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Putin Says Eurozone Crisis Could Hurt Russian Economy


The ruble was trading at 33.99 against the U.S. dollar on June 4.

The ruble was trading at 33.99 against the U.S. dollar on June 4.

President Vladimir Putin has said he's worried the deepening European financial crisis will negatively affect the Russian economy and hurt Russia's trade with Europe.

Putin was speaking during a joint news conference with European Union leaders at a summit in the Russian city of St. Petersburg on June 4.

"If what is now happening in Europe leads to recession, to a shrinking of the economy, then the volume of consumed energy resources and of other Russian products -- from the metallurgic and chemical industries, etcetera -- will also shrink," Putin said. "This will have a direct impact on us. This is why we hope that our colleagues in the European Union will be able to overcome current difficulties."

European Commission President Jose Manuel Barroso rejected Putin's remark, saying the crisis' impact on the Russian economy was greatly exaggerated. He stressed that Europe's imports of Russian gas were actually on the rise.

Both Slipping

European Council President Herman Van Rompuy offered assurances the EU would overcome the crisis, saying he expected the eurozone to agree on a plan for deeper economic and monetary union.

The summit came as the Russian ruble has fallen to its lowest level in three years, in part due to oil prices that have slumped as the euro has lost value against the U.S. dollar.

Russia's imminent accession to the World Trade Organization (WTO) and plans to introduce visa-free travel between Russia and Europe were also high on the summit's agenda.

Van Rompuy said the EU was committed to easing travel restrictions with Russia.

"Visa-free travel remains our common goal," van Rompuy said. "Easier contacts between people are the backbone of closer relations and benefits for all of us. I, therefore, welcome the active work on the implementation of the so-called Common Steps and the progress made in the negotiations on an upgraded EU-Russia visa facilitation agreement."

Russian and EU leaders also touched on Iran's nuclear activities and the conflict in Syria, which they agreed should be resolved on the basis of the plan brokered by United Nations-Arab league envoy Kofi Annan.

Russia has been under growing pressure from the West for vetoing tougher UN measures against the regime of Syrian President Bashar Al-Assad.

Moscow Under Pressure

European leaders also used the summit to chide Russia on human rights. Putin, who began his third Kremlin term one month ago, is facing criticism for a crackdown on the protest movement against his continuing rule.

"It should be a partnership that covers all aspects of modernization: the economy, society, and the rule of law," van Rompuy said. "I made a point today that a vibrant civil society should, in this respect, be seen as an integral part of real modernization. The greater engagement of civil society opens opportunities for the further development of political institutions and pluralism in Russia, which should not be missed."

Putin defended his human rights record. He said he did not feel that the jailing of former oil tycoon Mikhail Khodorkovsky was politically motivated.

Putin also sharply reiterated his discontent with the "third energy package" -- a set of EU regulations that would bar energy suppliers from controlling the transport infrastructure used to deliver gas to EU states.

Russia has long complained that the regulations unfairly apply to energy contracts signed before the regulations were adopted. The rule are viewed by Moscow as reducing the role and influence of the Russian state-controlled giant Gazprom.

Based on reporting by Reuters, AFP, and AP

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