Business ties bind Putin to Berlusconi

On the face of it, Silvio Berlusconi and Vladimir Putin scarcely look like natural bedfellows.

Italy's prime minister-elect is a rightwing, pro-US billionaire media and property magnate, better known for his cheap humour and political gaffes than for serious policy formulation. The Russian president – and prime minister in waiting – is supremely controlled, a cautious bureaucrat by instinct, who has restored the power of the Kremlin at the expense of some powerful business oligarchs and revived national pride by acting as a counterweight to US global influence.

Yet the two have forged an extraordinary friendship ever since they first met in 2001. Both put great store on personal chemistry in their relationships and both tend to be seen as outsiders, regarded with suspicion by other leaders. So it is scarcely a surprise that Mr Putin made sure he was the first to stop by Mr Berlusconi's luxury villa in Sardinia on Thursday to congratulate him on his re-election.

It is not the first time the Russian leader has been there. He came with his wife, Lyudmila, in 2003, and sent his daughters Masha and Katya back for a two-week summer holiday.

He has invited Mr Berlusconi back to his Black Sea holiday home in Sochi. Last year in St Petersburg they attended a martial arts competition with Jean-Claude van Damme, the Belgian B-film actor – just as Russian riot police were breaking up an opposition demonstration in Moscow. It did not appear to bother Mr Berlusconi.

They share more in their political style than one might expect: both like to shock, Mr Berlusconi with crude jokes and Mr Putin with crude language. Both are small men, vain about their appearance, who have ruled their countries through tight-knit groups of confidants.

But it is not just style that unites them. It is business.

It is not by chance that Mr Putin is dropping in on Sardinia on return from a trip to Libya, where he signed deals for arms sales and energy links. The Russian president is as much chief executive of Russia Inc, and the guiding force behind Gazprom, the gas monopoly, as he is a national leader. For Mr Berlusconi, politics is about doing business. Thanks to their personal ties, they have encouraged vital business links, especially in the energy sector.

Gazprom and Eni, the 30 per cent state-owned Italian energy group, are partners in the giant South Stream natural gas pipeline project intended to deliver 30bn cubic metres of Siberian gas a year to Italy, via the Black Sea and the Balkans. In Washington, and to many in Brussels, the pipeline is seen as a dangerous move to increase the dependence of the European Union on Russian energy supplies. To Mr Putin and Mr Berlusconi, it is just good business.

Eni and Enel, the Italian electricity group, are partners with Gazprom in exploiting the gas fields they bought at the bankruptcy auction of Yukos, the company owned by the jailed oligarch Mikhail Khodorkovsky. Enel has also acquired a controlling stake in OGK-5, a privatised power generation company, and plans to spend €2bn ($3.2bn, £1.6bn) in Russia building a vertically-integrated energy combine.

Now Gazprom has announced it wants to become a partner in Eni's gas pipeline from Libya, where the Russian giant signed on Wednesday a joint venture agreement with the Libyan national oil company. Gazprom is also discussing an exchange of assets with Eni, giving Eni more Russian involvement in exchange for Italian interests in Libya.

That is just in the energy sector. Italy cannot compete with Germany in its absolute levels of trade and investment in Russia. But thanks to the Berlusconi-Putin relationship, it is seen in the Kremlin as the most reliable business partner. No wonder Mr Putin has rushed to shake hands with his best friend in Sardinia.

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