Cameron Urges New Start With Russia After Litvinenko Murder

U.K. Prime Minister David Cameron, the first British leader to visit Russia since the 2006 murder in London of dissident Russian agent Alexander Litvinenko, urged the two countries to cooperate over shared economic interests.

“The fact is that the two governments don’t agree,” Cameron told reporters in Moscow during a joint press conference with Russian President Dmitry Medvedev. “We haven’t changed our position, and the Russians haven’t changed their position. I don’t believe that means we have to freeze the entire relationship.”

Cameron’s visit marks the first contact between a British leader and Russian Prime Minister Vladimir Putin since Putin, then the president, parted from Tony Blair on bad terms in 2007 over the Litvinenko murder. In a letter to the Sunday Times newspaper yesterday, four former U.K. foreign secretaries urged Cameron to confront the Russians over “hostility” toward journalists and business.

Among corporate leaders joining Cameron in Moscow were BP Chief Executive Officer Robert Dudley, Royal Dutch Shell Plc (RDSA) Chief Executive Officer Peter Voser, Xavier Rolet, chief executive officer of London Stock Exchange Group Plc (LSE), and Simon Robertson, chairman of Rolls-Royce Group Plc. (RR/)

Resource-Rich, Services-Light

“Russia is resource-rich and services-light, Britain is the opposite,” Cameron said earlier in a speech to students. “In fact, Britain is already one of the largest foreign direct investors in Russia. And Russian companies already account for about a quarter of all foreign initial public offerings on the London Stock Exchange.”

Cameron said deals valued at 215 million pounds ($340 million) were signed during his one-day visit to Moscow, including store expansion by Kingfisher Plc (KGF) and a venture between Rolls-Royce, the world’s second-largest aircraft-engine maker, and Rosatom Corp., Russia’s government-owned nuclear holding company.

In their letter to the Sunday Times yesterday, the former foreign secretaries -- David Miliband, Malcolm Rifkind, Jack Straw and Margaret Beckett -- asked Cameron to raise the 2006 murder of Litvinenko, the imprisonment in Russia of the oil billionaire, Mikhail Khodorkovsky, and his business partner, Platon Lebedev, and the death in custody of Sergei Magnitsky, an anti-corruption lawyer.

Polonium-210

Litvinenko, a Kremlin critic who died in November 2006 after being poisoned with the radioactive isotope polonium-210, blamed Putin for the murder in a death-bed statement, an accusation the Kremlin called “absurd.” Relations between the two countries have been strained since then.

Russia refused to hand over an ex-KGB bodyguard, Andrei Lugovoi, who is wanted in Britain for Litvinenko’s murder, because the country’s constitution forbids the extradition of Russian citizens.

“That will never happen, no matter what,” Medvedev said about surrendering Russian citizens during the joint briefing with Cameron. “We too have various questions on how some decisions are being carried out on British territory, but we don’t talk about it.”

Russia has unsuccessfully sought the extradition of Chechen separatist leader Akhmed Zakayev, one-time billionaire Boris Berezovsky and other businessmen accused of fraud, many of whom were granted asylum in the U.K.

‘No Reason’

The differences between the two countries are “no reason to dramatize the situation,” Medvedev said. “What’s most important is not to allow for this to negatively reflect on the overall trend of our relations.”

The dispute over Litvinenko sparked the expulsion of four Russian and four U.K. diplomats and Russia’s closure of U.K. cultural offices outside Moscow. The U.K. also froze cooperation with Russia’s Federal Security Service, the domestic successor to the KGB.

Tony Brenton, who was U.K. ambassador to Russia from 2004 to 2008, said the Litvinenko affair remains “unfinished business” that still bedevils relations between the two countries unlike Russia’s ties with Germany or Italy.

‘Political Difficulties’

“We have had more political difficulties, without a doubt,” Brenton said in a phone interview last week.

British mergers and acquisitions in Russia slumped to $346 million last year, compared with $428 million for German companies and down from a peak of $2.1 billion in 2007, data compiled by Bloomberg show. The value of U.S. deals surged to $5.7 billion last year from $1.2 billion in 2007, including PepsiCo Inc.’s $3.8 billion purchase of a majority stake in OAO Wimm-Bill-Dann in December.

Cameron said U.K. companies needed more assurances about the rule of law in Russia to encourage them to invest.

“They need to know that they can go to a court confident that a contract will be enforced objectively and that their assets and premises won’t be unlawfully taken away from them,” he said.

The British leader’s trip comes less than a fortnight after Russian officials’ raid on the Moscow offices of BP Plc (BP/), a day after it was replaced by Exxon Mobil Corp. (XOM) in an Arctic oil project with OAO Rosneft. Court bailiffs, accompanied by armed men, were enforcing a $3 billion lawsuit.

BP, which in 2003 forged a joint venture with a group of Russian billionaires with Putin’s blessing, has fallen out with its partners in TNK-BP for the second time in three years. The London-based company, which relies on the venture for a quarter of its output, had to give up a deal to explore Arctic fields with Rosneft after the billionaire partners sued to block it.

In 2006, Shell agreed to cede control of Sakhalin-2, Russia’s only liquefied natural gas plant, to OAO Gazprom after months of pressure from regulators.

To contact the reporters on this story: Robert Hutton in Moscow at rhutton1@bloomberg.net; Lyubov Pronina in Moscow at lpronina@bloomberg.net.

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net Balazs Penz at bpenz@bloomberg.net

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