Russian and British leaders fail to thaw relations

By David Clarke and Oleg Shchedrov

TOYAKO, Japan (Reuters) - The first meeting between Russian President Dmitry Medvedev and British Prime Minister Gordon Brown failed on Monday to thaw bilateral relations that are at their lowest point since the Cold War.

The meeting on the sidelines of the Group of Eight rich nations summit in Japan had fuelled hopes it could ease a row over a $38 billion oil joint venture, TNK-BP, or problems for Britain's cultural outpost in Russia, the British Council.

Medvedev and Brown smiled and shook hands praising great potential for Russian-British ties, but made no substantial headway in the thorny issues souring relations.

"The president proposed to focus on elevating relations to a normal level," Medvedev's chief foreign policy adviser Sergei Prikhodko told reporters.

"Brown outlined his own ideas about problems in bilateral ties, including the British Council, some major oil companies," he said. "Medvedev gave explanations and drew Brown's attention to the need to work out a long-term approach to cooperation."

Moscow and London established cordial ties after Medvedev's predecessor, Vladimir Putin, came to power in 2000. But they soured as Russia accused Britain of hosting the Kremlin's political foes, including self-exiled tycoon Boris Berezovsky.

Ties plummeted to their lowest point since the Cold War after Russia refused to extradite to Britain ex-security guard Andrei Lugovoy accused of poisoning outspoken Kremlin critic Alexander Litvinenko in London in 2006.

The strains in political ties soon translated into tax problems for the British Council, blamed by the Russian officials for illegal operations, and a row over TNK-BP, and tit-for-tat expulsions of diplomats.