Russian President Vladimir Putin this week becomes the last foreign leader to visit Berlin before a Sept. 18 election that polls indicate will cost his closest western ally, German Chancellor Gerhard Schroeder, his job.
At the center of the Sept. 8 visit will be a ceremony attended by the two leaders to sign an agreement to build a pipeline under the Baltic Sea to bring Russian gas directly to German consumers. Russia's OAO Gazprom, the world's largest natural-gas producer, has been in talks with Germany's BASF AG, the world's biggest chemicals company, and E.ON AG, Europe's largest publicly traded utility, on the project that may cost as much as $10 billion.
``It is a very political visit, which allows Schroeder to go on stage with a foreign political issue and a huge contract for Germany,'' said Rainer Lindner, head of the Eastern Europe department at Berlin-based Foundation for Science and Politics, in a telephone interview.
Polls indicate opposition leader Angela Merkel will oust Schroeder in the election, ending a relationship based on the friendship between the chancellor and president that has helped define Germany's ties to Russia over the last five years. While a Merkel government may be less close to Putin, Germany will continue to rely on Russia to meet much of its energy needs.
Birthday Guest
Putin, 52, who speaks German from his days as a Soviet secret agent in Dresden, has met with Schroeder 31 times in that period. Schroeder, 61, who adopted a Russian girl from the president's hometown of St. Petersburg, invited the Russian leader to be the only foreign guest at his 60th birthday party at his home in Hanover in April 2004.
Aside from its personal aspects, it's a relationship that's about business, says Alexander Rahr, author of a biography of Putin and a member of the German Council on Foreign Relations.
``Schroeder was very forceful in pushing German businesses onto the Russian market,'' said Rahr in a telephone interview. ``He was Russia's best lobbyist in Germany.''
Germany is Russia's largest trading partner, its largest creditor, and by last year, had invested $9 billion in its economy, according to official statistics. Bilateral trade reached $23 billion last year, with oil and gas making up about 70 percent of Russian exports to Germany.
The pipeline, which will be about 2,000 kilometers (1,240 miles) long, would deliver as much as 55 billion cubic meters of natural gas a year to western Europe on completion in 2010.
The accord ``is a ground-breaking step toward safeguarding the independence of our energy supplies,'' Schroeder said in a speech to the lower house of parliament in Berlin today.
Export Growth
German exports, which account for more than half of equipment and machinery imported to Russia, are growing at more than 25 percent a year, according to Klaus Mangold, an adviser to DaimlerChrysler AG.
``Relations between Russia and Germany were never as good as they are now,'' said Mangold at a meeting between Putin and German businessmen held at an 18th-century palace outside St. Petersburg on June 26.
Siemens AG, Germany's largest engineering company, won an order from Russia in December worth 1.5 billion euros ($1.87 billion) for 60 high-speed trains to run between Moscow and St. Petersburg, with an option to deliver an additional 90 trains. Delivery is scheduled to start in 2008.
Schroeder has also been a key ally for Putin internationally. Before the U.S.-led war in Iraq in 2003, the two were joined by French President Jacques Chirac in opposing the U.S. invasion.
PIN/BLOOMBERG
News ID 64158
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