- The Washington Times - Thursday, May 30, 2002

MOSCOW The European Union agreed to recognize Russia as a market economy yesterday, handing a major victory to President Vladimir Putin, who has taken a tougher approach than he had in meetings with President Bush and NATO leaders.
Relations between Russia and its biggest trading partner, however, remained tense with the Kremlin fearing that EU expansion into Central Europe could further isolate Kaliningrad, Russia's Baltic enclave, separated from the rest of the country by Lithuania, Latvia and Belarus.
The EU wants Russia to use its geographic location straddling Europe and Asia to crack down on illegal immigration, an issue that dominates voter concern throughout Western Europe, and to move quicker in reforming its monopolistic natural gas industry.
"At present, we are witnessing only the beginning of real, mutual cooperation," European Commission President Romano Prodi said at the end of the one-day summit. "We can get closer."
Mr. Putin, who has aggressively pursued closer ties with the West since the September 11 terrorist attacks, opened the summit by complaining that talks with the European Union have been "going around in circles." He focused on the European Union's refusal to acknowledge Russia's capitalist market system more than a decade after the collapse of the Soviet Union and its command economy. Being recognized as a market economy is required for World Trade Organization membership.
The criticism was in sharp contrast to Mr. Putin's friendly visit with Mr. Bush last week and the harmonious ceremony Tuesday when Russia became a junior partner in NATO, the military alliance created more than a half-century ago to contain the Soviet Union.
But the mood of the EU summit was quickly lightened when Mr. Prodi announced the European Union's intention to grant Russia market status. The announcement was met with applause. Spanish Prime Minister Jose Maria Aznar later pledged that the EU will "take steps" to support Russia in its 7-year-old bid to join the WTO.
"It is very clear that Russia's economy is developing as a market economy," said Mr. Aznar, who holds the rotating EU presidency.
Mr. Putin pushed for similar pledges from Mr. Bush during his summit earlier this week, but came away empty-handed despite the smiles and friendly words. The U.S. Commerce Department, however, said it will consider the issue of granting Russia market-economy status next month.
One key area that Russian and EU leaders failed to agree on was Kaliningrad, a Baltic Sea enclave that the Soviet Union acquired from the defeated Nazis at the end of World War II.
Russia fears that Kaliningrad will be completely shut off from the rest of the country when its neighbors Poland and Lithuania join the EU. Residents are allowed visa-free transit through those countries to Russia, but that will end with the EU expansion in 2004.

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