June 24, 2010 / 5:22 AM / 10 years ago

Trade in focus as Russia's Medvedev visits Obama

WASHINGTON (Reuters) - President Barack Obama and Russian President Dmitry Medvedev huddled at the White House on Thursday, seeking to kickstart trade and investment to complement a political reset between former Cold War foes.

Russia's President Dmitry Medvedev delivers a speech at Stanford University in Palo Alto, California June 23, 2010. REUTERS/Kim White

Medvedev, who started his U.S. visit with a tour of California’s Silicon Valley high-technology companies, started talks with Obama around 10:30 a.m. Later he is scheduled to meet U.S. business leaders to pitch Russia as a swiftly expanding economy where investors are welcome.

Medvedev’s visit to California’s high-tech cradle reflected his drive to reduce Russia’s dependence on natural resource industries by encouraging innovation and a pro-business mind-set.

The Obama administration has tried to engage the Kremlin in warmer relations since taking office 18 months ago, after relations between Washington and Moscow had deteriorated, especially after Russia’s 2008 invasion of Georgia.

Obama is keen to bolster meager trade and investment with Russia as a way to take its reset with Moscow to a new level after gaining Kremlin support over Afghanistan, Iran sanctions and a landmark nuclear arms reduction treaty.

“Both presidents feel strongly that there’s great potential in the U.S.-Russia relationship that extends beyond some of these flashpoint issues,” Ben Rhodes, Obama’s deputy national security adviser for strategic communications, told reporters.

“And that’s why the two of them have decided to underscore the potential, really, of deepening the economic relationship between the United States and Russia, including a focus on areas of cooperation related to investment, innovation and, again, deepening our economic relationship,” he said.

Obama’s bid to use concessions to Russia in exchange for better cooperation on the key U.S. foreign policy goals of Afghanistan, Iran and nuclear disarmament has been welcomed in the Kremlin.

There are still divisions between Washington and Moscow, including disagreement over Georgia, a U.S. ally. The two sides say they are cooperating over the response to recent ethnic violence in Kyrgyzstan but have differences over the U.S. Manas air base there.

In an interview with Russia’s Interfax news agency, Obama urged Moscow to work with the United States on missile defense, another issue that has long divided the two countries.

“I believe that cooperative missile defense with Russia has enormous potential,” Interfax quoted Obama as saying.


Thursday’s meeting — which was to include lunch and several meetings with senior officials and business leaders — will be the seventh between Obama and Medvedev and officials on both sides are keen to underscore their close personal ties.

That atmosphere, the officials say, contrasts with the rows of the Bush years, when relations sank to a post-Soviet low during the war between Russia and U.S.-ally Georgia.

Medvedev is eager to attract U.S. investment after the global economic crisis hammered Russia’s economy, revealing — according to Medvedev — the weakness of an economic model dependent on the sale of oil, gas and metals.

Russia has attracted $265.8 billion in foreign investment since the 1991 fall of the Soviet Union, though the United States accounted for just 3 percent of that, less than Ireland. U.S. bilateral trade with Russia was just $18.4 billion last year.

The 44-year-old Kremlin chief courted business leaders earlier this month, saying that Russia had changed and that the Kremlin would welcome foreign investors, though he admits red tape, corruption and a weak legal system are barriers.

Senior Kremlin officials said Medvedev would press Obama to speed up Russia’s bid to join the World Trade Organization.

Russia, the largest economy outside the global trade body, has accused Washington of holding up its accession, Although

U.S. officials say Moscow delayed its own bid by demanding to join with two former Soviet states, Kazakhstan and Belarus.

Washington is demanding Russia improve the protection of intellectual property rights to get support for its WTO entry.

The leaders of the world’s two largest nuclear powers are likely to discuss ideas on how to further cut their arsenals of atomic weapons after the April signing of a successor to the 1991 Strategic Arms Reduction Treaty (START). The situation in Kyrgyzstan is also likely to be discussed.

Additional reporting by Jeff Mason; Editing by Patricia Wilson and Bill Trott

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