Russia and Germany have pledged to strengthen economic ties as Russian
President Dmitry Medvedev called Europe’s largest economy Moscow’s “key
partner” for the future.

German Chancellor Angela Merkel said
relations between the two states had taken a stride forward as she led a
delegation of business leaders on a tour of Russia, China and
Kazakhstan.

“Germany is our key strategic partner,” Medvedev
said after meeting Merkel in the Urals city of Yekaterinburg, urging
Germany to invest in Russia and help modernise its economy.

The
Russian leader has called for warmer relations with the West as he seeks
to diversify the Russian economy after the global economic crisis
underlined its dependence on exports of energy and commodities.

Business deals signed during Merkel’s visit included an agreement worth
€2.2bn ($2.8bn) for German engineering conglomerate Siemens to supply
trains to Russian Railways.

According to Russia’s Customs
Service, Germany was Russia’s biggest trading partner in 2009, just
ahead of the Netherlands, with China in third place. The EU accounted
for over half of Russian trade last year, and the US just 3.9 percent.

However, Germany’s exports to Russia have fallen sharply in the
economic crisis, prompting German business lobbies to criticise the pace
of Russian economic reform.

Merkel, who initially adopted a
more reserved attitude to Russia than her predecessor Gerhard Schroeder
when she took office in 2005, has increasingly warmed to Moscow, meeting
Medvedev for the second time in just a few weeks.

“Relations
between both countries are more intensive than they have been for a long
time,” Merkel said, adding that it was vital the pair stepped up
economic cooperation.

“We talked about how it would be good to
have a few shining beacons out there to demonstrate that (economic)
relations are not a one way street,” the chancellor said.

Lucrative
deals
Merkel’s trip gave her an escape from a run of negative
political developments at home, and a chance to trumpet the German
economy’s recovery from a record slump in 2009.

Among the
industry leaders travelling on her delegation were the bosses of
Siemens, carmaker Volkswagen, planemaker Airbus, chemicals group BASF,
retailer Metro and lender Commerzbank.

On top of its contract to
supply trains, Siemens also secured a €1bn renewable energy joint
venture with Russian wind power companies Rosteknologii and Rusgrido.

EADS unit Airbus won an order worth more than €2bn to deliver A330
planes to Russia’s Aeroflot, a source familiar with the deal said.

And Gazprom Bank will take a 30 percent stake in Russian-German energy
agency Rudea. The bank, which has stakes in some 500 Russian firms, will
fund energy efficiency projects, such as plans to update street
lighting across the country.

Siemens has partnered with RZhD
(Russian Railways), Russian power generators and medical groups for
years, earning billions of dollars from RZhD alone.

It supplied
RZhD with eight trains for its fledgling high speed link between Moscow
and St Petersburg last year, and signed a 30-year maintenance contract
for €630m.

The group will also build a research centre at
Skolkovo – a technology hub set up by Medvedev to mimic Silicon Valley.