Russia may join the World Trade Organization this year, bringing to a close an 18 year accession process. With each new year, the claim that “we will join the WTO by year-end” came to sound more and more like that famous Jewish pronouncement each Passover, “Next year in Jerusalem!” People stopped believing in it. But the process gathered speed in 2011, and the final obstacle was removed last week when the EU essentially forced Georgia to withdraw its objection to Russia’s entry.
A number of myths have developed over these 18 years. Opponents in Russia warn that the Russian economy will collapse as soon as protectionist barriers are lifted, while advocates act as if the WTO is a magic wand that will transform the Russian economy and make long-planned reforms a reality.
Obviously neither argument is realistic. The fear of opening up to the world is rooted in the 1990s and early 2000s, when the Russian economy was very weak and could have been damaged by joining the WTO. Overall, the greatest benefit of the drawn-out accession process is that Russia has negotiated the best possible compromise on the majority of issues.
Since the late Soviet period, the Russian public has questioned the legitimacy of agreements made by their leaders. They still resent the decisions made by Mikhail Gorbachev and Boris Yeltsin during the economic and political crises in the late 1980s and early 1990s, believing that these decisions were made in desperate circumstances and were contrary to Russia’s interests. Although mostly unfair, this is a widely held belief, which is why accelerated procedures make Russians suspicious.
Therefore, this transition period created by the lengthy accession talks will guarantee Russia’s smooth accession to the WTO. Some people will still be displeased and will claim that their interests have been compromised, but their numbers would have been much greater had Russia joined the organization ten or even five years ago.
On the other hand, miracles only happen in fairy tales and WTO membership will not replace the need for consistent efforts to improve the investment climate, modernize and diversify the economy and do everything else we have been discussing but have not accomplished.
Russia’s drawn out accession to the WTO is a graphic illustration of its development over the past 20 years. Initially, the idea was purely political: Russia sought to join all the organizations of industrialized Western states. But that pro-Western euphoria of the 1990s gradually dissipated, giving way to considerations of prestige: Why is everyone but Russia a member? When China joined the WTO in the early 2000s, Russia became the only large economy outside the organization.
Until 2006, Vladimir Putin was the main driver behind Russia’s WTO bid. He really wanted Russia to join the last remaining important global club (it will almost automatically become a member of the Organization for Economic Cooperation and Development, or OECD, upon joining the WTO). But relations cooled when more and more demands were placed on Russia, dragging out a resolution.
Moscow became disillusioned in its partners and came to believe that it didn’t need WTO membership that much, especially since Russians have never been enthusiastic about it. Almost no progress was made between late 2006 and 2010. Moreover, in 2009, Prime Minister Putin initiated a new phase of integration within the Customs Union, which many saw as evidence of the Kremlin’s anger at the WTO. Russia hinted that it might prefer a regional alternative. For some time after the Customs Union project was proposed, it was unclear if Russia would continue its WTO bid or not.
Serious WTO accession negotiations resumed in late 2010, and it became clear in 2011 that the partners really wanted to come to terms. Georgia’s objection was the last obstacle to membership. Russia made it clear that it saw Georgia’s objection as political, not economic (which is true), and that if the partners want to see Russia in the WTO they must resolve the Georgian problem. Many criticized that attitude, but it has worked. When the Europeans decided that they would benefit from having Russia as a member, they told Georgia in no uncertain terms that it needed to accept a compromise.
The West is interested in the Russian market, and foreign players would have more tools to protect their interests and influence decisions in Moscow if Russia were in the WTO. The balance will most likely be positive for Russia, despite a divided attitude to WTO membership. It will help invigorate competition in Russia, while Russian businesses will gain access to new tools to protect their interests on foreign markets.
In a way, it is symbolic that the WTO membership problem will be resolved almost exactly 20 years after the collapse of the Soviet Union. The post-Soviet period of overcoming the consequences of collapse is almost over, and the old agenda is no longer relevant. The country must move on.