PREVIEW: Obama, Medvedev to tackle economic, technology issues

By Pat Reber Jun 23, 2010, 3:57 GMT

Washington - Russian President Dmitry Medvedev and US President Barack Obama are determined - amid their renewed sense of cooperation - to capitalize in the economic sphere when they meet Thursday in Washington.

By the time he gets to the White House, Medvedev will have spent time in California's Silicon Valley, where he is trying to convince high-tech gurus and venture capitalists to help steer Russia into a new economic age.

Ahead of the visit, the Obama administration is emphasizing a 'new phase' in US-Russia relations, citing major strides since Obama took office, and set out 'in a very deliberate and aggressive way' to make Russia a top foreign policy priority, said Ben Rhodes, deputy national security advisor for strategic communications at the White House.

Among the real accomplishments, Obama advisors cite the New Start Treaty on nuclear nonproliferation, Russian support for stronger UN Security Council sanctions against North Korea and Iran on their nuclear programmes, and Russian cooperation as a transit zone for the US-led war effort in Afghanistan.

Medvedev, 44, aims to diversify the Russian economy away from energy exports and improve the investment climate - two goals strongly supported by the US. The efforts will focus on a technology hub in Skolkovo outside Moscow.

Obama, 48, sees this push as 'something that will unleash growth for Russia' and increase opportunity for US exports and jobs, Rhodes told reporters.

'There's a new assessment within the Russian government that to make it in the 21st Century, you have to invest in brains and not just oil and gas,' said Mike McFaul, special assistant to Obama with a focus on Russia and Central Asian affairs.

Medvedev and Obama have already met seven times since early 2009 and held dozens of phone conversations, sometimes for up to 90 minutes. Both leaders are lawyers by profession, and in some cases - such as on the sanctions and the New Start Treaty - they've 'actually rolled up their sleeves together' and hammered out details, Rhodes said.

'It is an exceptionally strong and close relationship,' he said.

Major disagreements remain between the two countries are on Thursday's agenda. One involves US insistence that Russia withdraw from its occupation of the two Georgian breakaway regions of South Ossetia and Abkhazia.

Another involves Russia's growing impatience with the US military base at Manas, Kyrgyzstan, which Medvedev said recently 'shouldn't exist forever.'

Medvedev has vented his dissatisfaction with the unilateral sanctions against Iran adopted by the European Union and the US after Russia had supported a less stringent set of US measures.

'We didn't agree to this when we discussed the joint resolution at the UN,' Medvedev said in an interview late last week.

On the whole, though, Obama's advisors are satisfied that the 'dangerous drift' in US-Russia relations that occurred toward the end of the Bush administration has been turned around.

Both presidents feel strongly that there's great potential in the US-Russia relationship, and that's why they have decided to deepen economic ties. The 18.4 billion dollars in trade between the two countries hardly reflects the true potential, Russian Economy Minister Elvira Nabiullina said at a recent St Petersburg forum.

'We are interested in attracting US direct investment for modernizing and diversifying our economy,' she was quoted as saying by the Bloomberg financial news agency.

Key hurdles on the way to trade improvement, however, include Russia's continued exclusion from the World Trade Organization and the continued denial of most-favoured nation trading status by the US, a 1974 holdover from the time when the US was pressuring the former Soviet Union to allow Jews to emigrate.

Even before the Obama-Medvedev meeting, there were signs of increased cooperation. Boeing is expected to sign an agreement to sell more than 3 billion dollars of its 737 aircraft to Russia, Bloomberg reported.

There is talk of cooperation in developing and producing a heavy- lift cargo plane. That project could become the 'largest cooperation effort between the two countries since the International Space Station,' Alexei Fyodorov, head of the Moscow-based United Aircraft Corp, told Bloomberg.

Obama has been outspoken about the reforms needed to strengthen Russian law to protect businesses and civil society, and his advisors said the two leaders will announce a new initiative on open government in Russia at their meeting.