Trade and Investment, Russian Style

President Vladimir Putin asserts that institutions created by the West, particularly the World Trade Organization were, in his esteemed opinion, "archaic, undemocratic and inflexible". Well, he may be right. He may be correct in identifying that particular organization as being in true need of a fix. At the same time, doesn't it seem odd to hear President Putin complain of an institution, or even a country, or a combination of both as in this instance, as being "archaic, undemocratic and inflexible"?

This is the man, after all, who has dragged his country back into its earlier position of undemocratic, strong-man rule; that's fairly archaic, one would think. And inflexible as well. Mind, this is a country and a leader waging its own war against Islamic terrorism, but who sees nothing amiss in offering friendly support to Islamic terrorists whose aim to destroy and destabilize is elsewhere, in other countries. That's a fairly archaic world view.

This is the man who has wrested control of vast energy sources from oligarch control, a condition which resulted from the de-nationalization after perestroika and the fall of the Soviet Union, under his predecessor, the sober President Yeltsin, his one-time mentor, mentor also to a billionaire head of Russia's gas distributor, suddenly incarcerated, and his one-time empire re-nationalized.

This is the man who has put fear into the hearts of stalwart and determined Russian news gatherers, many of whom have, unfortunately, met their deaths after reporting on domestic affairs in a manner that might implicate their president in undemocratic ventures, activities abusive of human rights and downright criminal activities. Peculiar coincidences, to be sure.

This is the man who has bullied and blackmailed his one-time partners in the great union of Soviet Socialist Republics who have now achieved independence and allied themselves with the interests of the West, and democratic rule. The budding democracy that Russia was experimenting with has been given quite a set-back under Vladimir Putin, strongman extraordinaire.

Yet Mr. Putin is correct in stating that the emergence of developing economies "demands the creation of a new architecture of international economic relations based on trust and mutually beneficial integration". It sounds good, and it is quite true, in fact, that this is just what the new world order requires. "Structures that were made taking account of a small number of active members look archaic, undemocratic and inflexible...This is clearly visible in the example of the WTO".

(On the other hand, look at a true world body, exemplifying the integration and active co-operation of most of the world's countries, the United Nations. This is a democratic institute par excellence. Yet while it manages to achieve a good deal in attempting to ensure the world is a better place, it fails miserably, in the most needful of situations, incapable of garnering sufficient clout to impose its values where they are most needed.)

Russia's growing economic clout enables it to expound in this manner, and to grab the attention of would-be investors. Even international investors who have been burned badly in the quite recent past. Russia has a habit of suddenly kicking out international investors, and handily divesting them of their infrastructure, right to remain and to do business in the country, and their investment in same.

Royal Dutch Shell was forced to give over control of one of the world's biggest energy projects at a price that Russia arbitrarily set, under pressure from the Kremlin. Yet its chief executive is reported to have 'thanked' Mr. Putin for helping the company to reach a settlement. Despite the worries about human rights erosion in Russia, and its heavy-handed badgering of its neighbours, the past insecurity of investments in the country, investors are lining up.

Official Russia is fed up with being ignored. The lack of respect accorded Russia traditionally infuriates its administration. That it has been kept out of international groups of accommodation like the WTO has been a source of frustration and anger. It hasn't helped that Russia has watched helplessly on the sidelines as its former allies have joined the European Union and NATO, and Russia has been shunted aside.

As a newly-booming economic powerhouse Russia has attained a new measure of self confidence being expressed through Vladimir Putin. He's right and he's wrong. He's right to criticize the WTO structure, and to insist that a restructuring should be on the horizon more in keeping with an obligation to a newly-emerging world GDP. He's wrong in the direction he's hauling Russia into, away from democratization, toward more authoritarian rule.

The U.S. isn't of much help here, with its insistence on thumbing its nose at Russian sensibilities. For the sake of world peace, for the purpose of working together in the larger interests of the world at large, the powerful countries of the world must be more accommodating to one another, less confrontational.

Good thing, we hope, that both the Russian and the U.S. administrations will be turning over soon. Not soon enough, perhaps.