Red Line: Russia in the WTO, Libya recap, Bashar Assad

Participants: Ekaterina Kudashkina, Sergei Strokan, Dmitry Polikarpov, Yaroslav Lessovolik, Alexei Malashenko

Ekaterina Kudashkina: Today we are just evaluating possible outcomes. In our first section, we’ll look at what seems to be the final stage of Russia’s accession to the WTO. We will then move on to discuss the first results of the Arab Spring revolutions, and finally we will focus on Syrian leader Bashar Assad.

Now, our first section, Beyond the Headlines. It seems that Moscow’s 18-year-long saga to join the World Trade Organization is coming to its final stage, but I am not sure the WTO at the end of the tunnel is exactly a light. One of the sticking points was the position of Georgia, but last week it offered Moscow what it said was its final compromise deal, concerning control over trade with Abkhazia and South Ossetia.

How did our European partners exert pressure on Georgia? What were their arguments?

Dmitry Polikarpov: Their arguments were that Russia is one of the world’s most important economies and it is highly beneficial both for the United States and for the European Union for Russia to become a member of the WTO.

Ekaterina Kudashkina: But what is Georgia’s interest in that? 

Dmitry Polikarpov: Georgia receives economic aid from the European Union and from the United States.

Sergei Strokan: Those who support the move say that Russia’s entry would be the biggest step in world trade liberalization since China joined the WTO a decade ago. It would really cement Russia's integration into the world economy, providing more global access to the world's top energy producer and its $1.9 trillion economy.

Ekaterina Kudashkina: Well these promises sound really impressive. But could you explain to me what Georgia wants from Russia this time?

Dmitry Polikarpov:Georgia, which joined the alliance in 2000, has been withholding approval of Russia’s WTO entry because of disputes over control of customs checkpoints in Abkhazia and South Ossetia. Georgia wants to establish trade corridors that will link Russia and Georgia through the breakaway regions. The flow of goods will be monitored electronically in the presence of international observers stationed on Russian and Georgian territory.

Ekaterina Kudashkina: Why should Georgia become some kind of policeman on our borders? I just want to give our listeners a broader perspective of that because all those are quite natural questions that arise from Georgia’s stance. Do you think that perhaps Georgia is suffering from the inferiority complex of a minor nation living close to a larger nation?

Sergei Strokan: Definitely this is a deep-seated issue not only about customs. This is a fundamental problem, and the basic problem is how you specify the present status of Abkhazia and South Ossetia. Russia recognized South Ossetia and Abkhazia as independent sovereign states. But unfortunately this is not the case with Georgia or the United States and the European Union, which still call Abkhazia and South Ossetia breakaway republics of Georgia.

But let’s come back to WTO. The thing is that they have almost no time to complete all the proceedings this year. Russia's parliamentary election on Dec. 4 is a further complication because a new parliament will convene only in mid-January, pushing WTO entry into 2012.

Russian officials say that if the WTO entry bid fails over the next few months, then accession could be delayed for at least several years as both the United States and Russia enter presidential election cycles.

I would say that public opinion here in Moscow and in Russia has been divided over whether joining the WTO is a bonus or a challenge for Russians. Of course there are advocates of membership, who say that Russian consumers will benefit and Russia will have to become more efficient, making good on the government's mantra of diversification by putting the oil-dominated, state-led economy on a diet of rule-based openness. So this is the argument for WTO entry. They also say that domestic gas producers would benefit most, as well as oil producers, metal producers and mining firms, fertilizer makers and consumer goods producers.

Ekaterina Kudashkina: How about us – consumers. Are we going to benefit from that? When the price for, suppose, gasoline or any kind of fuel is established at the level of the world market and when my country is a producer of those goods, why should I pay as much as the U.S., which does not produce these goods?

Sergei Strokan: Of course this is the key question, a sort of double-edged sword. On the one hand, WTO entry would be another push for Russia’s producers to make competitive goods, so we as consumers can expect that we will get Russian goods of much better quality. But at the same time, it is a serious challenge for Russia’s producers of consumer goods because they will have to fight for the world markets.

Ekaterina Kudashkina: Opponents are saying that a flood of imports is going to suffocate domestic producers, and Russia may be hit by demands that it should give up longstanding policies such as the gas export monopoly that is currently enjoyed by Gazprom.

And during a meeting of the Chamber of Commerce and Industry, Prime Minister Vladimir Putin said that in the event of Russia’s entry to the WTO, Russia’s consumer goods industry will need to be protected from “cheap consumer goods.”

Dmitry Polikarpov: I don’t want to be protective of cheap consumer goods. To tell the truth I would like to have cheap consumer goods.

Ekaterina Kudashkina: As a consumer. Our consumer goods industry needs to be protected. Remember there have been several stories about when the markets were open to cheaper consumer goods, and you can very well remember what it did to local industries, to local producers. They were devastated.

Sergey Strokan: Just a brief comment about cheap consumer goods. At one of local markets here in Moscow, I was arguing with a trader. He sold me a poor quality Chinese watch and he said to me, you know, if you want it cheap, then the quality will also be cheap. So when we say cheap consumer goods, we need to understand that we need decent goods.

It will be much more difficult to protect domestic producers being a member of the WTO. And this is a strong argument against WTO entry. At the height of the crisis, Russia introduced a series of protectionist measures such as higher duties on imported cars, agricultural machinery and petrochemical products.

Many of those measures have caused strong protests from trade partners abroad and have been at the heart of negotiations with the European Union. There are still unresolved issues concerning the rules on wine, cheese, and investment in car manufacturing.

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Dmitry Polikarpov: “After its entry to the organization, Russia will simply become uncompetitive,” economist Mikhail Khazin said to the Trud newspaper.

Ekaterina Kudashkina: I think its clear who will definitely benefit from Russia´s entry – our Western trade partners. Let me quote U.S. Deputy Secretary of State William Burns who was speaking at the 19th annual meeting of the U.S.-Russia Business Council in Chicago. He said: “The simple fact is that Russia's accession matters to the U.S. economy. It will create new markets for American exporters in one of the world's fastest growing markets. If we want to meet President Obama's goal and double U.S. exports by 2015 – if we want to put more Americans back to work – then WTO membership for Russia must be a part of our strategy.”

This is why the western communities are so interested in bringing Russia into the WTO – just to expand their consumer sector opportunities.

Sergei Strokan: I think that what is more valuable to the quote is that William Burns served as an American ambassador in Moscow, so he knows pretty well how things stand in Russia and how Russia’s economy was evolving after the collapse of the Soviet Union.

Ekaterina Kudashkina: Now I suggest we get an expert’s opinion. We are joined by Yaroslav Lissovolik from Deutsche Bank Russia.

Mr. Lissovolik, how would you assess the prospects of Russia accessing the WTO if we consider the recent developments, especially shifts in Georgia’s position?

Yaroslav Lissovolik: I think we still have to see how conclusive the agreement between Russia and Georgia is, but if there is an accord that is indeed struck, I think this is a major breakthrough, and for Russia it would be one of the keys a more diversified and more competitive economy.

 Ekaterina Kudashkina: What are the different positions in the Russian establishment vis-à-vis Russia’s accession to the WTO?

Yaroslav Lissovolik: I think it is very non-uniform position. There are circles in the government that do support Russia’s accession to the WTO, and there are those that are very much against. I think on balance, at the very top of the political establishment there is support for WTO accession and that has been the driving force in the past decade of Russia’s forceful attempts to finalize this process. I think Russia should have been accepted to the WTO after the transition began; it should have been allowed in the WTO back in 1992.

Ekaterina Kudashkina: How about prices on old products?

Yaroslav Lissovolik: I don’t think they will be significantly affected because generally it is not a sector that is significantly regulated by WTO norms.

Ekaterina Kudashkina: Now we are moving to the next section of our program – Between the Lines, in which we usually discuss something we consider to be one of the most interesting, or thought-provoking, or controversial publications of the week. And this time I suggest we talk about an opinion piece published by the “New York Times” entitled “NATO's Success in Libya.”

Sergey Strokan: Was it written with irony, or do they really believe that this is a success?

Ekaterina Kudashkina: So, there’s the controversy for you – and we’ll certainly discuss it. But before that, I’d like to say that the story was written by Ivo H. Daalder, who is the U.S. permanent representative to NATO, and Adm. James G. Stavridis - the supreme allied commander in Europe, and commander of the United States European Command. So do you think that those people could be ironic in their assessment of the NATO operation in Libya as a success?

As usual, let me give you a first quote: “As Operation Unified Protector comes to a close, the alliance and its partners can look back at an extraordinary job well done. Most of all, they can see in the gratitude of the Libyan people that the use of limited force — precisely applied — can affect real, positive political change. And as the alliance ends its operations, NATO remains committed to Libya’s future, ready to help as needed and requested.”

That’s quote number one. Now, my question to you, Sergei and Dima, is – do you consider the NATO operation as a job well done?

Sergei Strokan: I think if we just look at the world media, what’s written on the outcome of the NATO operation, you will find an amazing variety of opinions ranging from the statements like “this really a great success, great achievement” to the view that it was a complete mess, a complete disaster. I think it’s not easy just to answer this question, and let me start from the fact of what NATO is. Before the Libyan operation, there was talk that NATO was suffering an identity crisis. So, NATO was desperate for new ideas, for a new mission. Then the officers of NATO realized this February that it can achieve something tangible. So – there is a dictator, there are people who are dying under the bombs and tanks of Muammar Gaddafi, so NATO has to step in. And now Muammar Gaddafi is killed, there is no more an authoritarian regime at the heart of the Middle East, so NATO officials probably believe that this is really a success. But I strongly doubt that this is a success for simple reason – there are too many questions over this victory.

Dmitry Polikarpov: My point is that NATO really needed some successful operation just to show its efficiency. That’s true. But I think we should consider this operation in Libya not from a political point of view, but mainly from a military point of view, because it was a military operation. The goal was to eliminate Gaddafi and it was achieved.

Ekaterina Kudashkina: But if we look at 18 of the most powerful, richest countries of the world getting together and uniting their efforts in removing someone like Muammar Gaddafi and their initial term of 3 months had to be extended, do you really think that this could be considered a successful operation?

Dmitry Polikarpov: I think so, because the goal was achieved. Their goal was not to guarantee political settlement but to open a way to this possibility at the political process.

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Sergei Strokan: I just want to make one clarification of what Dima said over the goal of the operation. Let me remind you that initially the official goal of the operation was not to kill Gaddafi, but to ensure that innocent civilians will not become the subject of attacks.

Ekaterina Kudashkina: And let me remind you that in NATO air strikes, more civilians were killed than during the Gaddafi suppression of the Benghazi’s riots.

Just to be fair, the “New York Times” piece refers to some of the shortcomings in the operation. Those are not exactly the ones we’ve been talking about here, but let me give you another quote. “Every operation offers lessons to be learned. The Libya operation exposed some shortfalls in allied capabilities, and highlighted the importance of allied commitments to addressing these shortfalls. It also made clear the need for like-minded partners around the world. Moreover, the operation’s success rested on a set of unique circumstances. A brutal dictator who had decided to inflict murder and mayhem rather than step aside provided a demonstrable need for outside intervention. Strong regional support, from the opposition and the Arab League, ensured that any intervention would be welcomed. And the U.N. mandate provided a sound legal basis for action.”

I could argue against every statement made in this paragraph. 

But anyway, how do you see the future of Libya?

Sergei Strokan: Well the question is obviously still up in the air. You know that the recent statement by the head of the Libyan National Transitional Council that the future Libyan Government is going to impose Sharia law has made headlines around the world. Of course, we can discuss how radical this Islamism will be, but this is obviously not what the United States and the Western partners expected when they were thinking of a smooth transition period and predicting that Libya will emerge as a democratic nation.

Ekaterina Kudashkina: So a NATO operation lead by the U.S. can bring into power the Muslim Brotherhood in Libya, in a country where there were no Islamic extremists whatever. Doesn’t it now seem somewhat ironic to you?

Sergei Strokan: But it is not NATO that brought them to power. They came to power due to the democratic process, the way it happened in Gaza.

Ekaterina Kudashkina: I am sorry but there has been no election in Libya yet and we cannot talk of a democratic process when we are talking about a civil war with external intervention. This is not exactly a democratic process.

Sergei Strokan: You may not call it a democratic process, but it is something that has conditions for the democratic process, because to start the democratic process, you have to form a Transitional Government.

Ekaterina Kudashkina: So just to wind up the discussion, let me summarize it. Do you agree that with the U.S. action, Islamists, which the U.S. administration sees as its adversaries, are now coming to power in those countries where the West has helped to remove the existing regimes?

Sergei Strokan: Again, very briefly. The NATO operation in Libya turned out to be double-edged sword.

Dmitry Polikarpov: Well I agree with you, but I would also say that they should have considered this possibility, before starting the operation.

Ekaterina Kudashkina: Now we will hear an expert’s opinion. Here is Alexei Malashenko of the Moscow Carnegie Center.

Alexei Malashenko: I think it is too early to answer this question because I cannot imagine a new administration, a new power in Libya that will be united by a certain idea – political idea, ideological idea and so on, because there are a lot of differences inside the Transitional Government.

I do believe, and everybody is beginning to understand, that the main role in this new governmental coalition will belong to the Islamic movement. It is not dangerous, but it will create some problems

I think that a new situation is being created now. What kind of relations could emerge between West and Islamic rulers, I don’t know, but anyway I cannot say that it will create some obstacles.

Ekaterina Kudashkina: Isn’t there an irony that a NATO-led operation actually brought to power some presumably radical forces in Libya this time?

Alexei Malashenko: Well, it is a joke of course, but if I were Sarkozy, I would prefer to deal with Gaddafi than with somebody else from Islamic movement.

Ekaterina Kudashkina: Do you think that similar processes are now developing around Syria?

Alexei Malashenko: It is quite possible, because nobody can predict who will come instead of Bashar al-Assad. They say a lot about his dictatorship and so on but I cannot imagine that the president of Syria will be replaced by somebody with democratic spirits. I think that it is quite possible that if a civil war begins in Syria, somebody from the Islamic branch will come to power.

Ekaterina Kudashkina: And now let us turn to our final section, Face in the News, which this week will focus on the embattled Syrian President Bashar Assad. We have already discussed this figure in our previous programs, however, Mr. Assad has made world headlines again in two interviews to both leading Western and Russian media -- The British “Sunday Telegraph” and Russia’s Channel One Television.

Sergei Strokan: There is every reason to believe that Assad is desperately trying to reverse the situation in Syria before it is too late.

Dmitry Polikarpov: While the West has already written him off.

Ekaterina Kudashkina:Judging by his recent statements, with no end to the eight-month mutiny at home, faced with mounting Western pressure to step down, President Assad launched his final outdoor counteroffensive by resorting to the most powerful weapon he still can rely on: the power of argument. In his Sunday Telegraph interview, he acknowledged that security forces made many mistakes.

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I think the most important thing with his interview is that Bashar Assad has sent the world powers a clear signal on the possible implications of the internationalization of Syrian conflict.

Just let me quote out of the Sunday Telegraph interview: “Syria is the hub in this region. It is the fault line, and if you play with the ground, you will cause an earthquake”. He warned that outside interference into Syrian conflict might bring to life “tens of Afghanistans.”

Dmitry Polikarpov: So what happens if Assad has a point and the number of imaginary Afghanistans due to the Western involvement in Syrian conflict will be not just one, but 10?

Ekaterina Kudashkina: At first sight, the formula “10 Afghanistans,” coined by Assad, sounds more like a metaphor to chill the audience by capturing its imagination the way famous fiction writers do. And this was a good hit.

Sergei Strokan: But “10 Afghanistans” can be grim reality. Let all of us try to make a sort of brainstorming session to spell out Bashar Assad’s warnings. What can be implied by “10 Afghanistans?”

Syria shares borders with key two U.S. allies – Israel and Turkey.  Therefore, havoc in Syria, which is almost unavoidable in case Assad’s regime is toppled, will bring a zone of instability, probably dominated by radical Islamists and Al-Qaeda much closer to a zone that is vital to U.S. strategic interests.  Does President Obama really need this? This is what Mr. Assad could have meant by the “first Afghanistan.”

Dmitry Polikarpov: As a follow-up to what Sergei said, I can name the second and the third Afghanistans. It is an open secret that Damascus has strong ties with two radical Islamic groups – the all-powerful Hezbollah movement, operating in Lebanon, and the Palestinian group Hamas, which is in full control of Gaza.

Sergei Strokan: By the fourth Afghanistan, we can mean the rise of radical Islamist movements in tens of Middle Eastern countries. Their leaders will consider the demise of the secular Syrian regime as a powerful signal for the new movement to create a belt of Islamist states ruled on the basis of Sharia law.

Ekaterina Kudashkina: And that is very interesting because, in fact, it’s what we’ve been discussing in our previous section. Are we witnessing a creation of a belt of Islamist states, ruled on the basis of Sharia law now. And I think this is what Mr. Assad also meant when he warned of “setting the whole Middle East on fire.”

Sergei Strokan: Setting the whole Middle East on fire is a real possibility, and I think that the fifth Afghanistan can be attributed to “Iranian factor.” At present, Tehran is a close ally of President Assad. However, toppling his regime will be considered by Tehran as another Western attempt to break the existing status quo in the region.

Dmitry Polikarpov:  Sergei is right. It will really reinforce Iranian leadership’s drive for regional dominance by supporting Islamic revolutions. Iran will also speed up its nuclear programs, to avoid the fate of Bashar Assad.

Sergei Strokan: Yes. The fifth Afghanistan is not the last Afghanistan unfortunately. The six and the seven Afghanistans are related to the third and the fourth ones. The six and the seven Afghanistans are the two tracks of the already troubled Middle East Peace process. Those tracks are the Israeli-Palestinian and Israeli-Syrian tracks. The change of the Syrian regime will delay the restart of the Middle East peace process for an indefinite future, if not become the last nail in its coffin. 

Ekaterina Kudashkina: The last three Afghanistans can emerge from the ruins of the present-day Syrian state if President Assad is ousted and the country disintegrates. And this is another likely scenario.

There is every reason to believe that if ethnic and religious strife goes on, Syria’s sovereignty will be jeopardized, and the country might fall apart. Though it is not that likely, because there are no distinct borders between various ethnic and religious communities in that country.

Bashar Assad belongs to the minority Alawite sect in mainly Sunni Syria. And many Western scientists are now saying that there are mounting sectarian tensions between Sunnis, Shias, Alawites and Jews, as well as between Kurds and Arabs in Syria. But I think that at least at this point it is more of wishful thinking. Perhaps they would like to see that happen, but it is not the case as yet.

 Ekaterina Kudashkina: But this is a scenario that we have seen in Afghanistan before.

Sergei Strokan: Yes, and the danger of 10 Afghanistans coming out of one country is the primary reason Russia strongly opposes the Western scenario of building a “new democratic Syria.”

Dmitry Polikarpov: I think we definitely have to keep in mind what happened in Libya. After Libya, Syria can well turn into another disaster of much larger proportions.

Ekaterina Kudashkina: In his interview withj Russia’s Channel One Television, Bashar Assad thanked Russia for using its veto power in the UN Security Council to block a harsh resolution on Syria. He also expressed hope that Moscow will continue to support the Syrian leadership.

Sergei Strokan:  However, we have to understand one thing. Russia is very criticized by the American side for what they believe to be foot-dragging in the consolidated efforts of the world community to put pressure on Bashar Assad.

Ekaterina Kudashkina:  But we have just been discussing Libya, and we have seen the results that the consolidated efforts of the international community are producing.

Sergei Strokan: But while opposing the Western rescue plan for Syria, which can kill the patient, so to say, Russia is by no means an advocate of the Syrian regime. Russian President Dmitry Medvedev has already made himself clear that if the Syrian leadership fails to end hostilities and negotiate political settlement with the opposition, he will have to step down.

Ekaterina Kudashkina: So, all in all, the ball is in Mr. Assad’s court now.And he must act with no delay to make sure that 10 Afghanistans in the Middle East brought by the escalating Syrian conflict will never come into being. But this is also a good warning sign to the international community they should actually help them to do so and not stand on the way.

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