Russia has announced it will no longer apply for World Trade Organization membership as a single state. Rather, it would only consider joining the WTO if it came in as  the head of a customs union, i.e. a trade bloc and currency union comprising Russia, Belarus, and Kazakhstan. Observers first ascribed the decision to Russia’s frustrations at the slow pace of its membership talks, and as calibrated to force concessions on the part of those blocking Russia’s entry into the WTO. While this explanation probably has some validity, it is by no means the whole story. Moscow’s  statement continues to betoken an aggressive effort to lock up the CIS as a bloc subservient to Russia and deprived by Russia of key attributes of sovereignty.

BACKGROUND: The negotiations on entry into the WTO have indeed been long and frustrating for Russia. For example, the US had demanded that it open up its dairy and meat sectors to U.S. exports that would have probably overwhelmed these sectors.  Meanwhile, Georgia has long exercised and would probably continue to exercise its right of veto that all members have, making Russian entry into the WTO an impossibility. The EU had thrown up obstacles pertaining to Russian import duties on timber and cars. Understandably, these and other obstructions led Moscow to conclude that the game was not worth the candle. This conclusion may well have been reinforced by the belief that the current financial crisis  is leading to global protectionism and that Russia is better off not having to answer for its trade polcies to the WTO. Furthermore, this crisis has only reinforced Rusisa’s belief that it is ascending while the US is falling and that regional blocs are the order of the day in what it believes is the multipolar world that is either coming into being or that should be emerging.

But Russian calculations go beyond these factors.  First of all, the ruble has taken a beating in this crisis and Russia has been steadily searching for ways to enhance both the ruble’s value and international demand for it. Thus it has hit upon the same expedient used by the Nazi regime after 1933 to maximize the value of and demand for the scarce Reichsmark, namely by forcing Germany’s neighbors in Eastern Europe to pay for German exports only in Marks, necessitating the reorientation of their exports to Germany, thus rendering them dependent upon Germany. Moscow’s program for a ruble union is of a similar nature and aims to force CIS countries to buy and sell mainly to Russia, thereby increasing demand for and the value of the ruble.

IMPLICATIONS: However, this announcement also shows Russia’s contempt for the sovereignty of its neighbors. It is quite unlikely that this announcment was coordinated with Minsk and/or Astana. Both of those states are in a very different stages of their negotiations with the WTO, neither have they given any warning of their desire to join the WTO only in Russia’s wake, even though that could happen under the WTO’s rules. Moreover, Moscow is currently waging a trade war against Belarus, blocking its dairy exports to Russia as punishment for signing the Eastern Partenrship with the EU and showing signs of inclining to the West. In return, Belarus has boycotted the CSTO summit and refused to participte in it for now. It is therefore quite unlikely that Belarus either approves of this gambit or was consulted in advance. Russia is also trying to force Kazakhstan to export its gas to Europe exclusively through Russian pipelines. Thus this gambit is an attempt to compel these states to join a customs, currency, and trade union with Russia and renounce all hope of economic and political independence as a result of that decision.

A third dimension of this Russian decision is the fact that this extends what has become the hallmark of President Medvedev’s policies. Those policies represent an intensification of the path already marked out by Vladimir Putin, namely the increasingly aggressive and high-handed efforts to force CIS members into an exclusive, Russian-led sphere of influence that would close them off to European and American influence. This drive pertains to energy issues and pipelines, the creation of the CSTO and its deployment in Central Asia, the attempts to force the exclusion of U.S. bases from Central Asia, the demand for a ruble union, and now the efforts to strenghten the trade bloc and customs union. Since it is an article of faith in Moscow that only on the basis of such a bloc can Russia play a great role in world potlitics and ward off foreign influence, as its ties to the West deteriorate, the pressure for such a union grows.

Fourth, this decision also marks another example of Russia’s strong preference for  international organizations that allow it to have a free hand to do as it pleases, usually in a high-handed manner, rather than having to answer to an international body which it cannot control. Multilateralism only makes sense to Moscow if it can control the direction of the organization that embodies that particular manifestation of multilateralism, e.g.  the CSTO or SCO. Since it was clear that membership in the WTO would elude Russia, and that in any case its interests would suffer even if it  became a member given all the concessions demanded of it, it naturally opted for a free hand.

Finally, this episode evokes memories of the games played by the Soviet Union with respect to its international status and claims of sovereignty that were chronicled long ago by Vernon Aspaturian. Today’s Russia simultaneously claims equality with the US and China, with the EU and NATO and with the leading members of those organizations. It also demands preferential status for itself in the WTO and in the CIS at the expense of the sovereignty of the smaller member states of these institutions which its officials deride. Since it publicly derides or even usurps these states’ territorial integrity, its efforts to suppress their economic sovereignty in practice should come as no surprise. In other words Russia, like its Soviet predecessor, continues to ascribe multiple statuses to itself while claiming differing levels of sovereignty to itself and to its neighbours, in an effort to enhance its status vis-à-vis foreign interlocutors and to secure critical foreign policy interests. The WTO affair is but another example of this now well-established trend.

CONCLUSIONS: Not only are the implications of Russia’s announcements negative insofar as the WTO and efforts to secure liberal trading regimes, and more globally open trade and economies, are concerned. They are also negative insofar as Russia’s ties to other states are affected. The aggressive efforts to spite the West and consolidate an exclusive bloc that diminshes the  sovereignty and independence of CIS states continues without letup. This is underway even if it means irrational economic policies like the subisdizing of  empire through purchases of gas at higher than market prices, or the  diffusion of a predatory form of state control over economics throughout the CIS. It also reflects Moscow’s belief that it need not and should not have to account for its deeds to the West, another sign of its relapse into unilateralism and even a certain form of self-imposed isolation. Of course, these policy trends also carry an explicit danger to all CIS states who try to assert their independence, whether it be Belarus or Georgia or any Central Asian state. Naturally, such economic policies are also connected with the growing efforts of Putin’s entourage to rely exclusively on energy prices going up to extricate Russia from the current crisis and their efforts to extend ever more state (i.e. their personal) control over ever more sectors of their own and other states’ economies. Closed markets and trade blocs generally accompany closed political systems and neo-imperial policies that can only end in conflict. Georgia may have been the first as we saw last year, but as Belarus shows, it probably will not be the last such example.

AUTHOR’S BIO: Stephen Blank is Professor at the Strategic Studies Institute, US Army War College. The views expressed here do not represent those of the US Army, Defense Department, or the US Government