minister Mr. Lavrov has said that it can be "counter-productive" for the United States and the West to encourage the spread of revolutions and pro-democracy protests in the Middle East .7 However, the former USSR leader Mikhail Gorbachev has asserted that popular revolts in Egypt and Tunisia are a warning that democratic freedoms cannot be traded for a facade of political stability or economic growth. Gorbachev has likened Putin's dominant United Russia party to the Soviet Communist Party and said that the Kremlin's economic modernization drive will not succeed without improvements in democracy and the electoral system. He said that "power without accountability" was unsustainable. In the end the voice of the people will be decisive.8

    Reports noted that France's oil major company Total and Russia's top oil producer Rosneft are negotiating possible cooperation in projects on the shelves of the Barents and Black Seas .9 Total is also interested in cooperation on continental shelf projects in Russia. Total (Europe’s third largest oil producer) recently teamed with Russian gas monopoly Gazprom to develop the Shtokman natural gas field in the Barents Sea, which holds about 3.9 trillion cubic meters of gas (enough to meet current global demand for more than a year). The French company is also bidding for as much as 25 percent of Tarko-Sale-based Novatek's project to produce liquefied natural gas on the Yamal Peninsula. The Arctic region, mainly in Russia's zone, holds about a fifth of the world's undiscovered and commercially viable oil and gas reserves, according to U.S. government estimates. 10

    In other developments, Russia has urged the United States of America to refrain from establishing long term military bases in Afghanistan on the grounds that permanent military presence can undermine peace keeping effort and ‘anger neighbours’ .11 Russia has in the recent past assisted the United States and NATO in their fight against the Taliban-led insurgency by providing supply routes and weapons for Afghan forces. However, it has ruled out sending its own troops there and stressed that the campaign must not last forever. Russia has also expressed its displeasure over the continuing US military base in Kyrgyzstan and has repeatedly stated that the base should be dismantled once the military operations in Afghanistan come to an end.12

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