RUSSIA - May 21 - Kyoto Paves Way To Join WTO.

Pres Putin recommits to the Kyoto treaty after months of mixed signals characterizing it as a tradeoff for the economic agreement, in exchange for European support for its bid to join the WTO, a breakthrough that can revive the long-stalled pact designed to curb global warming. The trade agreement helps open the way to WTO membership for Moscow, the largest country that remains outside the international group. Putin says: "We are for the Kyoto process. We support it, although we do have some concerns over the obligations that we will have to assume. The European Union has met us halfway in negotiations on the WTO, and it could not help but have a positive effect on our attitude toward ratification of the Kyoto protocol". The arrangement appeared to end an impasse that had long held up both Russia's integration into the world economy and enactment of the plan to reduce greenhouse gas emissions. European countries have been eager to win Russia's ratification of Kyoto, and they made significant concessions in the trade talks to obtain it. Ever since the US backed out of the Kyoto pact after Pres Bush took office in 2001, Russia has held the treaty's fate in its hands. To take effect, the treaty requires ratification by countries producing at least 55% of the world's greenhouse gases, and Russia, with its 17% share, was the only nation left that could put it over the top. Putin promised last year to move toward ratification, but his top economics adviser, Andrei Illarionov, launched a vigorous public campaign against it, portraying Kyoto as "a death treaty" and "international Auschwitz" that would strangle the Russian economy just as it was growing again. Some analysts interpreted that as a sign that Russia would not ratify the treaty, but others said Putin used the conflicting signals to make Kyoto a bargaining chip for economic benefits. An economist at Renaissance Capital, a Moscow investment bank, Alexei Moiseyev says: "Russia hasn't given up anything very significant. The things they gave up they were planning to give up anyway....It seems that for the EU, Kyoto is more important than Russia joining the WTO, and so they were willing to accept the...deal". The Kyoto pact requires participating countries to cut back greenhouse gas emissions by 2012 to 5.2% below 1990 levels. By a quirk of history, Russia stands to benefit from Kyoto, because after a decade of economic dislocation, its emissions today are already substantially below what they were in 1990, when Russia was part of the Soviet Union. Thus, Russia would be able to sell its excess pollution quota to other countries under terms of the agreement. Canada, Japan, and EU states have expressed interest in buying some, which would allow them to exceed their own limits but remain in compliance with the protocol. Putin has made joining the 147-country WTO a priority, and May 21 deal marks the most significant progress toward membership since Russia applied 11 years ago. To join the organization, which sets and enforces rules of world trade, an applicant first must strike market-opening deals with major trading partners that are also WTO members. The 25-country EU accounts for more than half of Russia's foreign trade. The leader of the Motherland party in the Duma Dmitri Rogozin, said in an interview that the WTO is "a club for aged lords" and that Russia should not be made to conform to other countries' economic rules. Russian officials expect to strike similar agreements soon with Japan and South Korea. US trade representative Robert Zoellick recently expressed optimism that Russia was on a path to finish negotiations with the US by the end of the year. In reaching May 21 agreement, the EU settled for less than it had demanded. The Europeans had insisted that Russia raise its subsidized domestic natural gas prices to 5 times current rates, allow foreign companies access to its pipeline network, end the gas export monopoly of state-controlled Gazprom and open up its financial services, insurance and telecommunications sectors to foreign companies, among other things. Under the agreement, Russia will cut some tariffs and open up some sectors, but it gave only a little on natural gas, the most sensitive issue because it supplies a quarter of Europe's gas at far higher prices than it charges at home.