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. Last Updated: 07/27/2016

Schroder, Putin Ready Debt-for-Equity Deal

German Chancellor Gerhard Schroder will try to advance key business projects in talks Monday and Tuesday with President Vladimir Putin in St. Petersburg.

The talks will set in motion the first of several debt-for-equity projects in which Russia is to offer stakes in attractive enterprises in exchange for Berlin writing off some of Moscow's $16 billion debt.

First Deputy Economic Development and Trade Minister Ivan Materov was quoted by Interfax last week as saying that eight such projects have already been agreed upon in principle — including IKEA's project to buy furniture and fittings factories in Russia, and Knauf's plans to buy an unfinished cement plant in Perm.

Knauf already has 13 plants in Russia.

Materov also mentioned a food production project in the Moscow region and the construction of a methanol plant in Arkhangelsk.

He said that a final decision has not yet been reached because Russia and Germany still have differences regarding the debt categories that will be involved.

No Russian blue-chip companies will be involved in the scheme, Materov said.

But while progress may be made on the debt issue, the summit in Putin's hometown could well be overshadowed by Western concerns over media freedoms in Russia.

Germany has moved quickly to foster closer ties with Moscow against the background of strains between Moscow and the new U.S. administration of President George W. Bush.

Putin, a fluent German speaker from his time as a KGB spy in the former East Germany, stressed Moscow's desire to boost ties with Europe in a state of the nation address to parliament last week.

He made no mention of Washington.

Ties have suffered after weeks of scandals over expulsions of alleged spies and accusations by senior U.S. officials that Russia aided in the proliferation of nuclear technology and could pose a threat.

Schroder is expected to share with Putin his impressions from a meeting with Bush in Washington late last month.

The visit will also be heavy on symbolism.

Emphasizing a willingness to lay to rest the ghosts of the past, Schroder will lay a wreath in a cemetery for the hundreds of thousands of Russians killed in the Nazis' 900-day World War II siege of Leningrad, as St. Petersburg was then known.

Germany is considering, as are other European Union states, providing funds to help restore some of St. Petersburg's imperial splendor for the city's 300th anniversary in 2003.

Though both men will concentrate on international affairs and business matters, the fight for control of NTV, Russia's sole national independent channel, could steal the show.

Putin has so far remained silent on natural gas monopoly Gazprom's attempt to oust NTV's management and and key editorial bosses.

Schroder has promised to raise the issue.

Putin had to answer awkward questions about the fate of independent media in Russia at last June's summit with Schroder.

He says he supports free speech and has denied any involvement in Gazprom's yearlong drive to take control of NTV.

The summit, the third meeting between the two leaders this year, will involve talks with a long list of ministers, including economic, defense and foreign policy chiefs.

Among topics due to be addressed are U.S. plans for a missile defense system that have infuriated Moscow and raised concern in European capitals and prospective cooperation between Moscow and Europe on regional security, including the Balkans.

(Reuters, MT)