Special Report by RFERL

A high-profile summit between Russian President Vladimir Putin and German Chancellor Angela Merkel ended on April 27 with the two countries signing a major gas deal. The agreement gives Germany's BASF the right to take part in the development of a large gas field in Western Siberia with Russia's Gazprom.

The Yuzhno-Russkoye gas field will feed a new gas pipeline that will deliver Russian gas to Germany under the Baltic Sea.

Energy was high on the agenda of Putin's talks with Merkel in the Siberian city of Tomsk on April 26-27. Earlier on April 27, Putin called Europe "a natural and the most convenient partner" for Russia.

On January 16 during her first visit to Russia as chancellor, Angela Merkel took a different stance on Russia than that of her predecessor.
While touting bilateral cooperation in trade, humanitarian efforts, and foreign relations, Merkel also brought up points of contention between the two states.
The January’s meeting came after Merkel told the German weekly news magazine "Der Spiegel" that Germany enjoyed a "friendship" with the United States but a "strategic partnership" with Russia.
"I don't think we share that many values with Russia," she told the magazine, "but we do have a vested interest in seeing Russia develop in a reasonable manner."
Stressing the more positive aspects of Germany's relationship with Russia, Merkel noted what she called the "breathtaking increase" in bilateral trade. Volume rose last year to a record $32 billion -- marking a 30 percent increase over the previous year.
She also tried to allay fears regarding her country's partnership with Russia on the North European pipeline project. The project has faced strong opposition by Eastern European states that believe it constitutes an effort to bypass them.
"The Baltic Sea gas pipeline is indeed an investment in Europe's energy security," Merkel said. "I have already said that it should be made clear to the Baltic countries and Poland that this project is not aimed against anyone."
Alexander Rahr, a Russia expert at the German Council on Foreign Relations, told reporters that while the German-Russian relationship might not be as cozy as it was during the Schroeder era, "relations will continue to be important and strategic."
Former German Chancellor Gerhard Schroeder was appointed on March 30 chairman of the consortium building the natural-gas pipeline under the Baltic Sea.
In Moscow, Gazprom chief executive Aleksei Miller announced the appointment at the inaugural meeting of the Russian-German consortium.
"Representatives of each company in the committee of shareholders were appointed today, and Mr. Schroeder was elected chairman of the committee of shareholders [of the company that will build the North European Gas Pipeline]," Miller said.
Schroeder joined executives from the Russian and German energy giants Gazprom, BASF, and E.On in Moscow for the meeting. He will receive an annual salary of 250,000 euros ($300,000).
Schroeder's nomination has provoked a storm of criticism in Germany over his alleged use of his official position for personal gain.
Construction of the Baltic pipeline started in September to link Russia's vast gas reserves with the German market. Russia's Gazprom has a 51 percent stake in the consortium, while German groups BASF and E.On hold 24.5 percent each.
Alexander Rahr noted earlier that Germany continues to have a vested interest in economic cooperation with Russia, especially in energy, and that Russia regards Germany as its advocate in the West. So, while the tone might change, he said, the substance of the German-Russian relationship will largely remain the same.

However, after the EU Summit on Energy Putin said that Russia is beginning to look for new partners because it is hearing "the same thing every day," about Europe's "excessive dependence on Russia" and the need to restrict "Russia's delivery of energy resources to European markets."

Putin stressed that this search does not mean Russia will limit supplies to Europe.

Since 1991, Russia has tapped its huge resources to transform itself from a minor, albeit important global energy player to one of the two largest producers in the world. Likewise, the states of the Caspian Sea and Central Asia are transforming themselves from potential to real global powers. As they do, formerly relatively remote energy relationships -- with consumers such as Europe, China, Pakistan and India, and with other producers -- are edging towards center-stage. And so too are issues that formerly rarely troubled outsiders, issues such as human rights, corporate governance, labor relations, corruption and social stability.