At a meeting in Berlin last week, German Chancellor Gerhard Schr?der broached the proposal of a debt-for-equity swap.
Schr?der referred to "worthy" Russian enterprises, while his Russian counterpart talked about "a bilateral plan in the energy sector."
It was assumed that Russia was prepared to sacrifice prize assets Gazprom and United Energy Systems to pay off its debts to the club, in which Germany is its biggest lender. However, Kasyanov said Wednesday in an interview that Gazprom's and UES's shares cannot be considered part of any potential agreement because the monopolies are in the process of restructuring.
Kasyanov said the government is prepared to invest in joint projects with Germany as a means to repay creditors, but is unwilling to offer Germany shares.
However, a plan did emerge during Schr?der and Kasyanov's meeting.
Under it, German companies will be able to establish their own enterprises in Russia, perhaps on the basis of local ones. The Russian government will make contributions to equity in the form of buildings, land and equipment.
The government will then use its own funds to buy equipment from Germany.
These expenditures will be used to offset the debt owed to Germany.
"Such an investment mechanism should be supported and it received such support at the meeting between the chancellor and the prime minister," Finance Minister Alexei Kudrin said.
Oleg Vyugin, a former deputy finance minister and now vice president of Troika Dialog brokerage, said that will reduce the amount of debt payments in rubles.
"It's a kind of a restructuring and a write-off because the payments of the government will cost the government less than servicing the debt in hard currency."
Kasyanov said that a Russian-German strategic group will work on "Schr?der's initiatives."
Three first deputy ministers will join the group: Ivan Materov of the Economic Development and Trade Ministry, Sergei Ignatyev of the Finance Ministry and Nikolai Alyeshin of the Industry, Science and Technology Ministry.
Ignatyev said Wednesday the group was formed in June and has held talks with their German counterparts on several occasions to talk about such matters as tariff rates.
They are also discussing 20 Russian projects, in connection with which Germans asked about government guarantees. Ignatyev said the government was not overly enthusiastic about issuing guarantees.
Many stumbling blocks will arise in the way, according to Yevgeny Yasin, former economics minister.
The Germans need to maintain high standards of management, and high product quality is hard to satisfy in Russia and prevents foreign companies from coming to Russia, Yasin said.
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