A Putin Torpedo Fired at the WTO?

I’ve been skeptical all along about Russia’s – read Putin’s – intentions regarding Russia’s entry into the WTO, and if it does enter, its intention to adhere to the rules. Yesterday, a couple of stories from the horse’s mouth bolster this skepticism.

From the first story:

Prime Minister Vladimir Putin said on Wednesday that questions remain over Russia’s entry into the the World Trade Organisation but that Russia can be expected to join the trade rules body in 2011.

Putin told reporters that Russia could use protectionist measures other than tariffs to support domestic industries once it joins the WTO, and expressed concern about the effects of membership on Russia’s automotive industry.

From the more extensive article:

Putin said questions remain over Russia’s campaign for membership of the WTO, which has been helped by Obama’s public backing. The eventual membership is also expected to boost foreign investment.

“There is no final result yet but we have agreed the main parameters with our main partners,” Putin said.

Russia “can be expected” to join the WTO in 2011, he told reporters, in line with predictions by other officials.

The government has raised a number of export duties as part of Putin’s new economic policy aimed at the revival of Russia’s industrial might. Putin indicated that Russia could implement protectionist measures even after WTO accession.

Putin said he was especially concerned with the post-accession future of the auto industry which saw massive state support and foreign investment. He said levels of protection in the United States, western Europe and China were higher than in Russia.

“If we see that our car industry is not treated on equal terms we will find such protection mechanisms,” Putin said. He later specified that the measures would be applicable under the WTO rules and will relate to technical regulation.

Putin’s remarks were likely to raise concerns among WTO members over Russia’s behavior in the global trade body and complicate talks currently underway in Geneva.

One reasonable hypothesis is that Putin wants to complicate talks. As I’ve written before, protectionism is one of the tools that Putin uses to allocate rents in order to sustain political equilibrium. A rule-based system is antithetical to such a discretionary approach, which is essential to maintaining the balance between competing factions and interests within Russia. Russian admission to WTO – with the responsibilities and constraints that go along with it – has serious disadvantages from Putin’s perspective. (That said, there is truth in Putin’s criticism of the policies adopted in the US and elsewhere to prop up domestic auto sectors. And few governments have not attempted to manipulate or evade WTO strictures to benefit powerful domestic constituencies.)

There may be another motive as well. WTO is more amenable to Medvedev and his (in Russian terms) more economically liberal, modernizationist, faction. And if this article from Argumenty Nedeli is to be believed, Putin is “seething” over Medvedev’s uppitness in thinking that he just might like a second presidential term (via JRL):

This year made it plain that maintenance of the so called tandem in the operational condition until 2012 is Dmitry Medvedev’s job now. Moreover, it is also clear that Medvedev is up to the task. Before Vladimir Putin, retirement of the head of state was extremely painful so that no leader resigned if and as long as he could help it. Putin demonstrated in 2008 how it could be done without any loss of political influence.

Medvedev will probably strengthen this trend and set the precedent of planned rotation of the presidential power within a narrow circle of senior functionaries.In any event, the premier’s team is still seething over reports in the media on presidential aspirations of Medvedev in connection with 2012. It is believed in the circles close to the premier that this information is constantly leaked to the media from at least two groups close to the president -his friends (Ivanov, Vinnichenko, etc.) and pro-American lobby (Voloshin,
Dvorkovich, Prikhodko).

There is also the third group of support, external one. The premier’s team perceives it to be located in Washington where the current U.S. Administration will definitely welcome Medvedev’s re-election.

It is said in the meantime that the circles close to the premier persuade Putin to refrain from an open and direct confrontation with Medvedev. The premier seems to be listening to the advice. His latest initiatives clearly aim to weaken Medvedev and the clout he wields.

Undermining WTO would certainly be consistent with aims “to weaken Medvedev.”

That said, I take all tea-leaf reading about what goes on in the Russian government with considerable caution. Who knows what games are being played. But Putin’s provocative remarks about WTO are consistent with his interest and his system of rule, and at the same time put Medvedev in something of a compromising position. Given that Medvedev is arguably less invested in the Putin system, and is certainly critical of it rhetorically, Putin’s words could have broader implications.

Disclosure: None