The leaders of Russia and the European Union hailed the start of a new era of economic and political co-operation yesterday following their first summit meeting since the election of President Vladimir Putin.
However, the president of the EU Commission, Mr Romano Prodi, said Russia still had to do more to attract sorely needed foreign investment and urged Moscow to allow a full and transparent investigation into alleged hu man rights abuses in Chechnya.
"I am convinced we are really starting a new era of co-operation," Mr Prodi told a joint news conference with Mr Putin in the Kremlin, which was also attended by other EU leaders. He said Russia's improved economic situation, with lower inflation and a tight budget, created the framework for boosting trade with the EU.
Mr Prodi, a former Italian prime minister, said the Putin administration needed to focus on reforming Russia's onerous tax regime and securing property rights for foreign investors.
The EU already accounts for 40 per cent of Russia's foreign trade, and Mr Prodi said the figure would rise to around 60 per cent as the Union expanded to include former Soviet satellite states in central and eastern Europe.
Addressing Russian concerns about this expansion, Mr Prodi said Moscow stood to gain from the emergence of a single market with lower tariffs and more than 500 million consumers with high incomes - twice the population of the United States.
Mr Putin said the talks had been "very constructive, very frank and very fruitful", and that Russia was committed to closer ties with the EU in a wide range of spheres, including security.
He said Russia was co-operating with international organisations in Chechnya, where its military campaign against Islamic guerrillas has drawn strong criticism. Mr Putin, who says Moscow is fighting "international terrorists" in Chechnya, made it clear however that co-operation had its limits. "We are categorically opposed to any thesis of human rights being used to try to prevent Russia from bringing order to that territory," he said.
In a speech after the Kremlin meeting, Mr Prodi repeated the EU call for peace talks. "We still believe that there is no solution in Chechnya without the launch of a tangible political process, however complex and arduous this may be," he said.
A joint statement released after the talks said Mr Putin had expressed interest in EU plans to develop its own military force which would complement NATO. However, the Portuguese Prime Minister, Mr Antonio Guterres, whose country holds the EU presidency, said the US also had to be part of any broader security co-operation between the EU and Russia.