Sunday, May 23, 2004

Russia offers Kyoto in return for WTO

President Putin has assured the world that there was no tit-for-tat agreement between the EU and Russia on support for entry into the WTO in return for signing of the Kyoto Treaty, so dear to the heart of the European Union.

On the other hand, he also told the world that the fact that the EU has agreed to support Russia’s membership of the WTO “cannot but have a positive effect on our attitude to Kyoto”. So, as they say, you pays your money and you takes your choice.

It does seem rather illogical that China, whose attitude to WTO rules is cavalier, to put it mildly, whose human rights record is considerably shoddier than Russia’s and whose internal market is almost entirely controlled by the state, should be a member of the WTO, while Russia, whose credentials are, of course, suspect, is left out. On what basis is one deemed to be more worthy than the other?

So what has the EU agreed with Russia when Pascal Lamy on all our behalf signed a deal with German Gref, the Russian Minister for Trade? (In parenthesis, let it be noted, that the EU signs international trade agreements and has no intention of giving up that right. People who say that we should negotiate this, that and the other, while remaining members of the European Union, do not seem to understand that.)

Russia will double internal prices on gas by 2010 but, as the BBC Russian Service analysis notes, those prices at present are somewhere around 20 per cent of west European ones. This undertaking is not going to hit Russia particularly hard, especially as Gazprom will retain its monopoly on gas exports.

The Russian telecommunications market will be demonopolized, though a compromise was reached on the position of the present monopoly, Rostelecom. Nothing much in that, as there are compromises on that subject in almost all of the EU member states.

Russia will go on protecting its agriculture (what there is of it) but lower average import duty on industrial goods. The payment on allowing the flight of planes over Siberia (a handy little earner) will be lowered and the rules that allow foreign investors into the Russian banking sector adjusted.

Not a lot there for the EU, who will now cautiously support Russia’s application to the WTO, though, presumably, before that becomes a general policy, it has to be decided at the Council of Ministers. Russia, in turn, will “move towards an acceptance of Kyoto”, over which, as President Putin said, there are serious misgivings.

Indeed there are. Putin’s economic adviser, Andrei Illarionov, who is more or less a free marketeer, is against it, as are the scientists who have already said that they were unimpressed by the science that undrpins it.

Who, one wonders, has gained more from the bargain?

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