December 20, 2010
Russian Entrance into the WTO – The Globalization of the Russian Bear
Over a decade and a half after the commencement of membership negotiations, 2011 may see Russia’s long awaited entrance into the WTO. Endorsed by the EU and many individual European governments, Russia’s accession to the WTO does not come without concerns from current members and the world community. While this is an important Russian step towards the West and globalization, there are still concerns about Russia’s economy and governance.
The benefits of Russian entry, on one hand, are very positive. Moscow has agreed to phase out most of its export tariffs, including timber, which will certainly benefit the European community as a whole. Russia has also agreed to waive flyover royalties that it has imposed on international airlines for passing through Siberia en route to East Asia. Although this is a minor concession, it will still put an additional $400 million back in the hands of European carriers instead of the archaic Russian national airline Aeroflot.
On the other hand, Russia will eventually have to face other WTO members’ geopolitical concerns before accession. First off, Georgia will demand Russian withdrawal and cessation of support for breakaway provinces South Ossetia and Abkhazia. The 2008 War and Russia’s ongoing occupation of the territories in question will inevitably be a major topic of debate.
Another concern, in addition to Russia’s forceful reassertion over its traditional sphere of influence in Eastern Europe and Central Asia, is Russia’s ability or willingness to counter corruption in its government and business community. If China’s integration into the WTO since 2001 has been of any guidance, Russia’s entry should build anti-corruption measures and promote the international system’s benefits and openness to the Russian people. WTO membership is surely opposed by the more nefarious economic powers within Russia – admission to the organization will lead to more oversight and honest competition for services and products.
Prime Minister Putin’s support for Russia’s role has also been called into question. His connections to Russia’s reluctant business oligarchs have been considered the root of his skepticism. His successor, President Medvedev, has been much more supportive of the negotiations and sees the WTO as a potential boost to Russia’s GDP. Estimates point to 11% GDP growth over the long term. The coming weeks will be very telling as negotiations conclude and final results are announced.