Yeltsin Leaves Italy With $5 Billion in Trade Deals

TIMES STAFF WRITER

Boris N. Yeltsin misspoke on Iraq, neglected to salute Italy's flag and needed help answering simple questions. His health was considered too fragile for a side trip to collect an honorary degree from the University of Bologna.

Other than that, the Russian president's three-day state visit to Italy was a big success. Yeltsin flew home Wednesday with $5 billion in trade and investment contracts that promise thousands of jobs for his country's struggling economy.

It was his first trip abroad since a disastrous December, when Yeltsin went to Sweden, made some stunning announcements about Russian arms reductions that had to be retracted, returned to Moscow with a viral infection and checked into a sanatorium.

The 67-year-old Kremlin chief was not exactly a picture of vigor in Rome, but the deals with Italy were welcome news for a Russia buffeted for months by Asia's financial crisis. They amounted to a strong vote of confidence in the Russian economy, which has been shrinking or stagnant since the collapse of Soviet rule.

The biggest agreement joins Russia's and Italy's leading energy producers, Gazprom and Ente Nazionale Idrocarburi, in what Yeltsin called "a strategic alliance" to search for oil and gas.

The agreement is worth an estimated $2 billion in sales to the two companies and gives the Italian partner a reported 3% stake in Gazprom.

Another deal, made known last year but delayed awaiting Yeltsin's signature here, is an $854-million joint venture between the Russian auto maker GAZ and Italy's Fiat to build 150,000 Fiat cars a year in the Russian city of Nizhny Novgorod. The first such investment by a Western auto maker in post-Soviet Russia, it is supposed to create 4,000 jobs and use an increasing proportion of Russian-made parts.

Ten other pacts signed here call for joint production of buses, washing machines, plastics, bicycles, baby food, petrochemicals and other goods in Russian factories.

Speaking to Italian and Russian industrialists, Yeltsin called the agreements a reassuring sign of his openness to the West.

"The Russian market is becoming an indivisible part of the world economy," he said. "Economic integration with the world and European markets is our long-term strategy. . . . You will always find the door open and a guarantee of success in our country."

Italy's export insurance agency paved the way for the ventures by restoring a program to guarantee investment in Russia. The program had been suspended since the 1991 collapse of the Soviet Union, which had looked to Italy as its second-largest creditor.

Italy, with the world's fifth-largest economy, is Russia's second-biggest trading partner in Europe, after Germany. Yeltsin said the new agreements would boost their $6-billion annual trade volume by half.

"We are in favor of Europe breathing as one chest, from lungs in the west and the east," he told the industrialists, repeating a metaphor he heard Tuesday in an audience with Pope John Paul II.

The Russian leader spoke in a booming, confident voice. Earlier in the visit, though, he looked pale and stiff and seemed unfocused. At Italy's Tomb of the Unknown Soldier, he broke protocol by failing to pay tribute to the Italian flag despite aides' frantic efforts to stop him in front of it.

Yeltsin is less sheltered outside the Kremlin and notorious for his gaffes abroad. He caused a stir the moment he arrived in Italy, announcing that U.N. Secretary-General Kofi Annan would go to Iraq to mediate a crisis over U.N. weapons inspections that threatens to erupt into war. Yeltsin's aides had to backtrack after Annan said he had no such plans.

Tuesday, during his first news conference in months, Yeltsin was asked about the misstatement. "I never said I would go to Iraq," he replied, prompting spokesman Sergei V. Yastrzhembsky to whisper a clarification in his ear.

Yeltsin was later asked to comment on speculation that President Clinton's threat to bomb Iraq was motivated by a desire to deflect attention from sex scandal allegations.

The presidential spokesman wasn't about to let the boss handle that one alone. He rushed again to the president's ear. When the aide finished whispering, Yeltsin stiffened and told reporters: "Leaders don't discuss problems of this nature."

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