Obama agrees arms cuts, Afghan transit with Russia

At a cordial, formal news conference in the Kremlin's vast, gilded St Andrew's Hall, the two leaders spoke of their resolve to put differences behind them and focus on cooperating to solve global problems such as the spread of nuclear weapons.

Both mentioned the issues that still divide them -- Russia's opposition to Washington's plans for a missile defense shield in central Europe and U.S. insistence on Georgia's territorial integrity -- but stressed the positives in public.

Obama praised Medvedev as a "straightforward, professional" leader who understood the interests of the Russian people and wanted to understand those of the United States, adding:

"We have resolved to reset U.S.-Russia relations so that we can cooperate more effectively."

At a signing ceremony, Obama and Medvedev, wearing identical dark suits, white shirts and red ties, pledged to finalize a treaty by year-end to cut the number of deployed nuclear warheads on each side to 1,500-1,675 from levels above 2,200.

Details of the arms deal were open until the night before Obama's arrival, with negotiators on both sides working through the weekend to secure agreement.

Medvedev described their talks as "very useful and open, businesslike conversations" and said they would aim to build a U.S.-Russia relationship worthy of the 21st century.

Russia will allow 4,500 flights a year carrying U.S. troops and weapons to the war in Afghanistan to cross its vast territory free of charge, a move hailed by the U.S. side as showing Moscow's willingness to help in the war on the Taliban.

Other accords covered the resumption of U.S.-Russia military cooperation, the creation of a new joint government commission, and an exchange of information on prisoners of war, according to texts released by officials.

Clouds remain on the horizon.

Senior Russian officials repeatedly emphasized in the run-up to the visit that Moscow would not sign an arms treaty later this year unless Obama made concessions on Bush-era plans for an anti-missile system in Europe, a project hated by the Kremlin which fears it could threaten Russia's security.

Obama has ordered a review of the project and the leaders played down their differences on it at the Kremlin, saying they had agreed a statement to continue to work together to evaluate global threats from ballistic missiles.

Officials on both sides said the statement had not been planned in advance but the two leaders decided to draw it up during their private talks, reflecting their desire to cooperate.

Noting that Obama had listened to Russian objections on missile defense, Medvedev used markedly softer language on the issue than Russian officials have done to date.

"No one is saying that missile defense is harmful in itself or that it poses a threat to someone," he told the news conference.

It remains to be seen whether Obama gets the same message on Tuesday at a breakfast meeting with the man who holds most political power in Russia and who chose Medvedev for the Kremlin, Prime Minister Vladimir Putin.

In a slip-up common among visitors confused by Russia's unusual dual power structure, Obama referred at the news conference to a forthcoming meeting with "President" Vladimir Putin before hastily correcting himself.

Putin was out of Moscow on Monday visiting a combine harvester factory in southern Russia.

Earlier Russian Deputy Foreign Minister Sergei Ryabkov greeted Obama, his wife Michelle and their two daughters as they stepped from Air Force One at Moscow's Vnukovo airport under unseasonably cold, cloudy skies.

The arrival was not shown live on Russian television and there was generally little sign in Moscow of the "Obamamania" which has greeted the U.S. leader on some other foreign trips.

Obama's motorcade sped alone along a barricaded highway from the airport toward the Tomb of the Unknown Soldier for a wreath-laying ceremony. In the city's outskirts, small groups of onlookers smiled and waved but most looked on without reaction.

Business leaders traveling with Obama want to use the visit to boost trade and investment. Russian trade with the United States was just $36 billion in 2008, the same amount as with Poland, and investment has lagged that of European competitors.

During his talks with Medvedev, Obama raised business concerns with the Kremlin leader, calling for investors in Russia to be treated consistently, according to a U.S. official.

On Tuesday Obama will listen to the country's embattled democratic opposition, meet former Soviet leader Mikhail Gorbachev and make a major speech to Russian students which is likely to touch on his vision of freedom.

(Additional reporting by Jeff Mason, Guy Faulconbridge, Dmitry Sergeyev and Amie Ferris-Rotman; writing by Michael Stott; editing by Tim Pearce)