Russian and European Union officials reached a trade agreement at a summit in Moscow Friday that supports opening the way to WTO membership for Russia, the largest country that remains outside the international group. President Vladimir Putin then recommitted to the Kyoto treaty after months of mixed signals, characterizing it as a trade-off for the economic agreement.
"We are for the Kyoto process," Putin was quoted as saying by Russian and Western news agencies during a news conference after a summit with European leaders. "We support it, although we do have some concerns over the obligations that we will have to assume. The European Union has met us halfway in negotiations on the WTO, and it could not help but have a positive effect on our attitude toward ratification of the Kyoto protocol."
"We will speed up Russia’s moves toward ratifying the protocol, said Putin. We are for the Kyoto process; we back it."
The arrangement between Putin and European officials appeared to end an impasse that had long held up both Russia’s integration into the world economy and enactment of the plan to reduce greenhouse gas emissions. European countries have been eager to win Russia’s ratification of Kyoto, and they made significant concessions in the trade talks to obtain it.
Putin nonetheless stopped short of pledging a positive vote on ratification, cautioning that his government still has some concerns over the obligations it would undertake under the treaty. He also said it is still "not 100 percent certain" the Russian State Duma would endorse the international agreement. However, the pro-Putin Edinstov or Unity party holds a two-thirds majority in the Duma.
It was clear to analysts that Putin was using his signature on Kyoto as a bargaining chip for entry nto the WTO.
"That there was a deal at all indicates very clearly that there was horse-trading going on," a senior Western economic analyst based in Moscow, who requested anonymity, told Bellona Web Sunday.
The analyst added that Putin’s positive statements about Kyoto "means they’re basking in a moment of glory. They’ll do whatever they want to do later."
But Richard Wright, head of the EUss delegation to Moscow, said in an interview with Ekho Moskvy radio station this week that Russias ratification of Kyoto could mean substantial new gas-saving infrastructure investment and thus could open the way for significant European investment in Russia.
"We believe it’s in Russia’s ecological interests; we believe it’s in Russia’s economic interests, and therefore, we very much hope that Russia … will ratify the protocol," Wright said.
Enviro-lobby unconcerned by Putins economic motives
That Putins change of heart over the Kyoto Protocol was motivated more obviously by economic rather than environmental concerns did not seem to dampen the spirits of environmentalists worldwide.
That Putin is making his decision based on economics is of no concern, said Frederic Hauge President of the Norway-based Bellona Foundation in an interview with Bellona Web Sunday. The Kyoto agreement will even have economic benefits for Russia, so obviously Putin is making this decision based on economic concerns.
Greenpeace spokesman Tim Hollo said in an interview with Reuters that Putins comments are a major inroad for environmentalists and will have an impact on global efforts to reduce greenhouse gas emissions.
"It’s a huge breakthrough for the international environment movement and for the global environment as a whole," he said.
But European Union, or EU, officials made it clear that Putins reversal on his governments previous stance on Kyoto had to hold water if Moscow was to enjoy the economic benefits it clearly hopes to gain by signing the protocol.
"Russia’s signature would be of crucial importance" for Kyoto, Frauke Stamer, spokeswoman for the German Environment Ministry, told The Associated Press, adding Moscow would not benefit from ratifying until it entered into force.
Russian backing imperative for Kyotos success
Ever since the United States backed out of the Kyoto pact after President Bush took office in 2001, Russia has held the treaty’s fate in its hands. To take effect, the treaty requires ratification by countries producing at least 55 percent of the world’s greenhouse gases, and Russia, with its 17 percent share, was the only nation left that could put the agreement over the top.
Putin promised last year to move toward ratification, but his top economic adviser, Andrei Illarionov, launched a vigorous public campaign against the protocol, portraying Kyoto as "a death treaty" and "international Auschwitz" that would strangle the Russian economy just as it was growing again. Some analysts interpreted that as a sign that Russia would not ratify the treaty, but others said Putin used the conflicting signals to make Kyoto a bargaining chip for economic benefits.
"Russia hasn’t given up anything very significant," said Alexei Moiseyev, an economist at Renaissance Capital, a Moscow investment bank, in a telephone interview Sunday with Bellona Web Sunday. "The things they gave up they were planning to give up anyway It seems that for the EU, Kyoto is more important than Russia joining the WTO, and so they were willing to accept the deal."
The meat of the protocol
The Kyoto pact requires participating countries to cut back greenhouse gas emissions by 2012 to 5.2 percent below 1990 levels. By a quirk of history, Russia stands to benefit from Kyoto, because after a decade of economic dislocation, its emissions today are already substantially below what they were in 1990, when Russia was part of the Soviet Union.
Thus, Russia would be able to sell its excess pollution quota to other countries under terms of the agreement. Canada, Japan, and European Union states have expressed interest in buying some, which would allow them to exceed their own limits but remain in compliance with the protocol.
Putin has made joining the 147-country WTO a priority, and Friday’s deal marks the most significant progress toward membership since Russia applied 11 years ago. To join the organization, which sets and enforces rules of world trade, an applicant first must strike market-opening deals with major trading partners that are also WTO members. The 25-country EU accounts for more than half of Russia’s foreign trade.
Russian officialdom still divided on WTO membership
"It’s an important step in the common integration of the Russian economy in the world economy," Mikhail Zadornov, a former finance minister, said by telephone Sunday. Others oppose membership for Russia out of fear that lowering trade barriers will expose the country’s antiquated industries to overpowering international competition.
Dmitri Rogozin, leader of the Motherland party in the Russian State Duma, said in an interview with the Washington Post that the WTO is "a club for aged lords" and that Russia should not be made to conform to other countries’ economic rules.
Russian officials expect to strike similar agreements soon with Japan and South Korea. US trade representative Robert Zoellick recently expressed optimism that Russia was on a path to finish negotiations with the United States by the end of the year, the newspaper reported.
In reaching agreement Friday, the EU settled for less than it had demanded. The Europeans had insisted that Russia raise its subsidized domestic natural gas prices to five times current rates, allow foreign companies access to its pipeline network, end the gas export monopoly of state-controlled Gazprom and open up its financial services, insurance and telecommunications sectors to foreign companies, among other things, said Renaissance Capitals Moiseyev.
Under the agreement, Russia will cut some tariffs and open up some sectors, but it gave only a little on natural gas, the most sensitive issue because it supplies a quarter of Europe’s gas at far higher prices than it charges at home.