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U.S. Disappointed With Russia Oil Purchase

December 23, 2004

WASHINGTON (AP) _ The State Department said Thursday it was disappointed with the way the Kremlin handled the purchase of Yukos oil assets, contending the action sends the wrong signal to foreign investors.

There was no indication, however, that the deal would mar President Bush’s meeting in February in Slovakia with President Vladimir Putin or cause Bush to withdraw his support for Russia’s entry in the World Trade Organization.

``We deal with Russia the way we deal with important friends and partners,″ deputy department spokesman Adam Ereli said.

Defending the gentle way the administration approaches Russian decisions it considers wrong, Ereli said, ``It is a question of trying to move things in the right direction.″

``We are not pulling our punches,″ Ereli told reporters at the department’s daily press briefing.

In Moscow, Putin vigorously defended the purchase of Yukos oil assets by a state-owned company, saying the state was just protecting its interests in moving to gain control of the second-largest oil production facility in Russia.

``We are disappointed with the way the case has been handled,″ Ereli said, citing a lack of openness. Russia’s standing in the world economy could be hurt, he said.

While Russia appears to be moving toward democracy, ``there are developments that cause us concern and cause us to feel the need to express our views about what is right and good,″ he said.

On the positive side, Ereli cited Russia’s integration into the European community.

Bush has stressed a strong friendship with Putin. Referring twice to Putin by his first name during a news conference Monday, Bush gave no indication that they were at odds.

``It’s important for Russia and the United States to have the kind of relationship where if we disagree with decisions, we can do so in a friendly and positive way,″ Bush said.

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