Putin calls for revolution in world economic relations

Russian President Vladimir Putin on Sunday called for a revolution in world economic relations, saying institutions created by the West were "archaic, undemocratic and inflexible."

Speaking to an audience of world leaders and top chief executives at a showcase business forum, Putin said the emergence of developing economies "demands the creation of a new architecture of international economic relations based on trust and mutually beneficial integration."

"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."

The Russian leader proposed the creation of "regional Eurasian free trade organisations" that would draw on the experience of the World Trade Organisation.

Russia demonstrated its new economic clout during the two-day Saint Petersburg International Economic Forum by agreeing to investment deals worth 13.5 billion US dollars (10 billion euros), forum organisers said.

"To tell the truth, we were astonished" by the sum, which included 7.5 billion US dollars in deals between private companies and six billion in private-public partnerships, Russian Economic Development and Trade Minister German Gref said.

It seemed evidence that the world's business elite had accepted Putin's assurances during the forum that Russia was a safe bet, in spite of rising tensions between Moscow and the West.

It also reflected a wider surge in developing economies that Putin said had turned the old world order on its head.

"If 50 years ago, the G8 countries accounted for 60 percent of the world's GDP, the current situation is vice versa -- about 60 percent of world GDP is produced beyond their borders."

His attack on the 150-member WTO, however, reflected Moscow's frustrations in its struggle for recognition, not only as a rapidly growing economy, but as a major world power.

Russia has clashed repeatedly with the United States and Europe in recent months, both over political issues such as the status of Kosovo and US missile defense plans, and on economic issues related to Russia's WTO accession.

Gref held talks Sunday with EU, US and WTO negotiators trying to finish off Russia's more than decade-long struggle to join the world body.

The minister said he still hoped Russia would join by the end of the year. US Trade Representative Susan Schwab said this was possible "as a technical matter," but would depend on the pace of Russian reforms and commitments.

Putin's outburst was "an extension of the argument he has been making all along: We ought to be in the WTO and we're being kept out for political reasons," John Litwack, chief economist of the World Bank's Russia office, told AFP.

Pascal Lamy, director general of the WTO, said his organisation was working "very hard" on the negotiations, adding: "Without Russia, the WTO is not really the multilateral institution it wants to be."

Putin stressed Russia's openness to foreign investment and increasing integration into the world economy, saying that Russia had invested 140 billion US dollars (105 billion euros) abroad in 2006, nearly equal to the 150 billion US dollars of incoming investment.

He also charged that "today, the protectionism that the WTO is called on to combat is frequently coming from the economies that created the structure" -- an apparent reference to European wariness about Russian investment and what Moscow calls unfair US trade practices.

First Deputy Prime Minister Dmitry Medvedev, a potential presidential successor, also said protectionist practices were "miring international organisations in showdowns."

Among the deals signed at the forum were a more than three-billion-dollar contract by Aeroflot to buy 22 passenger planes from US jetmaker Boeing, and 18 contracts between Russia and China worth over one billion US dollars.

Putin's message that "a shift has taken place from the major Western powers to the developing world," is an undeniable one, World Bank Russia office director Klaus Rohland told AFP.

"The days when the G7 countries were the center of the world economy are over. That's what they're saying here, and for better or for worse, it's true," he said.
Source : http://news.brisbanetimes.com.au