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Russia sees U.S. as barrier to WTO

February 18, 2006

MOSCOW (Reuters) -- Russian Economy Minister German Gref expressed frustration with the United States yesterday over Russia's stalled effort to join the World Trade Organization.
    "Unfortunately, we see that the only country with which we do not have a final agreement is the United States, which has promised [to be] the driving force behind Russia's bid for WTO membership," Mr. Gref told a conference in Moscow.
    He said he still hoped Russia would be able to join the WTO in 2006, "but of course that will depend on the political will of our partner countries."
    Russian officials have long predicted that the talks -- which have stumbled over issues ranging from energy pricing to farm tariffs -- would be over soon.
    But along with violations of intellectual-property rights, access to financial markets remains a key sticking point.
    President Vladimir Putin alarmed financial markets in December when he said the activity of branches of foreign banks working in Russia must be banned, a remark seen by the business community as threatening to foreign operators in Russia.
    Mr. Gref said Russia had difficulty understanding the U.S. side at times and had exhausted its potential for compromises.
    He said Russia particularly did not understand the U.S. position on financial services. "We see this stubborn position not being resolved for now," he said.
    Washington wants Moscow to allow foreign bank branches in Russia, but Moscow says it will only endorse banking subsidiaries to protect its weak and fragmented financial sector.
    Finance Minister Alexei Kudrin said this week that Russia would raise the share of foreign ownership of banks to 50 percent of its banking system's aggregate capital, but that Moscow was not ready yet to allow foreign banks to establish local branches.
    Mr. Kudrin said Moscow could make concessions to foreign insurance companies and in particular was ready to discuss access by U.S. insurance firms to this market segment.
    "We have used up our negotiating resources in terms of getting further compromises from industry groups, and our own ministries, in terms of finding compromises to move forward," Mr. Gref said.

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