Tuesday, 29 November 2011

BBC News: BRICS nations mark 10th birthday

BBC News Online has a couple of small features dedicated to the BRICS grouping of nations, currently celebrating its 10th anniversary.

Ten years ago, Goldman Sachs' Jim O'Neill made the bold prediction that the Bric nations - Brazil, Russia, India and China - would overtake the West's six biggest economies within four decades. Since then there's been the addition of newcomer South Africa. Together, they form a powerful bloc, but face their own challenges amid the global financial turmoil.

There's a video overview: http://www.bbc.co.uk/news/business-15913867

There's also a useful series of graphic slides: http://www.bbc.co.uk/news/business-15888749

Take a look!

Monday, 28 November 2011

The Ally from Hell

The Atlantic this coming month features a lengthy article examining the relationship between Pakistan and the USA / the West. No excerpts here, but do take time to read it - the article pulls few punches! Here's the opening blurb to provide some flavour:
Pakistan lies. It hosted Osama bin Laden (knowingly or not). Its government is barely functional. It hates the democracy next door. It is home to both radical jihadists and a large and growing nuclear arsenal (which it fears the U.S. will seize). Its intelligence service sponsors terrorists who attack American troops. With a friend like this, who needs enemies?
Supporters of an Islamic separatist group march a mock nuclear missile through the streets of Karachi, February 2011. (Reuters)

Wednesday, 23 November 2011

Down and Out in Durban: End of the Line for Kyoto?

The Council for Foreign Relations yesterday published a somewhat depressing article, outlining the prospects for success at the next big global environmental summit in Durban, South Africa:
As delegates from nearly 200 countries prepare to descend on Durban, South Africa next week for the seventeenth meeting of the Conference of Parties (COP-17) to the United Nations Framework Convention on Climate Change (UNFCCC), pessimism runs high. Privately, the leaders of major established and emerging economies concede that no new climate treaty containing binding emissions reductions will be negotiated before 2016. And even if an agreement were reached, it would not come into force until 2020—eight years from now. This bleak outlook comes despite warnings from scientists and economists about the dangers of delaying dramatic action to mitigate the planet’s warming.
Just this week, the UN World Meteorological Association reported that the volume of greenhouse gasses in the atmosphere reached a new record during 2010. And emissions appear to be accelerating, with carbon dioxide rising by 2.3 parts per million over the past year—a significant jump from the average (2.0) over the past decade. According to the U.S. Energy Department, recent increases in global carbon emissions exceed the worst-case projections of the Intergovernmental Panel on Climate Change (IPCC).   Adding to the warnings, a recent IPCC report predicts that dramatic planetary warming during this century is “virtually certain.” Fatih Birol, chief economist of the International Energy Agency, warns that the world has a brief, five-year window to stop a worldwide mean temperature increase of 2 degrees Celsius: “If we do not have an international agreement whose effect is put into place by 2017, then the door to will be closed forever.” Two degrees Celsius may seem like a small rise, but scientists regard it as a critical threshold, beyond which the world will face more extreme weather such as melting icecaps, devastating droughts, and torrential rainfall and flooding. And without significant efforts toward mitigation, global temperatures could rise even more.
The reasons for the diplomatic deadlock are plain. Major parties to Kyoto, including Japan, Russia, and Canada, have already signaled that they will not take on a second commitment because China and the United States—the world’s top two polluters—are not included in it. The European Union (EU) is prepared to sign up for a second round, but it insists that major developing countries, whose emissions are surging as their economies grow, must embrace and follow through on real commitments. The EU’s preference is to negotiate “a single global and comprehensive legally binding instrument” including all emitters, though it would countenance an “interim” solution whereby major emerging countries would accept a “road map” and timetable for treaty commitments. Even this fall-back position faces resistance from the so-called “BASIC” caucus—Brazil, South Africa, India, and China—who are disinclined to accept binding targets that might jeopardize their domestic growth and development goals.
The United States, for its part, has abdicated leadership on climate issues. Heading into an election year, President Obama seldom mentions global warming any more. And with the laudable exception of John Huntsman—who actually believes in climate science—his Republican rivals for the presidency have mostly fallen over themselves to deny its existence or importance.
Given these international and domestic dynamics, is Durban destined to be a failure? Not entirely. While a successor treaty to Kyoto with updated, binding targets is off the table, the conferees have an incentive and the ability to snatch some measure of victory from the gathering.
  • First, governments can agree to build on the climate mitigation activities they are already undertaking individually, bilaterally, and multilaterally. Under the broad Kyoto umbrella, parties have adopted various mechanisms and initiatives designed to reduce emissions, ranging from reporting requirements to market schemes for carbon trading, investments in renewable energy, and more robust fuel standards and targets for carbon intensity. As in Copenhagen and Cancun, states parties will stress the cumulative effect of parallel national efforts, rather than a stringent, binding treaty.
  • Second, rather than admitting failure and declaring Kyoto “dead,” the assembled delegations could seek to keep it on life support, in the form of a political rather than a legally binding agreement. A looser, informal “Kyoto II” could play several roles. It could provide a framework for a more robust system to monitor and verify compliance with stated national goals. It could offer a mechanism for transfer of clean energy technology and climate financing to the developing world. And it could hold out the promise, however distant in the future, of a successor treaty.
  • Third, Durban will ultimately be judged on whether the wealthy world makes good on its financial commitments to help developing countries adapt to the climate change the world has failed to mitigate. At Cancun last December, delegations to COP-16 agreed to create a Green Climate Fund of up to $100 billion to help countries cope with global warming. Unfortunately, that target seems increasingly out of reach, as advanced market democracies grapple with slow growth, massive fiscal imbalances and swelling sovereign debts. This week Ernst and Young reported that austerity measures across ten of the world’s major economies had created a climate funding “gap” of $22.5 billion—a figure that could double to $45 billion should the crisis in the eurozone escalate.
Perhaps coincidentally, the U.S. congressional supercommittee, composed of twelve legislators from the same country, admitted defeat this week—exhibiting a complete inability to engage in practical compromise. Given the stakes involved, let’s hope all the delegations a part of the COP-17—regardless of their diverse interests—do not resign themselves to the same fate.

Tuesday, 22 November 2011

Guardian: Iran faces new wave of sanctions over nuclear programme

The Guardian has the story (excerpts follow) - the continuing use of 'hard power' in economic guise by a West broadly united on this issue, seeking deterrence from apparent intent towards nuclear proliferation in the Middle East:
The US and Britain are leading a new wave of international sanctions targeting Iran's banks and oil industry following the International Atomic Energy Agency's report earlier this month that said Tehran worked for many years to develop nuclear weapons and may still be doing so.

Britain has used counter-terrorism powers to order its financial sector to cut all ties with Iranian banks in an attempt to undermine funding of the nuclear programme. The US announced measures intended to limit Tehran's ability to refine its own fuel as well as targeting Iran's Revolutionary Guards' financial interests.

The French president, Nicolas Sarkozy, wrote to European leaders as well as the US and Japan calling for "unprecedented" sanctions against Iran, including a halt to buying its oil.

But the measures are expected to have a limited impact in the face of resistance from China and Russia to strengthening global sanctions against Iran through the United Nations security council.

Britain went the furthest by, for the first time, cutting an entire country's banking system off from London's financial sector. It said that Iranian banks "play a crucial role in providing financial services to individuals and entities within Iran's nuclear and ballistic missile programmes".

The foreign secretary, William Hague, said the measures are part of increasing pressure on Iran to engage with the IAEA and foreign governments about its nuclear programme.

"The IAEA's report last week provided further credible and detailed evidence about the possible military dimensions of the Iranian nuclear programme," he said. "Today we have responded resolutely by introducing a set of new sanctions that prohibit all business with Iranian banks.

"We have consistently made clear that until Iran engages meaningfully, it will find itself under increasing pressure from the international community. The swift and decisive action today co-ordinated with key international partners is a strong signal of determination to intensify this pressure."

British diplomats said the Iranian central bank plays a direct role in procuring equipment for its nuclear programme and added that the sanctions were also intended to punish Tehran for its refusal to compromise over its enrichment of uranium, which can produce reactor fuel or fissile material for a bomb, despite a series of UN security council sanctions calling on it to do so. They said that denying Iran access to the international financial hub in London would raise the cost and hassle for the Iranians of doing business with the rest of the world.

Canada took a similar step against Iran's central bank.

In Washington, President Obama said additional US sanctions are intended to discourage business with Iran's petrochemical industry, which traditionally has produced plastics and similar products but has increasingly been used to refine petrol because international sanctions have hit Tehran's refineries.

"New sanctions target for the first time Iran's petrochemical sector, prohibiting the provision of goods, services and technology to this sector and authorising penalties against any person or entity that engages in such activity," Obama said. "They expand energy sanctions, making it more difficult for Iran to operate, maintain, and modernise its oil and gas sector.

"As long as Iran continues down this dangerous path, the United States will continue to find ways, both in concert with our partners and through our own actions, to isolate and increase the pressure upon the Iranian regime."

Washington designated Iran a territory of "primary money-laundering concern" in the expectation that it will discourage foreign banks from doing business with Iranian financial institutions.

However, Washington continues to avoid directly targeting Iran's central bank because if Tehran is unable to carry through financial transactions necessary to sell its oil, that could force the cost of petroleum up and hit the US economy.

The US secretary of state, Hillary Clinton, called the measures a "significant ratcheting-up of pressure" on Iran and said other countries will follow in the days ahead.

In his letter, Sarkozy said that Iran's nuclear programme represents a "serious and urgent threat to peace". He called for a halt to purchasing Iranian oil and for the assets of Iran's central bank to be frozen. EU foreign ministers are also expected to consider further measures at a meeting on 1 December.

Monday, 21 November 2011

Africa wants to be Europe without the Euro

The Wall Street Journal today features a useful article examining the process towards - and motivations behind - regionalism in Africa:
For decades, African technocrats have admired Europe's common market, where open borders and the right to work in any member country are seen as the kind of steps that would boost trade in Africa as well. Those steps are also seen as lowering barriers that now deter investors, allowing smaller African states to thrive alongside larger neighbors.

Archie Machaka, who runs a trucking company based in Zimbabwe, says that what should be a 10-day trip to drive a truckload of copper from a mine in the Democratic Republic of the Congo to a container depot outside Johannesburg in South Africa sometimes takes six weeks. His drivers must wait for exit documents in the Congo that can take a month to process. Then a new customs policy in Zambia, designed to check those papers more thoroughly, can leave his trucks idling for three or four days.

The new border regime "was supposed to improve efficiency, but it's not really coming through," Mr. Machaka said.

Faced with such problems, African countries are seeking more ways to work together.

Since 2000, the Southern African Development Community, encompassing 15 countries from the Congo to South Africa, has been lowering import and export tariffs between members. It plans eventually to eliminate them altogether.

South Africa is particularly keen to boost regional trade as an antidote to sluggish demand from Europe, the country's largest trading partner.

Last month, South Africa's finance minister, Pravin Gordhan, said his country wanted to join with its neighbors to fund large-scale infrastructure projects—such as highways running north into the heart of the continent—and a regional power grid that could attract investment from private South African energy companies. South Africa's National Planning Commission earlier this month recommended synchronizing agricultural policies among southern African countries to share crop surpluses. It also encouraged simple manufacturing in South Africa's lower-wage neighbors to create regional supply chains.

The continent's most advanced regional trade bloc, the East African Community, already guarantees the right to work across Kenya, Uganda, Rwanda, Burundi and Tanzania. Those governments also coordinate some fiscal policies, for instance by releasing their federal budgets on the same day. National parliaments are working on legislation that would further synchronize immigration and tariff laws.

Closer ties are paying off for east Africa's biggest economy: Kenya. In 2010, the bloc surpassed the EU as the top destination for Kenyan exports.

"We want to develop this corridor vigorously and collectively," said Mugo Kibati, director of a government program to overhaul Kenya's economy by 2030 and former chief executive of East African Cables, a telecommunications and power-transmission company.

But Africa is backing away from one prominent aspect of Europe's economic union: a common currency.

An African currency was once seen as an ultimate goal of continental integration. By 2018, leaders in southern Africa had aimed to have a common currency in circulation from South Africa's Cape Town to Kinshasa in the Congo. Not anymore.

"I don't think anyone thinks this is realizable or in fact appropriate," Gill Marcus, governor of South Africa's reserve bank, said last week.

She and other officials have noted repeatedly that the euro zone couldn't reconcile feeble economies like Greece with powerhouses such as Germany. That relationship is akin to South Africa and neighboring Zimbabwe, where three years ago inflation hit an annual rate above 200 million percent. Zimbabwe has abandoned its own currency in favor of the U.S. dollar, halting an economic tailspin.

Even in west Africa, where 14 countries have used a common currency tied to the French franc and the euro since the end of World War II, officials have soured on a broader, independent monetary union. It would need to balance the likes of Nigeria, a significant oil exporter, with tiny Togo, an agrarian country with anemic growth rates.

Such vast discrepancies also mean forming an integrated market would be more difficult in west Africa. In addition to Nigeria's economic muscle and vast population, it's an English-speaking country in a generally Francophone region. A violent five-month power struggle in Ivory Coast earlier this year highlighted the risks countries in the region face in tying their fiscal well-being to one another.

Gains are being made nonetheless. A widening network of transborder highways has slashed the time it takes to transport goods across a region once infamous for its number of road blocks per mile.

Sunday, 20 November 2011

The market for state territory - Pass the hemlock

The Economist has published an intriguing little article today—asking us to imagine a world in which countries still traded land for money....
Hellenic opinion was outraged last year when Frank Schäffler, a German politician, advised “bankrupt Greeks” to “sell your islands…and sell the Acropolis too!” That is hardly practical politics: as long as Greece remains a democracy, the political, and perhaps biological, lifespan of a leader who proposed hauling down the flag over even the tiniest Aegean outcrop would be measured in hours.

The furore obscured what Mr Schäffler was proposing: lease, commercial sale or a transfer of sovereignty. The government is already selling some land. The Institute for Strategic and Development Studies, a think-tank in Athens, says the Greek state has €35 billion ($47 billion) of property immediately available, which could cover 10% of its debt. KAPPA, a business lobby, suggests €75 billion. Stefanos Manos, an ex-finance minister, says a new state investment company could manage and dispose of property worth €200 billion. But just imagine that the exasperated northerners were dreaming of something more radical: fully ceding sovereign authority.

Territorial swaps for cash seem unthinkable today. But they were once common, especially when European powers were jostling for land in the New World. The United States’ 1803 purchase of the Louisiana territory from Napoleon for $15m (now $312m) is the most famous case. Germany bought the Caroline Islands, in the Pacific, from Spain in 1899 for 25m pesetas ($107m today). And during the First World War America paid Denmark $25m ($530m) for what are now the United States Virgin Islands, mainly to stop Germany buying them.
In an era of self-determination sales of territory have come to seem anachronistic. But leases, involving a de facto transfer of control, are common. In 2010 Russia extended a deal granting Finland a canal for 50 years, and gave Ukraine concessions worth €30 billion to park its fleet at Sevastopol for 25 more years. Michael Strauss of the Centre for Diplomatic and Strategic Studies in Paris sees “no obvious reason” why countries have stopped buying and selling land. “It’s a totally legitimate way for sovereignty to change under international law.”

Arturas Zuokas, the mayor of Vilnius, has made a teasing offer to Greece; he suggested his country acquire an island as “an exclusive place for rest in the Mediterranean” and “a great global advert for Lithuania”, featuring a spa, museums and a theatre. But he did not say whether he wanted title or sovereignty. Lithuania is forecast to be the euro zone’s fastest-growing economy in 2012, but the €7m on offer would only nibble at Greece’s debts.

The thinness of the market gives little indication of what sovereignty is worth. One guide might be the net present value of future tax payments, minus the net costs of public services disbursed there. Greece’s unusual habits with tax and spending could distort that indicator; but it could tempt an outsider to try to run the territory better. Auctions are the best way of setting prices—but would risk jangling nerves. Iran might find an Aegean island a handy way of foiling NATO’s planned missile-defence shield. Perhaps Greece could scare Germany into softer terms just by threatening such a sale.

Many a private-equity firm has overestimated the profits to be wrung from buy-outs, and the sovereignty market may be no exception. When America bought Alaska from Russia for $7.2m (now $113m), in 1867, some called it folly—and how wrong they were, American schoolbooks declare. But the sceptics might be right. David Barker, a professor at the University of Iowa, says that despite its oil wealth, Alaska was so costly to develop that the Treasury has lost money on the deal.

Thursday, 10 November 2011

The future of the EU: Two-speed Europe, or two Europes?

Charlemagne's Notebook in today's Economist newspaper explores the rumours of a united - yet divided - Europe:
Nicolas Sarkozy is causing a big stir after calling on November 8th for a two-speed Europe: a “federal” core of the 17 members of the euro zone, with a looser “confederal” outer band of the ten non-euro members. He made the comments during a debate with students at the University of Strasbourg. The key passage is below (video here, starting near the 63-minute mark):
You cannot make a single currency without economic convergence and economic integration. It's impossible. But on the contrary, one cannot plead for federalism and at the same time for the enlargement of Europe. It's impossible. There's a contradiction. We are 27. We will obviously have to open up to the Balkans. We will be 32, 33 or 34. I imagine that nobody thinks that federalismtotal integrationis possible at 33, 34, 35 countries.
So what one we do? To begin with, frankly, the single currency is a wonderful idea, but it was strange to create it without asking oneself the question of its governance, and without asking oneself about economic convergence. Honestly, it's nice to have a vision, but there are details that are missing: we made a currency, but we kept fiscal systems and economic systems that not only were not converging, but were diverging. And not only did we make a single currency without convergence, but we tried to undo the rules of the pact. It cannot work.
There will not be a single currency without greater economic integration and convergence. That is certain. And that is where we are going. Must one have the same rules for the 27? No. Absolutely not [...] In the end, clearly, there will be two European gears: one gear towards more integration in the euro zone and a gear that is more confederal in the European Union.
At first blush this is statement of the blindingly obvious. The euro zone must integrate to save itself; even the British say so. And among the ten non-euro states of the EU there are countries such as Britain and Denmark that have no intention of joining the single currency.
The European Union is, in a sense, made up not of two but of multiple speeds. Think only of the 25 members of the Schengen passport-free travel zone (excluding Britain but including some non-EU members), or of the 25 states seeking to create a common patent (including Britain, but excluding Italy and Spain).
But Mr Sarkozys comments are more worrying because, one suspects, he wants to create an exclusivist, protectionist euro zone that seeks to detach itself from the rest of the European Union. Elsewhere in the debate in Strasbourg, for instance, Mr Sarkozy seems to suggest that Europes troublesdebt and high unemploymentare all the fault of social, environmental and monetary “dumping” by developing countries that pursue “aggressive” trade policies.
For another insight into Mr Sarkozys thinking about Europe, one should listen to an interview he gave a few days earlier, at the end of the marathon-summitry in Brussels at the end of October (video here, starting at about 54:30):
I don't think there is enough economic integration in the euro zone, the 17, and too much integration in the European Union at 27.
In other words, France, or Mr Sarkozy at any rate, does not appear to have got over its resentment of the EUenlargement. At 27 nations-strong, the European Union is too big for France to lord it over the rest and is too liberal in economic terms for Frances protectionist leanings. Hence Mr Sarkozys yearning for a smaller, cosier, “federalist” euro zone.
This chimes with the idea of a Kerneuropa ("core Europe") promoted in 1994 by Karl Lamers and Wolfgang Schäuble, who happens to be Germany's current finance minister. Intriguingly, it is the first time that Mr Sarkozy, once something of a sceptic of European integration, has spoken publicly about “federalism”, although he had made a similar comment in private to European leaders in March (see my column). It echoes the views of Mr Sarkozy's Socialist predecessor, François Mitterrand.
Such ideas appeared to have been killed off by the large eastward enlargement of the EU in 2004, and by the French voters rejection of the EU's new constitution in 2005. But the euro zone’s debt crisis is reviving these old dreams.
But what sort of federalism? Mr Sarkozy probably wants to create a euro zone in Frances image, with power (and much discretion) concentrated in the hands of leaders, where the “Merkozy” duo (Angela Merkel and Nicolas Sarkozy) will dominate. Germany will no doubt want a replica of its own federal system, with strong rules and powerful independent institutions to constrain politicians. Le Monde carries a series of articles (in French) on what a two-speed Europe may mean.
If the euro zone survives the crisisand the meltdown of Italys bonds in the markets suggests that is becoming ever more difficultit will plainly require deep reform of the EUs treaties. Done properly, by keeping the euro open to countries that want to join (like Poland) and deepening the single market for those that do not (like Britain), the creation of a more flexible EU of variable geometry could ease many of the existing tensions. Further enlargement need no longer be so neuralgic; further integration need no longer be imposed on those who do not want it.
But done wrongly, as one fears Mr Sarkozy would have it, this will be a recipe for breaking up Europe. Not two-speed Europe but two separate Europes.
The first steps toward integration, the idea of holding regular summits of leaders of the 17 euro-zone countries, has already caused early friction with Britain (see my earlier post here). This week there were further cracks when, during a meeting of the euro zones finance ministers in Brussels, their colleagues from the ten non-euro states held their own separate dinner in a hotel nearby.
All this is alarming the European Commission, the EUs civil service and the guardian of its treaties. Speaking in Berlin on November 9th, its president, José Manuel Barroso, delivered what amounted to a direct rebuke to Mr Sarkozy.
The Commission welcomes, and urgesin fact we have been asking for a long timea deeper integration of policies and governance within the euro area. Such integration and convergence is the only way to enhance discipline and stability and to secure the future sustainability of the euro. In other words, we have to finish the unfinished business of Maastrichtto complete the monetary union with a truly economic union.
But stability and discipline must also go together with growth. And the single market is our greatest asset to foster growth.
Let me be cleara split union will not work. This is true for a union with different parts engaged in contradictory objectives; a union with an integrated core but a disengaged periphery; a union dominated by an unhealthy balance of power or indeed any kind of directorium. All these are unsustainable and will not work in the long term because they will put in question a fundamental, I would say a sacred, principlethe principle of justice, the principle of the respect of equality, the principle of the respect of the rule of law. And we are a union based on the respect of the rule of law and not on any power or forces.
It would be absurd if the very core of our projectand economic and monetary union as embodied in the euro area is the core of our projectso I say it would be absurd if this core were treated as a kind of "opt out" from the European Union as a whole.
Mr Sarkozys words seem to have caught the attention of Joschka Fischer, elder statesman of Germany's Green party and a former foreign minister, who said that the EU at 27 had become too unwieldy. “Let’s just forget about the EU with 27 membersunfortunately,” he told Die Zeit, a German weekly newspaper. “I just don’t see how these 27 states will ever come up with any meaningful reforms.” Indeed, some think the euro zone itself might be smaller than the 17 members (Greece may soon default and leave the euro).
The speech that everybody is waiting for now is Mrs Merkels. The chancellor wants to change the treaties, and on November 9th she called for “a breakthrough to a new Europe”. But what sort of Europe that should be was left mostly unsaid.

Friday, 4 November 2011

Russia and world trade: In at last?

The Economist discusses pronouncements this week that hint at the impending arrival of the Russian Federation at its long-awaited WTO destination:
After 18 years Russia is on the verge of joining the World Trade Organisation

There was disbelief this week when Arkady Dvorkovich, adviser to President Dmitry Medvedev, told journalists that Russia was close to joining the World Trade Organisation (WTO). Russia has been “close” for ages, but the timing has always slipped. Yet after 18 years of talks, it seems that membership now beckons.

Both America and the European Union have long agreed, as have all the other 153 WTO members bar Georgia, a small former Soviet republic which fought a brief war with Russia in August 2008 and is still partly occupied. Georgia had insisted, quite reasonably, on placing international observers to monitor the movement of goods at its sovereign border, which includes the territories of Abkhazia and South Ossetia.

Russia, which has recognised the independence of Abkhazia and South Ossetia, said this compromised their status. Swiss mediators have found a deal that does not mention their status, refers to the border as a corridor and provides for monitoring not by a government agency but by a private foreign company accountable to the Swiss government. Now Georgia has said “yes”, clearing the way for Russia’s entry.

After a few days, Russia also accepted the deal. There is no doubt that Mr Medvedev would like to go down in history not just as somebody who tinkered with Russian time zones but as the man who took his country into the WTO. The final decision still lies with Vladimir Putin, Russia’s prime minister and likely future president, though he is unlikely to block it now.

As Vedomosti, Russia’s business daily, points out, Mr Putin has always been the real obstacle to Russia’s entry into the WTO. In 2009, when talks between Russia and America were going full steam, Mr Putin unexpectedly thwarted them by saying that Russia would join only with Belarus and Kazakhstan, with which it has a customs union. Mr Putin, initially eager for Russia to be in the big international clubs, has come to see some WTO demands as a politically motivated nuisance.

The benefits of WTO membership are debatable. Some estimate that Russia could gain at least $50 billion a year. Others argue that Russia would do better to stimulate exports before joining. As it is, two-thirds of exports are oil and gas, not covered by WTO rules. Apart from extractive industries and metal, few Russian goods are competitive. A World Bank report notes that Russian exporters have trouble not just entering foreign markets but surviving in them.

The real problem, however, is not trade barriers to Russia’s goods, but the country’s own inefficiency, institutionalised corruption and stifled competition. None of these problems can be solved by WTO membership. But Sergei Guriev, head of the New Economic School in Moscow, says that it would at least expose corruption and increase competition, deeply alien to Russia’s ruling bureaucracy. Indeed, the main benefit of WTO membership may be political. “It will be a sign that Russia is moving towards the civilised world,” says Mr Guriev, “not away from it.”