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Russia, US to hold "unprecedented" talks on economy

Published 04/23/2009, 04:04 PM
Updated 04/23/2009, 04:24 PM
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By Gleb Bryanski

WASHINGTON, April 23 (Reuters) - Russia will hold "unprecedented" talks on the economy with the new U.S. administration during the G7/G20 finance ministers meeting in Washington, a Russian delegation source said on Thursday.

The source said the Russian delegation, headed by Finance Minister Alexei Kudrin, will meet with the new U.S. Commerce Secretary Gary Locke and President Barack Obama's economic advisers Lawrence Summers and Paul Volcker.

"Such broad contacts with the economic bloc (of the U.S. administration) have never taken place before, they are unprecedented," the source, who spoke on the condition of anonymity, told reporters.

The source said Kudrin has already been working closely with U.S. Treasury Secretary Timothy Geithner but the two countries needed to broaden these contacts to include other officials.

The Obama administration has pledged to "reset" relations with Russia after they reached post-Cold War lows under former President George W. Bush, most recently over Russia's war with Georgia and the planned U.S. anti-missile system.

The United States accounts only for 3.6 percent of Russia's foreign trade compared with over 10 percent for Germany but Russia holds about half of its forex reserves, the world's third largest, in dollar-denominated assets, mainly U.S. government bonds.

The source said the delegation aimed at creating a mechanism of economic cooperation similar to the 1990s commission headed by then Russian Prime Minister Viktor Chernomyrdin and U.S. Vice President Albert Gore.

"Such mechanism is needed. The new U.S. administration has settled and the business community is actively developing the contacts," the source said, adding results of bilateral meetings will serve as a groundwork for the next Russia-U.S. summit.

The source said the officials also will discuss Russia's long-standing bid to join the World Trade Organization after Obama and Russia's President Dmitry Medvedev urged their governments to finalise Russia's bid.

FROZEN FOR YEARS

The United States wants Moscow to first fulfill anti-piracy and other commitments it made in 2006 while Russia wants the United States to lift a Cold War-era restriction on trade with Russia known as the Jackson-Vanik amendment.

"The WTO talks are part of our agenda. They were in a frozen state for years under the previous U.S. administration. We are hoping to move them forward but it is to early to talk about any breakthrough," the source said.

The source said reform of the International Monetary Fund, a larger use of the IMF's Special Drawing Rights and an agenda for the first meeting of the Financial Stability Board in June will be discussed during meetings in Washington.

"We have our own position on most of these issues and it is close to other BRIC countries," said the source, referring to Brazil, Russia, India and China, whose finance ministers held a separate meeting prior to the G20 gathering three weeks ago.

Russia and China pushed for a discussion on a new global currency ahead of the G20 summit on April 2 but the issue got sidetracked. The source said it was premature to push for the SDRs to fulfill this role.

"The role of this instrument will be increasing during the crisis and such possibilities will be discussed. To say that SDRs can tomorrow become a supranational currency is premature," the source said.

The source said a separate statement of the G20 countries was likely after the Washington meeting but the issue was still under discussion. He said BRIC finance ministers will hold a meeting before the BRIC countries summit in Istanbul.

He said Russia will question the simplified mechanism for disbursing IMF funds to members such as Mexico and Poland and said more control over IMF resources was needed after a commitment to triple them to a total of $750 billion.

"The fund has accumulated large resources but the management mechanism has not been formalised. Old schemes are not working while the new clearly defined procedure does not exist," the source said. (Editing by Andrea Ricci)

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