Medvedev to greet Merkel for key rights, business talks (1st Lead)

Aug 14, 2009, 11:17 GMT

Sochi/Berlin - German Chancellor Angela Merkel arrived in the Black Sea resort of Sochi on Friday for a summit with Russian President Dmitry Medvedev, and was due to tackle human rights and economic issues with her counterpart.

The meeting, initially scheduled to deal with a wide range of economic topics ranging from energy supplies to the sale of carmaker Opel, now threatens to be overshadowed by a deteriorating human rights situation in the Caucasus.

Merkel has indicated that she will raise the issue of the deaths of three human rights activists in Chechyna within the last month, with Medvedev on Friday.

Merkel told a German radio station on Thursday evening that she 'knows Mevedev is serious about questions of human rights' - but that credible investigations now had to be conducted into the murders.

However more substantive talks are likely to be dedicated to the three economic issues of Opel, energy, and trade and investment.

Germany is Russia's largest trading partner, with the value of goods exchanged between the two countries in 2008 standing at some 68 billion euros (97 billion dollars), according to the German foreign trade agency, Germany Trade and Invest.

Due to Russia's dominant position in the German gas market, Moscow held a trade surplus with Germany of some 3.6 billion euros in 2008.

In the first five months of 2009, however, the volume of trade between the two countries slumped by half, partly as a result of recession in both states.

In July, when Medvedev met with Merkel in Munich, the two signed deals including one which will see German engineering giant Siemens deeply involved in the refurbishment of the Russian railway system.

Russian investors are poised to take a major stake in troubled carmaker Opel, and a consortium led by parts-manufacturer Magna and including Russian state-owned bank Sberbank is currently in advanced negotiations to buy the concern after it was divested by its parent General Motors.

The German government has clearly backed the consortium, led by Austrian-Canadian car parts manufacturer Magna, in its bid to take control of Opel, but GM has said it prefers the bid of RHJ International.

GM's board is currently considering both offers and is expected to make a recommendation to Opel.

If the deal went through, considerable technology and vehicle- making capacity would end up in Russia.

Also likely on the agenda will be progress in stalled negotiations between the EU and Russia over a replacement for the Partnership and Cooperation Agreement, which faltered following the Russia-Georgia war last year.

A German government spokesman confirmed earlier this week that the question of the stability of Russian energy supplies to Europe would play an important part in the progress of any new partnership agreement.

In early 2009 a dispute between Russia and Ukraine - through which 80 per cent of Russian gas supplies to Europe flow - led to the cut off of gas to much of Europe.

Although Germany is arguably Moscow's closest ally within the EU, giving Merkel relatively strong influence in the Kremlin, her influence however, with regard to human rights, remains to be seen.

Criticism of Russia by Merkel is not likely to darken the business climate, despite strong voices within the German government calling for a tough line in Sochi.

The German government's Human Rights Commissioner, Guenter Nooke, told the German Press Agency dpa that 'It has to be made clear to Medvedev that he counts as a weak president if he cannot ensure order in his own country, and that he then holds partial responsibility for these murders.

'It doesn't work if we just do business, and only talk about human rights on the side,' he said.