* Bid to avert drift now that nuclear arms pact is in place
* Libya, Arab world unrest looms large
* Economic ties to be accented
By Steve Gutterman
MOSCOW, March 8 (Reuters) - U.S. Vice President Joe Biden arrives in Russia on Tuesday to build on two years of improving ties capped by the New START nuclear arms reduction pact’s entry into force last month as elections in both nations draw closer.
The White House and Russia also want progress toward turning decades of disputes over missile defence into cooperation.
Biden’s visit will be coloured by turbulence in the Arab world, a potential source of friction which both sides said will be discussed. As Obama weighed potential military options on Monday for Libya, Russia stressed it opposes such intervention.
Biden is to meet President Dmitry Medvedev on Wednesday and on Thursday he meets Prime Minister Vladimir Putin, president from 2000-2008 and senior partner in Russia’s ruling “tandem”.
Putin may use a March 2012 election to return to the Kremlin. Analysts say opportunities for further milestones in ties will diminish as elections approach in both countries.
“For Obama, it’s important there be no pause in relations which would suggest that the ‘reset’ is not working ... that the arms treaty was signed and it’s over,” said Viktor Kremenyuk, deputy director of the USA and Canada Institute in Moscow.
Russia and the United States committed to new limits on their nuclear arsenals in the New START pact, signed by Obama and Medvedev in April 2010 and put into force in February after ratification by lawmakers.
The treaty, and Obama’s decision to scale down Bush-era plans for a missile shield in Europe, helped secure Kremlin approval for new sanctions on Iran over its nuclear programme as well as cooperation on Afghanistan.
Russia has stressed that deeper arms cuts will be tough to secure and is pressing for a powerful role in European missile defence or limits on a Western missile shield, stressing that relations could sour if Washington ignores its concerns.
The Obama administration wants to make the improved relationship more resistant to political tension by bolstering economic ties, and both countries hope Russia’s 18-year-old bid to join the World Trade Organisation will succeed this year.
WTO membership remains uncertain despite support from Obama at a Washington summit with President Dmitry Medvedev last year.
But the United States will not benefit from Russian entry unless Congress scraps the Jackson-Vanik amendment, Cold War legislation designed to punish Moscow. Obama’s opponents at home could turn the issue into a debate on democracy in Russia.
Former Soviet Georgia, Moscow’s adversary in a brief 2008 war that underscored Russia’s bitterness over its neighbour’s pro-Western course, can still block Russia from the WTO.
Biden will accentuate hopes for improved commercial ties by meeting business leaders at Skolkovo, a site outside Moscow where the Kremlin plans a high-tech hub using tax breaks and other incentives to lure investment and nurture innovation.
The Skolkovo project is a key to Medvedev’s drive to modernise Russia’s energy-reliant economy, but critics say his campaign has brought little change so far.
The United States has encouraged the modernisation, which Medvedev played up with a visit to Silicon Valley after his only summit in the United States with Obama last July.
But after former tycoon Mikhail Khordorkovsky was given six more years in jail in December, Washington said Russia needs fair courts and stronger freedoms to underpin economic change.
Biden will send similar signals, and counter critics who say the White House is soft on Russia, by meeting in Moscow with beleaguered Kremlin opponents and activist groups. * For a Factbox on Russian-US ties, click on: [ID:nLDE7270FU] (Editing by Louise Ireland)