Impression
Russia-Italy Ties
Dear Editor,
President Vladimir Putin and Italian Prime Minister-elect and the richest man of Italy, Silvio Berlusconi, on 18 April 2008 rekindled ties by talking up a possible new bid by Aeroflot for troubled airline Alitalia and hinted that a gas deal between Gazprom and Italy's Eni involving Libya could be in the pipeline too. Putin was visiting Berlusconi on the island of Sardinia just days after the Italian media mogul's victory in parliamentary elections. Putin arrived on the island 17 April after completing a two-day trip to Libya, where he signed a raft of deals on debt, railways and energy. On energy, Putin hinted that a Gazprom deal with Eni involving Libya could be close.
The meeting took place at Berlusconi's luxury villa, where he has previously hosted Putin and his family. But the two men, old allies and friends, struggled to focus on business and political ties at a joint news conference that was overshadowed by Putin's denial of a tabloid allegation about his private life.
Both Putin and Berlusconi said Gazprom and Eni would continue working on joint projects, which include the $10 billion South Stream pipeline aimed at supplying Europe via the Black Sea. Interfax reported Putin saying during the news conference that Eni has already received access to assets on the territory of the Russian Federation, and Gazprom expects to get appropriate assets in other countries, including in Libya". Putin's comments came a day after Eni chief executive Paolo Scaroni offered Gazprom a stake in the 140,000 barrels-per-day Elephant field in Libya.
Berlusconi said Italy would talk to Aeroflot about the sale of Alitalia, while Putin said Aeroflot's board was ready to reopen talks with Alitalia about a role in saving the airline, contradicting recent statements by an Aeroflot official. Aeroflot's rekindled interest in Alitalia was unexpected. "Only a few days ago, Aeroflot officially said that it was not interested anymore in Alitalia.
Berlusconi said considering the problems of the Italian carrier, which lost 3 million euros per day last month, and the cost of the bid, it would not be a very convenient deal for Aeroflot. “We spoke about Alitalia and the possibility of opening negotiations with Aeroflot," he added that the situation was "very open" and that there were still talks going on with bidder Air France-KLM.
Italian government is trying to find a strategy for closing the Alitalia sale before the carrier runs out of cash. In a last-ditch bid to save Alitalia, the Italian government put it up for sale last year. Aeroflot made a joint bid with Italian bank UniCredit but pulled out three months later. During his election campaign, Berlusconi called Air France's bid "arrogant and unacceptable" and asked Italian investors to make a counteroffer.
Russia enjoys close relations with Italy.There are close commercial ties between the two countries. Italy is Russia's second important commercial partner in the EU, after Germany. Italy is heavily dependent on Russian gas, and its state-owned energy company, ENI, has recently signed a very important long-term contract with Gazprom, to import Russian gas into Italy. The relationship between Russia and Italy goes back a long way. Already in the 1960s, Italy's FIAT built a car-assembling plant in the Soviet city of Togliattigrad (a city named after the Italian Communist Party's secretary Palmiro Togliatti).
In 1993, Italy signed an agreement with Russia to assist in nuclear weapons dismantlement, with an emphasis on improving safety. Program activities included the development of equipment and methodologies for radiation monitoring, the protection of individuals from radiation, and equipment to conduct operations in contaminated areas by remote control. Italy provided approximately $5 million to this program, which concluded in 1999. In June 2003, Italy pledged €1 billion (about $1.2 billion as of June 2003) for assistance projects under the rubric of the Global Partnership Against the Spread of Weapons and Materials of Mass Destruction. This pledge was made more concrete on 5 November 2003, when Italy signed two bilateral agreements with Russia committing €360 million ($413.7 million as of 5 November 2003) for naval projects and €360 million for chemical weapons destruction during the course of ten years
In 2006, Russia and Italy have signed a protocol of cooperation for fighting crime and defending civil liberties. In particular, the Berlusconi Government (2001-2006) strengthened Italy's ties with Russia, due to his personal friendship with President Putin. Cooperation extends also to the aviation sector, between Italy's Alenia and Russia's Sukhov, who are jointly developing a new aircraft. Finally, for a long time Italy had the largest communist party in the Western world, with over 2 million members.
Two friendly nations, Russia and Italy have come to understanding to reach a deal to the advantage of both. Russia's trade with Italy grew to a record high of $36 billion last year. Economic ties between Russia and Italy are growing stronger as bilateral trade reached an unprecedented 21 billion euros in 2006. The increase was driven by a rise in Russian energy supplies and an almost 50% growth in Italian exports," Putin said at a meeting with Italian businessmen in early April. Alexei Miller, CEO of Russian energy giant Gazprom, said earlier this month that Italy was the company's second-largest gas market.
Italy actively supports the Russian-led South Stream pipeline project designed to pump 30 billion cubic meters of Central Asian gas to Europe. The project also involves Serbia, Greece, Bulgaria and Hungary. Italy and Russia are also developing jointly a hi-tech project to build the Superjet-100 medium-haul passenger airliner. Putin also said, "Multi billion investment in Russian power engineering is a tangible and serious step toward expanding cooperation between Russia and Italy, as well as between Russia and its European partners."
Earlier, President Vladimir Putin made a two-day visit to Italy in 2007 March against the backdrop of intensive economic ties with the country, Russia's second trade partner in the European Union (EU). Putin and former Italian premier Prodi met in January 2007 in Russia's Black Sea resort of Sochi to discuss energy cooperation, bilateral trade and mutual investment. Business ties between the two nations have recently consolidated, particularly in such sectors as energy, the automotive industry, aircraft building and banking.
The Russian president announced that the two countries would hold a fifth round of interstate consultations in the latter half of this year. "We are open to a close and comprehensive partnership with Italian businesses," the Russian leader said, adding that no developments within Russia or Italy would be able to hamper their bilateral business partnership, which he said was set to "expand and strengthen."
Russia held presidential polls on March 2, and Putin will cede his post to current First Deputy Prime Minister Dmitry Medvedev on May 7 and would be the Russian premier and leader of United Russian party. However, there would be no significant change in the contours of Russo-Italian relations.
Thank you
Yours Sincerely,
DR.ABDUL RUFF Colachal
Analyst, Researcher & Commentator
Delhi
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