by Henry Meyer

Russia and the European Union stood on the verge Friday of agreeing terms to Moscow's accession in the World Trade Organization (WTO), Russia remaining the largest country to be left out of the global trade governing body.

Opening an EU-Russia summit expected to seal the WTO deal, Russian President Vladimir Putin said that Moscow and the European Union should be equal partners who are able to find solutions to the most complicated disputes.

"We are capable of finding a compromise about fairly contentious issues," he said.

Irish Prime Minister Bertie Ahern, whose nation holds the rotating presidency of the European Union, said in cordial remarks that he too was seeking to build a partnership with Moscow but made no direct reference to the

"We look forward to working closely with you over the next four years and building a strong partnership and the European Union," he said, in reference to Ireland's presidency of the European Union.

"Three weeks ago we welcomed 10 new states (into the European Union). Enlargement will bring the European Union and Russia closer together. It will bring us more opportunities for cooperation."

Yet the Russia-EU summit was filled with tension despite attempts by both sides to show good will.

It is the first meeting since the European Union expanded its membership from 15 nations to 25 on May 1, with former Warsaw Pact countries that still have strong economic links to Russia entering the bloc.

Moscow had little choice but to accept that expansion, even though its interests in nations that relied on Russian energy and goods were being, according to officials here, badly affected.

But following the expansion, Moscow must now negotiate directly with the European Union to see if the two sides could agree terms that would let Russia enter the WTO.

Talks went on late into the night Thursday between EU Trade Commissioner Pascal Lamy and Russian Trade Minister German Gref, with both parties refusing to disclose any details to reporters.

The EU remains one of the three main players -- along with the United States and China -- that are still blocking Russia's WTO membership.

European Commission President Romano Prodi and Ahern, as well other top EU officials, arrived in Moscow for the summit late Thursday.

"We will try today to reach an end to this marathon," Gref said, adding that he had the Russian government's mandate to sign a final accord on Friday if the negotiations were successful.

The biggest stumbling block is Russia's insistence on more time before it has to bring its domestic energy prices in line with international prices -- the subsidized Russian energy rates are regarded as giving Russian industries an unfair competitive advantage.

Moscow has offered to provide access for independent firms to its state-run gas and oil pipeline networks but it is not clear if that is a sufficient concession.

Russia is also under pressure to open up its banking and insurance markets to European companies.

Ahern will also call on Russia to ratify the Kyoto treaty on climate change at the summit meeting with Putin. The United States walked away from the deal in 2001 which means Russian approval is crucial for the protocol to survive.

Moscow media reported that Putin is unlikely agree to the Kyoto pact on Friday, amid warnings from his aides that the treaty will not even be discussed.