Russian President Vladimir Putin and Libyan President Moamer Gaddafi agreed on Thursday that Libya's 4.5-billion- dollar debt will be swapped for business contracts with Russian companies, according to dpa. Russian Finance Minister Alexei Kurdin told reporters that the final debt settlement will be implemented as Libya trades with Russian companies, Itar-Tass agency reported. "Debt obligations are always very ticklish, and they of course retard cooperation in the economic and financial spheres," Kurdin said. He added: "The settlement of the debt means that all barriers in our relations have been removed." On one of his final foreign trips, Putin signed with Gaddafi a package of agreements that included a treaty encouraging the protection of capital investments. The Russian-Libyan talks encapsulated intergovernmental deals in the fields on the economy, trade and finance. The leaders have also signed a memorandum of understanding on cooperation between Russia's natural gas company Gazprom and the Libyan National Oil and Gas Company. A contract on building a 500-kilometres railway was also signed during the talks. Reacting to the visit, Putin expressed his satisfaction over his talks with Gaddafi. "I am satisfied by the results of the just-ended visit. We have long moved towards this event," Putin told the media after the talks. Speaking about writing off Libya's debts, the Russian leader said: "We are satisfied about the negotiated way of resolving this problem." He added that the move will benefit the economies of both Russia and Libya. Putin headed to Italy's Sardinia after finishing his two-day trip in Libya that started on Wednesday. The Russian leader's visit to Libya is considered one of his final foreign trip before the end of his presidential term on May 7. Putin is seeking to revive ties with Libya, which had been a traditional ally of the former Soviet Union. Tripoli was a major arms purchaser of Soviet weapons. Despite a thaw in relations with the West, Gaddafi on Wednesday criticized what he called a "provocative and hostile" policy towards Moscow. Critical of US international policy, Gaddafi said mutual deterrence was necessary to maintain world peace as "the rule of force replaced the rule of law." "The policy of threatening the sovereignty of countries and provoking others needs a deterrence," Gaddafi said. "The unity of (the former) Yugoslavia and the Russian Federation should have been respected. The independence of Iraq and Afghanistan should have been respected," Gaddafi said. "There has been no world war since World War II because of nuclear deterrence. But in the absence of deterrence, the balance of power in the world is at risk," the Libyan leader noted. Long accused by the West of sponsoring terrorism and suffering under international sanctions for years, Tripoli renounced terrorism and nuclear weapons in 2003. This was followed by lifting of sanctions by Western governments in 2004.
