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. Last Updated: 07/27/2016

Putin Says Latvia Border Deal Will Help Trade

President Vladimir Putin told Latvia's prime minister on Wednesday that a new border treaty was not enough to mend thorny relations between the countries but the step would be rewarded with new trade deals.

Russia and Latvia signed a treaty on Tuesday demarcating a frontier after a diplomatic dispute fueled by Riga's claims over a tiny Russian border district caused a two-year delay.

"We realize that signing the treaty was important, but it does not solve all problems," Putin told Aigar Kalvitis, welcoming the first Latvian prime minister to visit Russia to his Novo-Ogaryovo residence outside Moscow.

Putin made it clear that Russia was ready to back the treaty with economic perks. Latvia depends on Russian oil and gas and is a major transit route for Russian goods exported to Europe.

Gazprom, which holds shares in Latvian gas company Latvijas Gaze, delivered 0.8 billion cubic meters of gas to Latvia last year. Ahead of Kalvitis' visit, Kommersant quoted Latvia's Foreign Ministry as saying Riga was interested in joining a Russian-German project to build a gas pipeline under the Baltic Sea.

The treaty, which has to be ratified by the parliament, has become a target of attacks from Latvian nationalists, who insist on sticking to territorial claims.