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Medvedev, Merkel Talk Economy, Human Rights

Russian President Dmitry Medvedev (right) welcomes German Chancellor Angela Merkel during their informal meeting in Sochi.

Russian President Dmitry Medvedev (right) welcomes German Chancellor Angela Merkel during their informal meeting in Sochi.

SOCHI, Russia (Reuters) -- Germany and Russia should work closer together to beat the downturn, Russia's president has told his German counterpart on August 14 at the start of talks which will focus on the economy but also touch on human rights.

President Dmitry Medvedev welcomed German Chancellor Angela Merkel to his official vacation residence at the Black Sea resort of Sochi for their third meeting this year, in a gesture that showed close ties between Berlin and Moscow.

"We shall think how by strengthening our bilateral economic strategic ties we could help our economies and people overcome the consequences of this heavy crisis and come out of it even stronger," Medvedev told Merkel.

A senior Russian official told reporters ahead of the talks that the leaders would discuss a bid by Canadian carmaker Magna and Russia's Sberbank to buy a stake in Opel, the European unit of General Motors, and a number of other investment projects.

Trade between Russia and Germany, Russia's biggest trading partner in Europe, reached a record $67.2 billion in 2008. That figure has been cut by more than half in the first five months of 2009, the official said, without giving a precise number.

Merkel has backed the Magna-Sberbank bid over a competing offer from Belgian private equity firm RHJ International and Russia hopes she will reiterate that support during the talks, a senior official in the Russian delegation said.

On August 13, a senior Magna executive said agreement in principle had been reached with General Motors to buy the stake. But a GM official later said the race was not over.

"We view [the Magna-Sberbank bid's] chances highly, they have become much stronger, he said.

Medvedev and Merkel will also discuss finding Russian investors for struggling firms like Dresden chipmaker Qimonda and Germany's fifth biggest shipbuilder, Wadan, he said.

"Kommersant" daily reported on August 14 that Russian services conglomerate Sistema was seeking to take a stake in Infineon, which holds a 77.5 percent in insolvent Qimonda.

Wadan is owned by Russian investor Andrey Burlakov, who is looking for ways to save the insolvent shipyard.

"Given proper social and economic reasons and commercial guarantees, such projects can become springboards for strategic alliances between Russian and German hi-tech companies in car making, shipbuilding and electronics," the Kremlin official said.

"This will complement the existing and emerging alliances in the energy sector," he added referring to Nord Stream, an ambitious project to deliver Siberian gas under the Baltic Sea to Europe.

Russia wants to boost German support for the project in the face of the concerns of some European states that it could harm the Baltic Sea and strengthen Russia's grip on the continent's energy supplies.

Germany regularly voices concern over human rights in Russia, an issue which returned to the limelight after the killing of several rights activists in Russia this year and Merkel said she would raise the issue with Medvedev.

"I do believe that the subject lies close to his heart. But actions must also follow," she said on August 13.

Merkel said she would specifically raise the killing of a children's charity head Zarema Sadulayeva and her husband in Chechnya earlier this week.

"It is absolutely unacceptable," she said.