Page last updated at 15:36 GMT, Tuesday, 26 August 2008 16:36 UK

Doubts grow on Russia's WTO plans

Putin
Mr Putin has warned Russia may drop some of its WTO accords

Doubts over Russia's commitment to join the World Trade Organization (WTO) have emerged after the country questioned the value of membership.

Prime Minister Vladimir Putin said he saw "no advantages" and "only burdens" to joining the WTO, after warnings from the West about its conflict in Georgia.

The comments came ahead of Russia's decision to recognise two Georgian regions as independent.

The move prompted a further sell-off on the Russian stock market.

Market hit

The benchmark RTS index slipped 6% in the wake of President Dmitry Medvedev's decision to recognize the independence of the Georgian breakaway regions of South Ossetia and Abkhazia.

In recent months the index has lost about a third of its value, driven lower by concerns about Russia's stance on Georgia, as well as falls in energy and metals stocks and current global economic woes.

Russia intends to inform various WTO partners of its withdrawal from accords that contradict its interests
Igor Shugalov, Russian first deputy prime minister

Analysts added that many foreign investors are now uncertain about doing business in Russia and so are cutting their investments.

Meanwhile, fears that Russia - which has been in negotiations about joining the WTO since 1995 - may pull back from joining the trade organisation has also affected investor sentiment.

The decision to formally recognise Abkhazia and South Ossetia has heightened tensions with the West - prompting some WTO members to warn they will not allow Russia to join until it pulls out of the region.

Russia's accession to the trade bloc has been delayed by a number of issues, including rules governing Russian state monopolies such as Gazprom, export taxes, and agricultural subsidies.

At the weekend, US Commerce Secretary Carlos Gutierrez, told Germany's Der Spiegel that Russia's actions had left its membership of the WTO "all at risk".

Meanwhile, US State Department spokesman Robert Wood added: "What Russia decides to do with regard to the WTO is up to Russia but it should be very clear that it's not ... business as usual with Russia."

Pre-emptive moves

However, Mr Putin has shrugged off such warnings.

In a move many experts viewed as a pre-emptive strike against threats to deny Russia entry to the WTO, Mr Putin said it may be "sensible" to abandon some of the deals it has reached to join the organisation.

"We see virtually no advantages, but we are carrying a burden," Mr Putin said.

"That does not mean we should abandon our strategic goals of moving toward WTO, but we must be clear when dealing with our partners."

Mr Putin's comments came after first deputy prime minister Igor Shuvalov suggested the country should continue in its efforts to join the trade bloc - but shy away from any accords that place a heavy burden on the Kremlin.

"Russia intends to inform various WTO partners of its withdrawal from accords that contradict its interests," Mr Shugalov was quoted as saying.

WTO barriers

"The West has been saying it won't allow Russia to join the WTO until it pulls out its troops from Georgia," said Yevgeny Gavrilenkov, Troika Dialog investment bank's chief economist.

"Now (Russia is) virtually saying we don't want WTO membership on these terms."

Russia had hoped to finalise its membership of the trade group this year after agreeing bilateral trade pacts with most of the WTO's 153 members.

However, Russia faces a further hurdle to joining the WTO from Georgia itself, which has demanded Russia cease trading with the breakaway republics of South Ossetia and Abkhazia.

Georgia has been a member of the WTO since 2000.




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