Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

EU Asks Russia to Ax Dollar for Euro

European Union leaders on Thursday urged Russia to start accepting euros instead of dollars for its exports, promising a boom in investments and trade.

But the bonhomie at their summit was shadowed by EU criticism of Russia's war in Chechnya.

Russia currently gets paid in dollars for its oil and gas exports to Europe, and the EU wants to switch to euros instead. The two sides signed a joint communique agreeing to discuss the issue in detail.

Russia has hoped that Thursday's meeting would help cement its place in Europe, reflecting Moscow's apparent desire to offset a chill in relations with the United States, strained over U.S. plans for a missile defense system, spy scandals and Russian arms sales to Iran.

Romano Prodi, chairman of the European Commission, strongly pushed for the use of the euro, saying it would help bolster trade, attract new investment and balance Russia's hard currency reserves.

"It is a clear sign of commitment to closer relations between the EU and Russia," Prodi said at a Kremlin news conference with President Vladimir Putin, Javier Solana, EU foreign policy and security commissioner, and Swedish Prime Minister Goran Persson, whose country holds the rotating chairmanship of the EU.

Putin avoided the euro issue at a news conference, but hailed Prodi's proposal to consider a concept of a common European economic space. He also urged the EU to lift anti-dumping barriers imposed against some Russian exports. Prodi and others also mentioned progress on a proposed energy charter that would encourage EU investments into Russia's energy sector but said that it needed more work by experts. They gave no details.

Putin and the EU leaders also discussed EU assistance for the destruction of Russia's chemical and nuclear weapons arsenals, environmental programs and joint action against money laundering and organized crime.

"Our meeting was constructive, rich in substance and extremely fruitful," Putin said, adding that relations with the EU were a priority for Russia.

"The significant role that the EU is playing in the European and world policy is objectively pushing us toward closer cooperation," Putin said at the start of talks in the Kremlin's ornate Catherine Hall.

EU leaders renewed a pledge to back Russia's bid to join the World Trade Organization and said they would work with their hosts to form a "unified economic space," a concept whose meaning is vague.

Putin was upbeat about his stewardship of the economy, saying growing output, liberal tax and customs policies and a reduction in red tape should encourage foreign investors.

The final summit document acknowledged progress in economic reform. "European countries have every reason to see Russia as a reliable and promising partner," Putin said.

In addition to agreeing to examine broader use of the fledgling euro in trade and the economic ties, the two sides discussed moves to increase the euro portion of the Central Bank's $32.5 billion in reserves, which is currently mostly held in dollars. Prodi welcomed the news, saying, "Russia has much to gain from rebalancing its currency reserves."

EU chiefs also agreed to help develop Russia's impoverished Baltic enclave of Kaliningrad, a former nuclear port closed to foreigners in the Soviet era. Sandwiched between EU hopefuls Poland and Lithuania, it is plagued by organized crime and health and environmental problems.

But they failed to nail down a nuclear waste cleanup pact signed in 1999 with Russian that could release hundreds of millions of dollars to deal with nuclear waste. The program would target reactors in decommissioned nuclear submarines and spent fuel rods in northern Russia and on the Kola peninsula. The two sides are wrangling over the extent of Russia's legal liability should an accident happen during a cleanup.

Despite the friendly atmosphere at the summit, the EU leaders prodded Putin on Chechnya. Persson urged Russia to investigate allegations of atrocities against civilians contained in a recent report by Human Rights Watch. "That's the way to regain confidence by the population," he said.

Fifty-one bodies were found in a mass grave in Chechnya earlier this year in Dachny, an abandoned village that Human Rights Watch said was less than a kilometer from Russia's main military base of Khankala. Russia said Wednesday that the identities of 24 of the bodies had been established so far and all of them were civilians.

Putin on Thursday acknowledged that civilians had suffered in the 20-month-old war, but again insisted that the campaign was needed to crush the "religious extremists," who he said wanted to carve a separatist Islamic state from the Black Sea to the Caspian.

He compared the Chechen rebels to Albanian separatists in and around Kosovo and tried to turn the tables on the EU, saying that failure to disarm the Albanians would lead to them spreading crime and violence throughout Europe.

Russia strongly opposed the 1999 NATO airstrikes on Yugoslavia over Serbian violence against Kosovo Albanians.

(AP. Reuters)