* Putin visiting big trade partners Germany and Netherlands
* Hosts are concerned about inspections of NGOs in Russia
* Trade fair in Germany, energy deals in Netherlands
By Maria Sheahan and Alexei Anishchuk
HANOVER, Germany, April 7 (Reuters) - Russian PresidentVladimir Putin arrived in Germany on Sunday to protests over hishuman rights and democracy record and a warning from GermanChancellor Angela Merkel that Russia needed an active civilsociety to flourish.
Putin's visit to Germany and the Netherlands, Moscow'sbiggest trade partners in Europe, was supposed to focus on tradebut comes at an awkward time after a wave of state inspectionsof foreign-funded non-governmental organisations (NGOs) inRussia, much criticised abroad.
In her address at the opening of an industrial fairspotlighting Russian business, Merkel told Putin Russia waspropped by its raw material deposits and huge investment ininfrastructure but Germany could help it in its aims to innovateand diversify.
"We believe this can happen most successfully when there isan active civil society," she said.
"We must intensify these discussions, develop our ideas, andwe must give the NGOs, who we know as a motor for innovation, agood chance in Russia," she added to strong applause.
Germany and the Netherlands need Russia for energy and as amarket for exports ranging from Volkswagen Touaregs to tulips,but are uneasy about the influence its oil and gas give it andabout Putin's treatment of opponents and activists in his newKremlin term.
Merkel had come under pressure at home to voice herconcerns to Putin, not only on the inspections of NGOs, but alsoon their differences over Syria's civil war and Russiancriticism of the German-orchestrated financial bailout ofCyprus. Her talks with Putin would include "controversialsubjects" she told reporters on the sidelines of the fair.
In his address to the trade fair Putin focused on Russia'seconomic strength, noting, "despite global disarray and theglobal financial crisis, our country has continued to developpositively."
Outside hundreds of protesters gathered, many carryingSyrian flags, others wearing devil masks or waving images ofPutin dressed in a prisoner's striped uniform. "Stop politicalterror," read one banner.
In an earlier interview with German broadcaster ARD, Putinhad dismissed criticism of the NGO inspections and said theywould not cast a shadow over the visit, echoing his repeatedrejection of Western worries about his domestic policies.
Putin - a former Soviet KGB officer who was stationed inEast Germany, where Merkel grew up - has accused Western statesof using NGOs to spy on Russia and influence politics.
He said in the interview that Russians have a right to knowwhich NGOs are foreign-funded "and for what purposes".
He sent warmer signals on economic issues, expressingconfidence in the euro and toning down criticism of the Cyprusbailout by saying he hoped more money would flow into Russia asa result.
