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. Last Updated: 07/27/2016

Germans Keep the Good Times Rolling

By air, land and sea, the rush to invest in Russia has gone into overdrive.

In less than a week, a visiting French prime minister committed his nation to boosting investments in Russia like never before, the stock market soared into virgin territory, and Moscow's credit was for the first time declared good enough for the world's widows and orphans.

"Since Wednesday, we have been living in a new country," said Renaissance Capital chief economist Alexei Moisseyev.

But it didn't stop there.

Vladimir Putin capped one of the most euphoric financial weeks of his presidency Thursday by announcing that Moscow is just days away from sealing a deal with Berlin to begin constructing a $6 billion gas pipeline under the Baltic Sea that could dramatically increase Russia's already considerable share of the European gas market.

And that was just the main business attraction of a two-day summit with German Chancellor Gerhard Schroeder that produced more than a dozen commercial and political agreements ranging from railways and electricity to tourism and medicine.

"Russia and Germany have excellent political relations that need no improvement," Schroeder was quoted by news agencies as saying after the two leaders met for the seventh time this year and the 20th as heads of state.

Putin's fluency in German and his knowledge of the culture from his KGB posting in Dresden have been a key factors in the dramatic improvement in relations between the two Cold War foes.

Putin noted that since 1999, when he became prime minister, bilateral trade has grown 80 percent to nearly $29 billion a year, making Germany Russia's largest trading partner.

"Our relationship has seriously improved in all the areas," Putin said. "But Chancellor Schroeder is not satisfied -- he thinks more could be done, and I totally agree with him."

Putin said for the last 30 years, since Russia started large-scale gas exports to Germany, energy has been the most strategic sphere of cooperation between the two countries.

He said that "within two or three days" the two countries should finalize the details of the $6 billion Baltic Sea pipeline project, which would allow Russian gas to flow directly to Europe without having to pass through troublesome Ukraine and Belarus.

The pipeline will first connect with northern Germany, but will eventually have spurs to Holland, Sweden and even Great Britain.

Schroeder said he was confident the agreement would be signed "imminently," and Economic Development and Trade Minister German Gref later said that executives from Gazprom and its German counterpart Ruhrgas will meet in St. Petersburg on Friday to finalize the deal.

In another major development, top German utility E.On agreed to invest up to $500 million in a pilot project with national power monopoly Unified Energy Systems to build two giant gas turbines near the Shekinskaya hydropower station in the Tula region by 2008.

The two companies also signed a "strategic long-term cooperation agreement" that calls for E.On's participation in upcoming tenders for the right to manage UES generating assets. Tycoon Vladimir Potanin's Interros holding signed a similar agreement with Electricite de France during French Prime Minister Jean-Pierre Raffarin's visit to Moscow earlier in the week.

Another German energy company, Deutsche Energie-Agentur GmbH, struck a deal Thursday with the Russian government on a pilot project to increase electricity efficiency in the regions.

Russia's utilities are on the verge of collapse after being virtually ignored by the government for decades. Up to 90 percent of the infrastructure of some regions is beyond repair and as much as 60 percent of electricity is wasted.

Deutsche Energie-Agentur said in a statement that it would invest in the modernization of Samara's electricity network and do the same in other cities if it is successful.

The Germans are also keen to work more closely with the third so-called natural monopoly, the newly created Russian Railways Co., or RZD.

RZD and its counterpart Deutsche Bahn AG signed a memorandum of understanding aimed at "significantly increasing passenger and cargo traffic as well the competitiveness of rail transport between the two countries."

RZD chief Gennady Fadeyev said the two companies agreed to set up a task force to hammer out by January the technical and financial requirements to slash the amount of time it takes for cargo to travel between Moscow and Berlin and double annual volumes.

Also on Thursday, Germany's Bosch said it had signed an 8 million euro contract on the sidelines of the summit to deliver equipment for a genetic engineering facility in Sverdlovsk that produces insulin.

On the military front, Foreign Minister Igor Ivanov and his German counterpart Joschka Fischer signed a one-year agreement allowing German military equipment and personnel to cross Russia on the way to Afghanistan.

The two sides also agreed to ease their respective visa regimes by granting long-term visas and reducing or abolishing visa fees for some citizens.

Interior Minister Boris Gryzlov said he agreed with his German counterpart to ease the visa regime for "youth and students, top federal and regional authorities, scientists, sportsmen, cultural figures and certainly businessmen."

He said the agreement may be finalized by the end of the year. The two countries also agreed to double the number of student exchange programs in 2004.

Gryzlov also said the two countries decided to establish a special body to fight international terrorism. And Germany confirmed its plans to lend 300 million euros to for nuclear safety issues, most of which will go toward scrapping 120 decommissioned nuclear submarines that were formerly part of the Soviet Union's Northern Fleet.