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ANALYSIS-Post-summit Putin needs payback to answer sceptics
By Richard Balmforth

MOSCOW, Nov 19 (Reuters) - Russian President Vladimir Putin's summit with U.S. President George W. Bush has confirmed his drive to integrate Russia with the West, but analysts say he needs some payback soon to win over sceptics at home.

The Crawford, Texas, encounter allowed the two men to cement a deepening personal relationship. But it signally failed to produce headline-grabbing results, including a deal on missile defence that continues to dog relations.

"The bad news...is that expectations on both sides were not met in terms of concrete deliverables, or outcomes," said Michael McFaul, a Russia expert at Stanford University.

Relations have blossomed since Putin threw his weight behind Bush's global war on terrorism in the wake of the September 11 attacks on U.S. landmarks, fuelling expectations of breakthrough deals in key areas.

But the two men failed to strike a "grand bargain" on nuclear arms and missile defence, a fundamental of their strategic relationship, or achieve a major breakthrough on trade ties which are vital to Russia's economic renaissance.

Nevertheless, on his return to Moscow, Putin received a letter from British Prime Minister Tony Blair offering a new relationship with NATO, which continues to be viewed with hostility by much of Russia's military establishment.

Putin wants to reinvigorate Russia's ties with NATO to give it the chance of exerting influence -- if not a veto -- over the way the 19-nation military alliance conducts its business.

Reacting to Blair's letter, which proposed a new body to govern the relationship, Russia's foreign ministry said "the question of giving a new character to relations between Russia and NATO" would be central to talks later this week in Moscow between NATO Secretary-General George Robertson and Putin.

Resolving the more than two-year military operation in rebel Chechnya would boost Moscow's hand. Envoys from both sides at the weekend held their first peace talks in two years to end a conflict that has seen Russia criticised by the West for alleged human rights abuses and atrocities by its troops.

TRADE CONCESSIONS VITAL

Russia is likely to make more progress quickly over trade issues, the United States having indicated it will look favourably on its entry into the World Trade Organisation and work towards ending the 1974 Jackson-Vanik amendment that links trade ties to Soviet restrictions on Jewish emigration.

And Russian commentators also believe that Moscow's refusal to cut oil production despite pressure from OPEC may be the key to unlocking hard economic concessions from the West.

These analysts said Russia's refusal to cut production or exports despite OPEC's pressure benefited Western powers and left Moscow in a strong position to return once more to the issue of restructuring Paris Club debt.

Russia, as of January 1 2001, owes $44.8 billion in government debt.

Russia's ties with the Paris Club soured at the start of 2001 after Moscow missed payments and Germany, which holds about 40 per cent of the debt, opposed any restructuring.

"We were told then that high oil prices were advantageous (for paying off debt), so pay up. Now we can say (to the Paris Club) low oil prices favour you, so let's restructure," Oleg Vyugin, executive vice-president of Troika Dialogue investment house, said.

"If low oil prices are maintained, then we will find ourselves in a favourable situation to get our debt restructured," Alexei Zabotkin, chief economist at the Russian investment company UFG, told Reuters.

McFaul, speaking in a post-summit conference call organised by a Moscow investment house, said that despite the good atmospherics in the United States Putin still had to contend with scepticism at home for his forceful backing for Washington in its campaign against Afghanistan.

"Society (in Russia) has come a long way, much farther than most people in the West realise, in terms of support for market principles and democratic principles. But supporting the Americans in Afghanistan, there is a lot less support here," he said.

"Putin is someone who takes polling very seriously. He is somebody that takes very seriously what his support in society is," McFaul said.

(Additional reporting by Jon Boyle)

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