Russia criticizes U.S. for pulling nuclear deal

President Bush salutes in the rain as he returns from Camp David to the White House in Washington September 6, 2008.

IRKUTSK, Russia (Reuters) - Russia said on Tuesday it regretted a decision by U.S. President George W. Bush to freeze a major bilateral civilian nuclear pact but said Moscow wanted nuclear cooperation with the United States to continue.

The United States said on Monday that Bush would withdraw the agreement -- potentially worth billions of dollars in trade -- from Congress. The move was widely seen as a penalty on Moscow for its actions in Georgia.

But officials in both Washington and Moscow said the step could ultimately save the agreement, possibly for a future U.S. administration, by preventing Congress from sinking the deal.

"We see the decision of U.S. President G. Bush ... to pull the agreement on the peaceful use of nuclear energy as mistaken and politicized," Russia's Foreign Ministry said in a statement.

"The step by the U.S. administration is worthy of regret," the ministry said, adding that Russia viewed the decision as a breach of agreements made between Bush and former President Vladimir Putin in April.

But Russia's powerful first deputy prime minister, Igor Shuvalov, told reporters that Moscow still wanted cooperation to continue in the nuclear sector.

"We consider that the joint development of relations between the Russian Federation and the United States in the sphere of the peaceful use of nuclear energy is very important," Shuvalov told reporters in the Siberian city of Irkutsk.

"Whatever the decisions at the current time, we consider that it is a promising area for mutual cooperation and Russia and America will definitely cooperate, if not now than in the future," Shuvalov said.

The nuclear agreement, signed in May by U.S. and Russian officials, would have allowed the world's two biggest atomic powers to boost their nuclear trade and work on new ways to prevent proliferation.

The deal would have opened the booming U.S. market and Russia's vast uranium fields to companies from both countries by removing Cold War restrictions that prevent bilateral trade potentially worth billions of dollars.

"These are two great powers which should do much together in this area," said Shuvalov, whose duties include overseeing foreign trade issues in the government.

A 123 agreement, so-called because it falls under section 123 of the U.S. Atomic Energy Act, is required before countries can cooperate on nuclear materials.

It is critical to the Global Nuclear Energy Partnership, or GNEP, which the United States and Russia have discussed for several years as a way to expand peaceful nuclear energy development and mitigate proliferation risks.

Russia and the United States control the largest arsenals of nuclear weapons in the world and both have ambitious plans to build hundreds of new reactors for power production.

"The agreement on peaceful nuclear energy was equally beneficial to Russia and the United States so the American nuclear sector will suffer no less than the Russian one from its withdrawal," the Russian Foreign Ministry said.

Russia, one of the world's biggest sellers of enrichment services, has been trying to break into the nuclear markets of the United States and European Union.

(Writing by Guy Faulconbridge; Editing by Alison Williams)