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Thursday, April 13, 2006


Back finally from a long break, and much indeed has happend. One of the most interesting issues in Russian political economy to track is the ever-evolving relationship between statism and free-markets. The history of Post-Soviet Russia revolves largely around that single theme. From mass-privatization through vouchers, 'Loans for Shares', and the Rubble collapse to the destruction of Yukos and the recentralization of the oil industry, Russia has struggled mightly to figure out what level of state involvement in the economy will provide a stable balance of order and freedom.

An interesting wrinkle on this theme has emerged recently regarding Russian entry into the World Trade Organization that reflects Russia's ambivalent position regarding the importance of free markets. According to this piece in the Moscow Times, a tacit quid pro quo has developed linking U.S. company involvement in the development of the giant Shtokman gas field to progress on a U.S.-Russia WTO deal:

Two sources who spoke to senior Russian officials said the implicit quid pro quo has emerged in the last month. "My discussion with Russian officials has clearly suggested that while there is no formal connection" between WTO accession and participation of U.S. companies in Shtokman, "there is an informal understanding that if Russian membership in WTO is blocked, it would be considerably more difficult for American companies to win participation in Shtokman and other major Russian energy projects," said Dmitry Simes, head of the Nixon Center, a Washington-based think tank.

My sense is that while Russia would prefer to be a member of the WTO, it is not willing to trade too much for the honor. It will also be happy to punish companies from countries unhelpful to its cause. My sense is also that the U.S. is playing politics on this one as well. The Bush administration has been very aggresive in many instances to isolate Moscow (with the notable exception of its soft-pedal on Chechnya), and it may feel that it can leverage concessions in Central Asia by playing hardball on trade.


At 6:22 AM, Blogger David Amulet said...

I hadn't heard about this ... and interesting development, if true. Welcome back.

-- david


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