Putin slams EU terms for Russia WTO entry

President Vladimir Putin blasted European Union "bureaucrats" yesterday for leaning on Russia to raise domestic energy prices as a condition for joining the World Trade Organisation (WTO).

"We cannot move to world energy prices in a single day. It will ruin the country's economy. Eurobureaucrats either do not understand this or are trying to impose conditions which are unacceptable for Russia's entry to WTO," Mr Putin told a Russia-German summit meeting in the Urals.

"Such a tough position towards Russia is unjustified and dishonest. We view this as an attempt at arm-twisting."

Mr Putin's language was unusually blunt and appeared to show his frustration with the EU at a time when Russia is attracting more foreign investment than ever before in its recent history.

He softened the blow by saying Russia - the world's second largest crude exporter - might be willing to denominate oil contracts in the European Union's single currency, the euro.

The European Commission later responded by saying it was not seeking unduly tough concessions from Moscow.

"We are not asking the Russians to make unreasonable concessions or to force obligations on the Russians other than those in the WTO," said Arancha Gonzalez, spokeswoman for European Trade Commissioner Pascal Lamy in Brussels.

Mr Putin said Russia, awarded an investment-grade assessment from US rating agency Moody's Investor Services on Wednesday, had become a stable country and the EU should take note.

Winning investment grade opens the door to many investors, such as pension funds, which had previously been barred from putting their money into Russia on the grounds it was too risky.

"Russia's main advantage today is its political and macroeconomic stability," he said. "If we move to world energy prices faster, macroeconomic stability will be undermined."

The WTO wants members to squeeze subsidies out of their economies. Russia, which enjoys much lower oil and gas prices than Western Europe, is resisting pressure from WTO negotiators raise them to international levels.

Russia is the only major trading nation not to join the WTO and Mr Putin sees membership as a big step towards completing the transition from Soviet-style planning to a free market economy.

But talk of raising gas and electricity bills might fuel discontent among impoverished households - a prospect Mr Putin would rather avoid ahead of March presidential polls which he is widely expected to win.

Russian Economic Development and Trade Minister German Gref, talking to local and German businessmen on the fringes of the summit, said the energy price issue was one of the reasons for a deadlock in WTO talks.

"Negotiations are proceeding with considerable difficulty. They are deadlocked," Russian news agencies quoted Gref as saying. He was referring to a meeting in Brussels this week with the EU's Lamy.