Russia on road to nowhere after WTO departure

None of the states have yet officially notified the WTO of their decisions. And the EU is holding fire on its official reaction, with EU trade commissioner Catherine Ashton's spokesman on 11 June saying Brussels is "seeking clarity" from Moscow.

But Putin spokesman Dmitry Peskov has dampened hopes of a Russian u-turn. "The withdrawal of the [WTO] application is a technical issue. It was de-facto withdrawn with the statement of the prime eministerminister, and the WTO will receive official documents very soon," he told media.

I will not speculate here about the practicability of creating such a custom union and its potential accession to the WTO. Consultations with around 60 to 70 WTO states have already shown that such a move, even if it is possible, would slow down accession considerably.

But I will consider why the decision was taken and its potential consequences for Russia's future, its place in the world and its relations with the international community.

Consideration of Russian motives is hampered by Moscow's opacity - even key Russian negotiators did not know about the planned decision. Now, they are trying to justify it retrospectively, saying it will not delay Russian accession, when in fact it destroys 16 years of their WTO-related work.

Some see the WTO decision as part of a domestic policy struggle in Russia, against the backdrop of an alleged split between Mr Putin and the more liberal Russian President Dmitry Medvedev. If this is true, it would mean that national interests are being sacrificed in a battle to show who is boss. Would this not be too high a price to pay?

This opinion only holds water if there is indeed a rift. It is possible that some contradictions exist due to their blurred relationship. But there is no evidence so far of any open conflict between the two leaders on key issues. So this kind of speculation cannot be taken into account when forming an opinion on the WTO move.

Others see the WTO move as linked to Russia's frustration with the accession process: it has come very close to becoming a member over the 16 long years of talks, but never quite made it. The decision to change the format of the negotiations might be an attempt to augment Russia's importance as a WTO member. But would it not be more productive to simply meet accession requirements?

Benefit of the doubt?

Perhaps Russia really cares about the regional integration of the post-Soviet space and wants to help these countries join the global economic community, with the European Economic Community as a model.

But how could this be reconciled with Russia's "milk war" against Belarus (Russia is raising tariffs on Belarusian milk amid a political dispute) and its demands for Belarus payments of "gas debts?"

Taking the argument further, if Russia had such noble aims, the following conditions would have been met:

Russia would have notified the WTO secretariat in advance of its decision;

steps toward creating the customs union would have been taken earlier and would have been more focused; the three countries would have already synchronised their WTO talks to make the switch to customs union-level talks less painful.

To date, the trio's WTO progress has been uneven: Russia has agreed 90 percent of its admission terms, Kazakhstan has agreed 70 percent and Belarus barely 10 percent.

In fact, none of the conditions have been met, putting the nobility of Russia's motives in doubt, and raising the possibility that present-day Russia is simply unwilling to join the WTO.

The economic crisis, prompting increased Russian protectionism, could instead lie behind the decision. Regional integration could simply be a pretext to quit the process at a time when Russia's accession is expected in the very near future. The desire to knock together a customs union could also be related to political nostalgia for the Soviet Union.

Irrespective of motives, the potential consequences for Russia's relations with the rest of the world are disturbing.

If nothing else, the move could further tarnish the country's image. In the Ukraine "gas war" in January Russia lost its reputation as a "reliable partner." Now it risks losing the title of "predictable partner" - an important requirement in the international community.

EU-Russia deal at risk

EU-Russia negotiations on a new strategic bilateral agreement include the creation of a free trade area, which would only possible after Russian WTO accession. Now this prospect is becoming dim. Prospects of "resetting" relations with the US could also suffer.

Russia itself is set to suffer the most. The rhetoric that Russia, having cut itself off from the rest of the world, will be able to support national manufacturers, cannot be taken seriously. The argument that it is easier to deal with the economic crisis alone, or with regional partners whose potential for a fast economic turnaround is even lower, is unconvincing.

The WTO is the economic model of an open society. Abandonment or substantial delay of WTO integration means refusal or delay to integration with the global open community. It means reluctance to play by common rules, and, in the end, amounts to self-isolation.

This kind of self-isolation is useful only for keeping an incumbent regime in power. If protectionism and self-isolation are the real reasons for Russia's WTO departure, one can only feel sorry for the Russian people, who are being deprived of the hope of a bright future. Self-isolation in today's globalised world is a road to nowhere.

Olena Prystayko is a research fellow at the EU-Russia Centre in Brussels.