WASHINGTON, Feb. 14 (UPI) -- Something close to a standing ovation has greeted the stylish way that the new American Defense Secretary Robert Gates reacted to the highly aggressive speech of Russian President Vladimir Putin, who denounced the Bush administration for provoking a new arms race and a new Cold War in which "nobody is safe."
Rather than slam Putin back, Gates responded with humor and a low-key but pointed reminder that Washington and Moscow were cooperating well on a broad range of issues from anti-terrorism and money-laundering to U.N. sanctions against Iran.
"It almost made an old cold warrior like me nostalgic for the Cold War -- almost," was the wry Gates comment that drew laughs and applause from the audience at the Wehrkunde conference in Munich, and which took most of the steam out of the Putin attack.
But now that the dust has settled, the real implications of Putin's assault are being assessed, along with its possible costs -- which might well start with Russia's long-delayed ambition to join the World Trade Organization.
Russia is expected to join the WTO by the end of this year, according to Russian Economics Minister German Gref, who said this week that all the negotiations with major trading countries have been completed. China hastened to agree.
"China resolutely supports Russia's soonest possible accession to the WTO," Chinese Deputy Commerce Minister Yu Guangzhou told a news conference Wednesday. "Russia's entry into the WTO will help improve the investment climate in Russia and make its market more open, which will offer a favorable environment for swifter and more harmonious development of relations between our countries," he added.
But a country seeking admission to the WTO must successfully complete bilateral negotiations with any WTO member who asks for them. So some tricky negotiations remain, most ominously those with the former Soviet Republic of Georgia, which wants to use its WTO leverage to make Russia carry out its promises to legalize trade and movement through the checkpoints across border crossings in Georgia's breakaway regions of Abkhazia and South Ossetia. The autonomy or self-proclaimed independence of these regions has been quietly backed by Russia.
Georgia's American and European allies may yet force a compromise, stressing that once Russia formally joins the WTO it will come under intense legal pressure to drop its unilateral economic sanctions against Georgia (which would be outlawed under WTO rules). Georgia will not like it, because this may be the only real opportunity it has to stop the Kremlin's transparent attempt to turn the whole Caucasus region back into a Russian sphere of interest.
But what if the Bush administration wants to send a signal to Moscow that it did not appreciate President Putin's assertive remarks? After all, the Americans do not have to put any pressure on Georgia to compromise with Russia unless they think the goal of getting Russia into the WTO is worth spending some political capital in Tbilisi. If the Americans do nothing, Georgia can continue to hold firm and demand that Russia fulfills its promises, starting with the long-pledged withdrawal of Russian bases. The next round of Russian-Georgian talks is scheduled for Feb. 26 in Geneva, and their progress will be very interesting indeed.
There are other potential problems for Russia's hopes of early access to the WTO. The U.S.-based International Intellectual Property Alliance is pointedly recalling that in November 2006 Russia and the U.S. signed a bilateral agreement on WTO, under which Moscow undertook to resolve all problems concerning copyright protection before June 1, 2007. If there is no clear progress, the Bush administration is then obliged by the agreement to list Russia as a country in violation of intellectual property rights. This would immediately put at risk all Russia's trade concessions. That decision by the Bush administration will be taken in the light of the advice and recommendation of the International Intellectual Property Alliance, which is so far not at all impressed by Russia's record on compliance.
There are several countries and corporations that might be discreetly content at any further delays to Russia's WTO ambitions. Those Western oil majors who were bullied by the Kremlin into negotiating down their share of the proceeds from the mammoth new oil and gas ventures in Sakhalin Island would be delighted to see Moscow's rough tactics rebound in the Kremlin's face, with a declaration that Russia is not yet fit or ready for WTO membership. And the White House, NATO and the European Union are all concerned about Putin's latest suggestion about starting a natural gas version of the OPEC oil cartel, which could be a system to manipulate output and process to the benefit of cartel members.
EU members are torn between those who argue that WTO membership would "civilize" Russia and end its dismaying habit of interrupting or manipulating oil and gas supplies for political reasons, and those who say that WTO membership should be used as a carrot to persuade Russia to sign the EU's Energy Charter, guaranteeing continuity of supplies and mutual access to energy markets, both upstream and down. The case can be argued either way, but the fact is that Russia appears to be neither a reliable nor a trustworthy partner in the energy business.
At this month's meeting of G8 finance ministers, Russia's Alexei Kudrin declared publicly that the United States was "firmly in favor of Russian membership of the WTO." There was no immediate confirmation of this from the Bush administration, and U.S. attitudes toward Russia in general have been shaken by the highly combative speech that President Vladimir Putin made at the Wehrkunde conference.
Given all of these issues, any prediction of early Russian membership of the WTO should be treated with caution. It will probably happen, but not necessarily this year.
And if the accession is long delayed, then the whole question of the U.S.-Russian relationship is likely to get caught up in the presidential election campaign, along with the rather broader issues of protectionism, free trade and the WTO that Democratic contender John Edwards is raising in such a populist way.
When Putin warned that a new Cold War was on the horizon he probably did not think through the political and commercial implications of his remarks. But for the Kremlin, the costs could be profound. In the very long run, however, the costs for the West of a Russia deliberately excluded from the WTO, and feeling itself isolated, could also be significant. Pariah states are always tricky, particularly those with massive nuclear arsenals and the world's largest supplies of natural gas.
