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Putin Says No Advantages For Russia From WTO

Prime Minister Vladimir Putin
MOSCOW -- Prime Minister Vladimir Putin has said Russia sees no advantages to World Trade Organization (WTO) membership and should freeze some commitments made during entry talks in a sign Moscow is pulling away from the West after its conflict with Georgia.

Quoted by Russian news agencies during a government meeting, Putin, said Russia's economy would incur a heavy burden in meeting WTO membership requirements and that some of these demands were against the country's interests.

"We propose continuing negotiations within the framework of the working group on WTO accession, but informing our partners of the need to exit some agreements that currently oppose the interests of the Russian Federation," Putin said.

"We don't feel or see any advantages from membership, if they exist at all. But we are carrying the burden," he said. Agriculture was particularly affected, Putin added.

Russia, the world's 10th-largest economy, is by far the biggest country still outside the WTO and has been negotiating membership since 1995.

It had previously been thought a deal could be reached by year-end, but First Deputy Prime Minister Igor Shuvalov said there was no prospect of joining within the coming year and suggested political motives were delaying accession talks, Interfax said.

The Kremlin has faced strong Western criticism for crushing Georgia's attempt earlier this month to take back by force the rebel province of South Ossetia and continuing to exert pressure on key oil, gas and trade transit routes in its former vassal.

"Judging by the rhetoric of the last few days, it seems things are moving toward a sharp confrontation between Russia and practically the whole of the rest of the world," says Vladimir Osakovsky, an analyst at UniCredit.

"That has every chance of spilling out into real action from both sides. Perhaps the halting of the WTO accession process could be the first real step, a real consequence of the war."


Other analysts say Putin's statement raised questions over the economic program set out during the choreographed handover of the presidency to Dmitry Medvedev in May this year.

"It's another reason for investors to question the government's commitment to not just the reform agenda but the whole economic program that was set out as part of the political transition," says Chris Weafer, chief strategist at Uralsib brokerage in Moscow.

"The main concern for investors from all these recent events is that the program could be materially changing, i.e. perhaps less emphasis on the diversification and the openness."

U.S. President George W. Bush has said the war with Georgia was hurting Russia's efforts to join modern global economic and security institutions, and his Commerce Secretary Carlos Gutierrez suggested Russia's WTO bid was now at risk.

Accession depends on Russia settling outstanding issues such as export duties on timber, farm subsidies, and the role of state-controlled enterprises such as natural-gas producer Gazprom.

Candidate countries must also reach agreement with all 153 members, handing WTO member Georgia leverage over Russia's candidacy.

Tbilisi objects to Russian support for Georgia's rebel South Ossetia and Abkhazia regions, saying it cannot control customs on their borders with Russia. It is blocking formal negotiations on Russian accession while allowing informal talks to continue.