MOSCOW - After a summit with U.S. President George W. Bush and the signing of a new pact with NATO, Russian President Vladimir Putin planned another key meeting Wednesday - this time with Russia's biggest trading partner, the European Union.

Just ahead of Wednesday's summit, European Commission President Romano Prodi officially opened the new EU office in Moscow, on a choice piece of real estate across the Moscow River from the Kremlin.

The ceremony "symbolizes the upgrading of our economic and trade relations that began 11 years ago and which have now developed into the strategic partnership that links the European Union and Russia today," Prodi said, before unveiling a golden plaque outside the new headquarters.

Prodi, along with Spanish Prime Minister Jose Maria Aznar, whose country holds the rotating presidency of the European Union, and a host of other EU officials are to meet with Putin in the Kremlin later in the day.

The summit is critical "given the actively developing new relations between Russia and the United States and the qualitatively new level of relations with NATO," Russian Foreign Ministry spokesman Alexander Yakovenko said.

"We wouldn't want our relations with the EU to lag behind these processes," he said.
Unlike the U.S. and NATO summits, which were dominated by security issues, the EU-Russia summit is expected to focus largely on trade and investment - as well as a dispute over Kaliningrad, a Russian enclave on the Baltic Sea that will soon be entirely surrounded by EU member states.

Already, 35 percent of Russian exports go to the European Union, and that figure is expected to climb even higher, to 50 percent, as the EU takes on new member states from the former Soviet Union and eastern Europe over the next several years.

Serious irritants remain - including Europe's dependence on Russian natural gas supplies. EU officials say Russia's pricing policies and the lack of reform at Gazprom, the giant Russian gas monopoly, keep gas export prices artificially high.

Russian officials are lobbying hard for EU support for Moscow's bid to join the World Trade Organization and for the EU to formally designate their country as a "market economy," considered a key step for WTO accession.

Meanwhile, Kaliningrad poses a unique problem.

For centuries the enclave was ruled by Germany and known as Koenigsburg - until the Soviet Union acquired it from the defeated Nazis at the end of World War II. The 1991 Soviet collapse gave neighboring Lithuania independence, cutting Kaliningrad off from the rest of Russia.

For Moscow, the enclave remains important more strategically than historically. It is home to a million Russians and retains a key Baltic Sea military base.

When the EU expands to encompass Kaliningrad's neighbors Poland and Lithuania in 2004, the enclave will be more isolated than ever.

Kaliningraders have enjoyed visa-free travel through Poland and Lithuania until now, but that will soon come to an end, making transit to and from Russia a much more complicated affair.

Talks so far have failed to produce an agreement.

"Unfortunately we are still far from concrete results," Yakovenko said Russia's NTV television ahead of the summit.