By Conor Sweeney and Oleg Shchedrov
KHANTY-MANSIYSK, Russia (Reuters) - Russia and the EuropeanUnion said on Friday they had turned a new page in theirsometimes testy relations after launching long-delayed talks ona new cooperation pact.
A relaxed, smiling Russian President Dmitry Medvedev,making his debut with EU chiefs, hailed the "sincere,neighbourly" mood at a three-hour meeting in a Siberian oiltown.
It contrasted with the last, bad-tempered EU summit hostedby Russia last year, when Medvedev's predecessor Vladimir Putincoldly rejected suggestions he was rolling back democracy.
Friday's centrepiece was the formal launch of negotiationson a new strategic agreement governing relations between the EUand Russia, its third biggest trading partner. A first round ofnegotiations will be held in Brussels on July 4.
"I believe this new agreement should open a new chapter inour relations," European Commission President Jose ManuelBarroso told a news conference.
"I particularly welcome President Medvedev's recentcomments about strengthening the rule of law and workingtogether as responsible members of the internationalcommunity."
Medvedev said Russia was concerned at a tendency by some EUnations to use the bloc to settle bilateral disputes -- areference to former Soviet allies who delayed the launch of thepartnership talks by 18 months because of rows with Moscow.
The talks offered EU chiefs their first opportunity toassess Medvedev, who took office last month after previouslyserving as deputy prime minister and chairman of Russia'sstate- controlled gas giant Gazprom.
Barroso described the new Kremlin chief, a former corporatelawyer and close Putin ally, as "a very open person who reallywants to engage". Putin, now prime minister, did not attend.
Some analysts believe Putin deliberately chose Medvedev toset a more conciliatory tone at the Kremlin as Russia seeksbillions of dollars in foreign investment to rebuild itscrumbling infrastructure and develop its industry.
SECURITY UMBRELLA
Medvedev repeated a call to Western powers to hold a summitwith Russia to discuss a new, post-Cold War security umbrellawhich could supersede NATO. None of the current internationalbodies adequately represented all of Europe, he said.
EU foreign policy chief Javier Solana praised Russia'schoice of Khanty-Mansiysk for the summit, which highlighted amore modern side of the country.
The town has been largely rebuilt with oil money over thepast five years, its new roads and neat rows of brightlypainted European-style housing offering a refreshing changefrom the drab, crumbling Soviet-built settlements whichdominate Russia.
But contentious issues remain between Moscow and Brussels.
The EU has clashed with Moscow over human rights, Kosovo,democracy and Russian support for the separatist Georgianregion of Abkhazia -- all issues raised at Friday's formalsession.
EU External Relations Commissioner Benita Ferrero-Waldnersaid the bloc had also expressed to Russia its concern over thefate of one of the country's biggest foreign investments, BP'shalf share of local oil firm TNK-BP.
The EU is the biggest source of foreign direct investmentin Russia, with European firms putting in 17 billion euros($26.76 billion) in 2007.
As Russian partners and BP argue about control and futureownership, the firm has been hit by nine separate actionsranging from court cases to tax inspections and visa problemsfor foreign staff.
A fresh eve-of-summit trade row broke out between Russiaand EU member Finland over timber duties, though in the eventboth sides played it down at the meeting. The EU and Russia did233 billion euros of trade last year in goods.
Helsinki said it was considering taxing Russian goodstransiting the country after Moscow raised duties on the exportof Russian timber, but Brussels officials played down theissue.
"This idea was only floated yesterday," said EU TradeCommissioner Peter Mandelson. "It is far too early for any ofus to take any view on it."
Mandelson said he could understand why Finland wasconsidering helping its timber processing industry but addedthat such a move would be considered as state aid and needapproval from Brussels.
Helsinki says that higher Russian tariffs on raw timberexports hurt paper producers in Scandinavia. Russia says themove is needed to help its domestic timber processing industry.
(Writing by Michael Stott; editing by Mark Trevelyan)
