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Putin Going to Vienna on Business

Backed by several wealthy businessmen, President Vladimir Putin will arrive in Vienna on Wednesday for his first foreign meeting after a chilly EU summit in Samara last week.

Other than a one-hour visit with Austrian Chancellor Alfred Gusenbauer, the two-day visit is expected to be all business. The economic focus is being interpreted by some as an attempt to build warmer ties with individual EU countries after Friday's bickering with EU's leadership. From Vienna, Putin will fly to Luxembourg on Thursday.

Putin, accompanied by billionaires Oleg Deripaska and Viktor Vekselberg and Gazprom CEO Alexei Miller, will spend much of Wednesday at talks hosted by Christoph Leitl, head of the Austrian Chamber of Commerce.

Among the letters of intent expected to be signed is one with Strabag to build at least 10 commercial centers, worth $100 million each, in Nizhny Novgorod, Astrakhan, Lipetsk and other cities. The centers would include hotels, shopping malls and convention halls.

Strabag, whose owners agreed to sell Deripaska a 30 percent stake for $1.6 billion last month, would serve as general contractor for Korston Group, a Moscow-based property development company, in the project, said Korston chief operating officer Lisandro Platzer. Korston recently built a similar commercial center in Kazan.

A deal also is expected between engineering company AVL List and GAZ, the carmaker controlled by Deripaska. AVL List will sign up to develop engines for the Nizhny Novgorod-based GAZ, Austrian media said.

Among those at the talks should be Frank Stronach, the Austrian-born founder and CEO of Magna, the Canadian car parts producer that recently announced that it was teaming up with Deripaska in a $1.54 billion deal. Stronach also just signed a preliminary $2 billion deal with AvtoVAZ to build a new plant at the carmaker's headquarters in Tolyatti.

Miller and Vekselberg are expected to talk about energy issues. Gazprom plans to sign a European gas-distribution agreement with Vienna-based OMV, Bloomberg reported, citing the Austrian Chamber of Commerce. The two companies will approve a memorandum of understanding on gas distribution in central and east Europe.

After several disruptions, the EU is trying to ensure more secure supplies from Russia, which is the bloc's main source of natural gas.

Gusenbauer said gas is high in his agenda. "I am certain we can ensure supplies without disruptions and stable relations both between Austria and Russia and within the framework of the European Union," he said in remarks published in Moskovskiye Novosti.

Gusenbauer said that he also would address human rights issues during his meeting with Putin.

OMV is a lead participant in the proposed Nabucco pipeline, which would ship gas from the Caspian region to central Europe bypassing Russia via Turkey, Bulgaria, Romania and Hungary.

The project is part of EU efforts to diversify energy supplies and supply routes away from Russia. Moscow is keen to hang on to its control and earlier this month signed a deal to lock in Central Asian gas to its own pipeline network.

Gazprom has said Nabucco is not feasible without its gas -- possibly pointing the way to a deal under which Russia supplies some of the fuel for the pipeline. Gazprom already supplies most of Austria's gas and wants to win deeper access to distribution and gas storage there, while Austria, with its strategic location in the heart of Europe, may become a major hub for gas supplies to the wider EU.

Austria has a tradition of friendly business ties with Eastern Europe. Austrian banks like Raiffeisen and Bank Austria Creditanstalt are strong in the Russian market, are industrial ventures such as Strabag.

"There is a special approach that Austrians have developed for Russia," said Platzer, of Korston. "They have always been more active into the Russian market."

Platzer, who is Argentine, noted that Austrian businessmen were often prepared to take more risks here. "Maybe that is because it is a small country," he said.

But tension following criticism from EU states toward Putin's governing style remains. Putin canceled an interview with Austrian television ahead of his visit over a promotional trailer the Kremlin viewed as "unfriendly." The trailer mentioned the Chechen conflict.

Some in the Austrian business community have voiced criticism about an influx of Russian capital. "You can speak of the sellout of Austria," Hannes Androsch, an industrialist and left-leaning politician, told the Viennese newspaper ?sterreich. "You become a guest worker in your own country."

Russians, however, view Austria as a favorite vacation destination, and prominent Russians, including Putin, have gone skiing there. The number of tourists from Russia and other former Soviet republics is soaring, said spokesman with the Austrian Embassy in Moscow. "We have had growth rates of 20 percent in recent years," he said.

The rush of wealthy Russians stirred up a controversy last winter, when a tourism manager in the posh resort of Kitzb?hel proposed introducing a 20 percent quota for Russians staying in local hotels. The comments were quickly retracted, and red-faced officials noted that Russian guests made up only 2 percent of all visitors.

(The Moscow Times 23.v.07)

 
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