Due West: Which way will Russia go on the WTO?

© Photo : KommersantKonstantin von Eggert
Konstantin von Eggert - Sputnik International
I never thought I’d have to go back to “Russia and the World Trade Organization” theme so soon. But it seems that we now have the answer to the question whether Russia will join the organization any time soon. And it is negative.

I never thought I’d have to go back to “Russia and the World Trade Organization” theme so soon. But it seems that we now have the answer to the question whether Russia will join the organization any time soon. And it is negative.

While Prime Minister Vladimir Putin presided at signing the free trade agreement between eight of the eleven CIS countries, President Dmitry Medvedev was meeting a group of pro-government intellectuals, athletes, United Russia MPs and selected regional governors. There he answered a question from Alexander Tkachev, the governor of Krasnodarsky Krai, one of Russia’s main agricultural regions. The governor, well-known for making all sorts of promises, claimed that under his leadership the region’s farmers will make Russia stop importing foodstuffs and suggested that this will not happen if Russia joins the WTO. Medvedev replied: “If we are told that we are not fit for it for some reason, we can live without it. This is absolutely true and I am absolutely sincere."

"Everybody and our partners in the WTO accession process should understand that our joining is not only in Russia's interests. It is in the interests of various businesses, foreign businesses ... for reasonable regulation of international trade flows. It is a two-way street," the president added.

This lukewarm remark came only two weeks after First Deputy Prime Minister Igor Shuvalov told the US-Russia Business Council annual meeting in Chicago that accession remains Moscow’s absolute priority. It also sounded just one day before another round of negotiations with Georgia is to begin in Switzerland with Swiss mediation. Georgia says it will only give its assent to Russia joining if a way is found to introduce international monitoring on the borders between Russia and South Ossetia as well as Russia and Abkhazia. Moscow recognized the two territories as independent states, while Tbilisi claims them as integral parts of Georgia. The Georgians also want advance cargo notifications to be issued in case goods cross those two borders. Russia says the demands do not belong to the WTO sphere of competence. The dilemma seems to be unsolvable. But it isn’t. FRG and GDR, mainland China and Taiwan, even Moldova and Transdniestria found ways of bypassing unpleasant political realities and finding ways of coming to diplomatic solutions that, even if they did not solve problems, at least saved faces.

There seems to be not even a whiff of any compromise in the air now. Moreover, the Russian and Georgian sides keep mum about the goings on behind closed doors, but so far the talks proved completely fruitless. Russia’s weapon of last resort is to force an open vote of WTO members on the subject. But this would be an unprecedented scandal for a body that prides itself on consensual decision-making.

Judging by recent pronouncements from Messrs Medvedev and Putin, there may be no vote and indeed no WTO membership any time soon. Putin recently told Chinese journalists that the issue “depends” on Russia’s partners in the EU and the United States. It is a clear signal to Washington and Brussels: “You have to lean on Tbilisi and make it agree to our membership. We shall not budge from our position.” And Medvedev said publicly in August that the Kremlin will not change its policy vis-à-vis Abkhazia and South Ossetia in order to achieve WTO membership.

But I think the Georgian intransigence, no matter real or imagined, plays very well into the prime minister’s hands. Instead of integrating with the WTO, nowadays the Russian leadership visibly favors its own megaproject - that of a Customs Union between Russia, Belarus and Kazakhstan. Kyrgyzstan has just announced its desire to join, too.

Vladimir Putin wrote a long piece in the Izvestia daily a couple of weeks ago, which in fact proclaimed the Customs Union a number one priority for Russia externally. It is to be followed by a Eurasian Union, modeled on the EU. And although the prime minister strenuously denies that the new union is a form of restoring the Soviet Union in a new form, there is an unmistakable ring of domestic politicking to Putin’s statements. With Soviet nostalgia still rife, especially among his supporters, Vladimir Putin feels confident that the Eurasian project would boost his prestige at home.
Also, Putin never liked the WTO. To him it is a brake on the Kremlin’s total control over the Russian economy, writing its own rules for foreign investors and rewriting them when needed. The accession would have introduced an external framework of rules, regulations and dispute resolution schemes, which are difficult if not outright impossible to change or bypass. This would weaken the government’s so far firm hold on the economy. I do think that Putin is in no rush to see it happen as he prepares to assume presidency once again. This may disappoint many potential investors but the conviction in Moscow is that their number would always be enough to keep going.

If the Georgians relent at the last moment, or Washington makes it do so (the latter being an unlikely scenario for now), Russia will probably become a WTO member. But if there is no compromise reached with Tbilisi, not many tears will be shed in Moscow for Russia’s eighteen-year-old dream of joining.

The views expressed in this article are the author’s and may not necessarily represent those of RIA Novosti.

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What is Russia's place in this world? Unashamed and unreconstructed Atlanticist, Konstantin von Eggert believes his country to be part and parcel of the "global West." And while this is a minority view in Russia, the author is prepared to fight from his corner.

Konstantin Eggert is a commentator and host for radio Kommersant FM, Russia's first 24-hour news station. In the 1990s he was Diplomatic Correspondent for “Izvestia” and later the BBC Russian Service Moscow Bureau Editor. Konstantin has also spent some time working as ExxonMobil Vice-President in Russia. He was made Honorary Member of the Order of the British Empire by Queen Elizabeth II.

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