Strained Relations

The meeting, which marks 10 years since Brussels and Moscow signed a partnership agreement, will be the last summit attended by Putin as Russian President -- and looks set to be a tense one.

Taking place in the former Portuguese royal residence of Mafra near Lisbon, the talks are hosted by Portuguese Prime Minister Jose Socrates, whose country currently holds the EU presidency, alongside EU foreign policy chief Javier Solana and European Commission president Jose Manuel Barroso.

A dispute over a Russian ban on imported Polish meat has so far been a spanner in the works of talks on the new partnership and cooperation agreement to replace the original deal, which expires at the end of 2007.

However, hopes of a breakthrough were boosted by the victory in Poland's parliamentary elections last Sunday of a liberal pro-European party that pledged to improve relations with Moscow.

The energy controversy

The new partnership accord is set to contain a chapter on energy -- a fraught issue expected to dominate Friday's talks.

As the EU's main supplier of oil and gas, Russia has locked horns with the bloc over Brussels' plans to vet foreign investment in European energy networks, as well as Moscow's reluctance to allow EU companies access to Russian pipelines.

Observers expect the summit will result in more conciliatory talk about improving energy relations, with the unveiling of a new mechanism to warn European countries ahead of time about possible cuts in energy supply from Russia.

But according to the AFP news agency, Russia has protested against EU plans for reforming its domestic energy market, saying these unfairly discriminate against state-controlled gas giant Gazprom and other Russian energy companies.

Economic relations "good"

While he conceded that there were "serious problems" ahead on energy and investment, Russian Deputy Prime Minister Sergei Naryshkin told participants at a conference on the eve of the summit that economic relations were nonetheless "good."

Anatoly Chubais, CEO of Russia's electricity monopoly UES, said that trade turnover between the EU and Russia had gone up by a factor of 3.5 over the last seven years to reach an annual 209 billion euros ($300 billion).

Putin calls for patience

Also on the agenda is the question of Iran.

In the run-up to the talks, Putin warned Western powers against adopting harsh policies towards Iran over its nuclear program and calling for "patience" in resolving the future status of Kosovo.

"Why upset the principles of international law by encouraging separatism in Europe?" Putin asked in reference to Kosovo after meeting his Portuguese counterpart Anibal Cavaco Silva in Lisbon on Thursday.

"Why make the situation worse, bring it to a dead end, threaten sanctions or even military action," Putin asked. "You can run around like mad people wielding razor blades but it is not the best way to resolve the problem."

Russia has gone against the position of most Western powers by both failing to back tighter sanctions against Iran and opposing moves towards independence for Kosovo, a southern Serbian province.

But Putin was playing down hostilities.

"I do not think relations with Europe are in a regrettable shape," Reuters quoted him on Thursday. "There are simply issues on which we disagree."

Meanwhile, human rights groups, including Amnesty International, urged EU leaders to confront Putin at the summit on what many see as the Kremlin's dubious human rights record.