Power politics and surrealism mark Russia’s approach to WTO

Two weeks ago, Russia announced that it intended to join the World Trade Organisation not on its own but as part of a customs union with Belarus and Kazakhstan.  It was a classic Russian initiative, combining brutal power politics with a healthy dose of surrealism.

For at the time of the announcement, Moscow was in the middle of a trade war with its two neighbours, banning imports of Belarusan dairy products and Kazakh meat.  Russia was also in the process of freezing a $500m credit for Belarus, which in turn was imposing new customs controls on Russian goods.  Acrimonious disputes of this nature do not usually precede the establishment of friendly arrangements such as customs unions.

Still, it has been all too clear during the nine-year rule of Vladimir Putin, Russia’s prime minister and ex-president, that Moscow expects its ex-Soviet neighbours to do its bidding in such matters.  Where Russia’s national security and economic interests are concerned, there is no room for objections from countries that were ruled directly from the Kremlin as recently as the late 1980s.

That said, were there any deeper motives behind Russia’s announcement?  After all, Russia was probably within months of gaining WTO membership, and its bid had the support of the US and the European Union.  One Russian economic analyst suggests that Russian government experts conducted an updated cost-benefit analysis of WTO membership and concluded that there were no clear-cut economic advantages to being in rather than out.

This argument may carry particular weight in Moscow in the present harsh global economic climate.  It might be more difficult to protect Russian industries from foreign competition, or alleged foreign dumping, or both, if Russia were already a member of the body that supervises world trade.  Meanwhile, WTO rules do not for the most part cover oil and gas, which together with weapons are Russia’s main exports.

All these arguments are sound enough.  But one other factor I would mention is that Russia, generally speaking, does not warm to genuinely multilateral bodies such as the WTO.  As Charles Grant of the Centre for European Reform think-tank argued in a thoughtful paper last week, Russia enjoys being one of the five permanent United Nations Security Council members, because that confers uniquely privileged status as well as the right to veto anything it dislikes.  Russia also is happy with the Shanghai Co-operation Organisation, a group that includes the former Soviet republics of Central Asia and is dominated by Russia and China.

But Russia has its difficulties with the Organisation for Security and Co-operation in Europe (OSCE), whose  peace monitors in Georgia will probably have to leave soon, after it proved impossible to meet Russia’s demand that the pro-Russian region of South Ossetia be treated as an independent state.  Like the OSCE, the WTO tries to operates by consensus rather than as a concert of the big powers.  And for the moment, it doesn’t seem that such standards of behaviour suit Russia.