Russia-EU deal hits problems: Moscow to settle for 'declaration of intent' to forge closer ties

BRUSSELS - The Russian President, Boris Yeltsin, will settle for a low-key 'declaration of intent' with the European Union because negotiations on a final partnership deal encountered snags, EU diplomats said yesterday.

Diplomats said both sides had hoped to initial a full partnership and co-operation accord with Russia today during Mr Yeltsin's visit, but Russia had refused to budge on key financial issues.

'There are outstanding points such as guaranteeing rights for foreign companies in Russia and the freedom of capital movement which are still under discussion,' one EU diplomat said.

Negotiations on a bigger accord continued yesterday and diplomats said other obstacles included a banking decree issued by Mr Yeltsin last month which restricts the operations of foreign banks in Russia.

Mr Yeltsin, who began his three-day visit to Brussels yesterday by clinching a co-operation accord with Belgium, is expected to sign a short, 'declaration of intent' with the EU. 'Probably, the portions which refer to the state of (partnership) negotiations will be in brackets, or taken out in the three-page document,' one diplomat said. 'What Yeltsin hopes to get out of his visit to the EC (European Community) is a clear expression of Community support for the reforms he has been pursuing.'

One clause disputed in the partnership deal had been on human rights, but diplomats said this had now been resolved. 'The Russian position seems to have become much more flexible on the human rights side and the Commission is now satisfied over this,' one diplomat said.

The co-operation deal is expected to be similar to agreements signed by East European and Central European countries, but EU sources said it would offer no provision for future membership of the 12-member bloc. 'The EC is definitely not considering offering Russia membership,' said one EU source.

Basic tenets of the deal are expected to include some preferential tariffs as well as clauses on workers' rights. Technical assistance and co-operation in sectors such as energy will also be covered.

The issue of cutting back on aluminium quotas - a sticking point with the EU - will be drawn up in a separate document, EU diplomats said.

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