Merkel in Russia

German engineering giant Siemens signed a lucrative deal to provide 200 trains to Russia's RJD railway company in Yekaterinburg, Russia on Thursday as the heads of state of both countries met with business leaders to discuss deepening bilateral economic ties.

Russian President Dmitry Medvedev told the group that German partners continued to demonstrate their reliability while German Chancellor Angela Merkel described German-Russian cooperation as a "success story."

Merkel is in Russia along with members of her government and 25 German business leaders. They met with Medvedev and Russian business leaders as part of the Petersburg Dialogue a semi-annual event meant to strengthen ties between the two countries. In addition to the Siemens deal, a proposal to supply Russia with 11 Airbus A330s to Russia for 2.2 billion euros ($2.8 billion) was discussed. CEOs from Volkswagen, BASF and Commerzbank are also in Yekaterinburg with Merkel.

Merkel and Medvedev also expressed their commitment to working together in the high-tech field. Medvedev vowed to modernize the Russian economy and invited German companies to take part in the transformation. As an example, Medvedev cited the construction of a Siemens innovation center in Skolkovo outside of Moscow where his government plans to build a Russian equivalent of Silicon Valley.

Despite recent drops in German exports to Russia, the two countries' future business relationship looks rosy, according to Klaus Mangold, chairman of the Federation of German Industry's committee on Eastern Europe. "According to our estimates, we see German exports growing (by percent) in the double digits in 2010 and 2011," Mangold said.

Friction over visas

One stumbling block to a deeper business relationship that came up in the talks was the lack of visa-free travel between Russia and the European Union. Mangold described the process of obtaining visas for Russian businesses "extremely aggravating" and Medvedev called for the rules to be relaxed.

"A full partnership with Germany and the EU is not possible without it," Medvedev said. Merkel agreed to push for a change to the situation, but said it would take time.

"Complete visa-free travel will not happen immediately," she said. "But we are committed to ensuring that it becomes a little easier, at least for the business sector."

Human rights still an issue

Thursday's meetings fell on the one-year anniversary of the murder of Natalya Estemirova, a human rights activist who was found shot in Ingushetia. Merkel called on Russia to solve the murder, describing the issue as being of "great importance."

Medvedev said that Russia had in fact identified Estemirova's killer.

"The perpetrator of this murder - the killer - has been uncovered and definitively identified. He is on an international wanted list," he said. Officials were also looking for the person who had hired the assassin, he added.

Memorial, the organization she worked for, has accused Chechnya's pro-Kremlin leader Ramzan Kadyrov of being behind the crime.

Medvedev admitted that Russia had shortcomings when it came to human rights.

"We are trying to solve this problem," Medvedev said. "We in Russia believe that it is extremely important for our country."

Later on Thursday, Merkel is headed to China to meet with that country's leaders.

Author: Holly Fox (AFP/dpa/Reuters)
Editor: Chuck Penfold