Schroeder, Putin meet at German trade fair, discuss close economic ties

Chancellor Gerhard Schroeder and Russian President Vladimir Putin toured a major trade fair Monday, a sign of the economic ties increasingly linking their countries and of the two leaders' friendship.

Germany is Russia's top trading partner and Schroeder said he and Putin concentrated on business relations in talks over dinner at a Hanover restaurant Sunday night.

"The president and I had the possibility yesterday to talk about close political and economic ties," Schroeder told reporters as he and Putin strolled around Russian companies' displays at the Hanover Trade Fair.

German chemical company BASF AG and Russia's Gazprom, the world's biggest gas producer, will sign an agreement during the fair, the two leaders said. The deal reportedly involves joint development of a Siberian gas field.

Gazprom is one of more than 130 Russian companies exhibiting at the trade fair, focused this year on Russia.

Also German engineering conglomerate Siemens AG and Russian rail operator OAO Russian Railways were to sign a €1.5 billion (US$1.94 billion) agreement Monday for the production of high-speed trains in Russia.

On Sunday, Schroeder said in his speech opening the fair that Russia is becoming an increasingly important trading partner for Germany.

"In order to foster security and prosperity in Europe and beyond, Russia and the European Union must work together closely," Schroeder said.

In building ties with Putin, Schroeder has favored pressing him discreetly over his increasing control over Russian business and politics as opposed to the blunter U.S. approach.

One bond between the two leaders is the fluent German that Putin speaks from his time as a KGB agent in communist East Germany before the fall of the Berlin Wall.

DAVID RISING, Associated Press Writer