Russia’s WTO membership seems to be an uphill task
By Delphine Thouvenot
MOSCOW: The United States was due on Sunday to finally give its green light to Russia's entry into the World Trade Organisation (WTO), a major political prize for President Vladimir Putin.
But analysts said that Russia remains a difficult place for foreign investors to do business because of high levels of corruption, complex bureaucratic rules and opaque trade practices.
After more than a decade of struggling to get into the organisation, WTO membership will be “one of the most important legacies of Putin,” said Yaroslav Lissovolik, an analyst with the Deutsche UFG investment bank in Moscow.
Fyodor Lukyanov, editor of the journal Russia in Global Affairs, agreed with that assessment and referred to Putin as “the principal architect” of Russia's drive to join the global trade body.
“The acceptance of Russia is for him a final way to demonstrate that Russia is a completely normal country that adheres to international standards,” Lukyanov said.
A study published by the Organisation for Economic Cooperation and Development (OECD) earlier this year, however, found that “major obstacles” remain for foreign investment in Russia.
While economic indicators in Russia are good, with GDP growth set to reach 6.7 per cent this year, foreign investment remains low at just three percent of GDP in 2005 -- compared to 4.9 per cent in Poland, the OECD said.
Foreign investors can also encounter unwelcome surprises. In March, US telecoms giant Motorola had over 100,000 handsets confiscated by Russian customs only to see them appear for sale on the black market.
The largely political nature of Russia's WTO push was shown earlier this year when Russia announced a bilateral agreement with the United States on WTO entry was certain ahead of the G8 summit hosted by Russia in Saint Petersburg.
Washington decided not to sign at the last minute. Some analysts have seen Moscow's subsequent decision to route gas from the giant Shtokman field to Europe instead of the United States as a form of revenge for the snub.
But analyst Irina Lebedeva of Deutsche UFG stressed WTO entry was not purely a political goal since it is “a plus” for sectors of the economy like chemicals and metals that stand to benefit from lowered trade barriers.
WTO membership could also help stimulate foreign investment, observers said.
“Joining the WTO will play a major role in improving Russia's image,” said Alexei Portansky, head of the information office for Russian accession to the WTO, a Moscow-based lobby group.
Lukyanov, however, pointed to scepticism in Russia about the benefits of WTO entry and said some sectors, such as agriculture and banking, could lose out because of greater competition.
“Apart from metallurgical and chemical companies, Russia has few advocates of WTO entry,” Lukyanov said, noting that many lobbyists for Russian WTO entry are in the United States.
Twelve US groups with interests in Russia, including Ford and Boeing, as well as British-Dutch oil major Shell, wrote to US President George W. Bush and Vladimir Putin last month urging Russia's accession to be speeded up.
Analysts, however, also emphasise that obstacles remain on the road to Russian accession, with both Georgia and Moldova threatening to use their vetoes as existing members of the WTO to block Russia's entry.
The two former Soviet republics have seen their lucrative wine exports to Russia banned this year. Russia has imposed economic sanctions on Georgia as part of a diplomatic row between the two neighbouring states.—AFP
