Russia withdrawing from Syria would not influence free-trade talks

Prime Minister John Key said he hoped Russia withdrawing troops from Syria would give momentum to peach talks in Geneva. Photo / Greg Bowker

Russia's surprise military withdrawal from Syria does not mean free-trade talks are back on the table, Prime Minister John Key says.

Mr Key hailed Russian President Vladimir Putin's decision to pull back after a five-month campaign in the Middle East. Mr Key's intelligence officials were "shocked" and had little information on the announcement today.

He hoped the withdrawal would give momentum to peace talks in Geneva.

However, it would not have any influence on New Zealand's bid for a free-trade agreement with Russia. This remained on hold until the "Ukraine situation" was resolved.

Mr Key said market access in Russia was not a problem for New Zealand exporters.

The major issue was getting paid when the Russian Government was spending huge amounts on military commitments in the Middle East. These costs were likely to be one of the motivations for Russia's withdrawal, Mr Key said.

"Even the military strikes Vladimir Putin's been having in Syria and the amount of people he's dedicated to Syria has been costing him a fortune. And the Russian economy is very, very weak.

"So he hasn't had a lot of money to throw around at the moment. And that's been our big issue, it is actually getting paid in Russia."

Dairy co-operative Fonterra has told the Prime Minister that Russia's payments had been "very slow".

New Zealand had no plans to pull out of the Russian market as a result, Mr Key said. But the country's slow payments and dependence on oil meant that unlike Saudi Arabia, with whom New Zealand is also seeking a trade deal, it was not in a strong financial position.

EU and the US have placed sanctions on Russia because of its actions in Ukraine.

New Zealand is still exporting to Russia, but Mr Key said exporters have been told not to take advantage of the gaps created by the sanctions.