Why Has Russia Soured on the WTO?

Along with the immediate need for Washington to ditch the insult of Jackson-Vanik, Russia’s ascension to the World Trade Organization is another measure which this blog has strongly supported.  However, it appears that Moscow has become fed up with even trying to go through negotiations, and this week Vladimir Putin has insisted that Russia would only join the trade group as part of a bloc with the shining democracies of Belarus and Kazakhstan.  Blogging over at Newsweek, Rana Foroohar argues that this is a big mistake and a real pity:

That’s bad news, because Russia desperately needs to diversify its economy away from oil, on which it is totally dependant. It’s debatable whether Russia should ever have been a BRIC – as one economist recently said to me, “You could just as easily have stuck Saudi Arabia in there.” The oil hides all manner of ills – Russia’s debt to GDP ratio and deficit figures don’t look as bad as some other countries at the moment, but the minute that oil prices go down, it all goes out the window. Corruption and inefficiency are endemic, and unemployment is rising (at ten percent officially, but probably much higher, especially in industry heavy towns), and the downturn has sparked a number of protests over recent months – just last week, Putin paid a visit to a small factory town where 400 jobless workers blocked a highway for several hours and put on a big show of browbeating local officials and factory owners for not helping workers.


In fact, it’s the Russia central government that’s chiefly at fault. The country needs a wholesale economic overhaul and reform, even in the energy sector, which is amongst the least efficient in the world. The fact that lots of unconventional natural gas is coming online now in the U.S. and Europe should be all the prompting Russia needs to stay the WTO course. When the world no longer needs its energy, it will have even less patience for Russian petulance.