russia

Russia’s Frozen Poulty Ban — Not Likely a Path for WTO Membership

by Fran Smith on November 9, 2010

in International, Trade

Russia will be banning frozen chicken imports beginning January 1. The reason for the proposed ban? The head of the Russian agency in charge of Consumer Rights Protection and Human Welfare was quoted as saying, “It is an outdated and rough technology, which leads to a loss of many of the useful qualities of meat.”

Some domestic poultry producers in Russia are opposed to the ban, which would allow only chilled chicken to be sold in Russia. Of course, there are some, such as poultry producer and high-level Russian politician, Sergei Lisovsky, who supports the ban but wants it to go even further — to ban all imported chicken. In an interview reported by The Washington Post, Lisovsky said that the only reason imported chicken was allowed was to help Russia get admitted into the World Trade Organization. But then he was quoted as offering this seemingly contradictory argument: “Since we are not a member of WTO, why should we fulfill all these requirements?” he asked. “The quicker we stop fulfilling the WTO requirements, the quicker we’ll be allowed in.” Huh?

?? ????????????? ?? ???, ??????  “Don’t count on it, Sergei.”

The Magic of Numbers

by Tatiana Kryzhanovskaya on September 30, 2009

in Politics as Usual, Trade

Is it really easier to work in groups or is it just a way to shift responsibility?

This question is relevant after the recent summit in Pittsburgh, where the G-8 has sort of transformed into the G-20. And even though the G-8 will be still meeting annually as well as the new G-20 format, the world leaders have announced that G-8 is not capable to solve world economic problems alone anymore. Maybe there is a similar reason for Russia to insist on joining the WTO as a union with Belarus and Kazakhstan? It is still not clear why Russia has taken this course of action.

It looks like WTO membership is an Achilles’ heel for Russia. And recently, the Russian government appears to be searching for new WTO membership obstacles. In June, Prime Minister Putin declared that entering the WTO for Russia is possible only if it were to enter as a trade union with Belarus and Kazakhstan. He pointed out that partnership with neighboring countries has been much more important for Russia than WTO membership. In September, President Medvedev said that his colleague Mr. Putin was misunderstood. Of course, there is no need to enter the WTO as a union.

Whether Russia will ever join the WTO is still a big question. But it is certain that the customs union between Russia, Kazakhstan, and Belarus will take effect in July 2011, which was announced earlier this week.

Finding Something to Praise in Obama’s Speech Today

by Iain Murray on September 22, 2009

in Economy, Energy, Environment, Global Warming, International, Regulation, Sanctimony, Stimulus to Nowhere

While this speech is mostly hogwash, I am surprised and delighted to be able to find one thing to praise in it:

Later this week, I will work with my colleagues at the G20 to phase out fossil fuel subsidies so that we can better address our climate challenge

This is the right thing to do, for reasons I explained in my recent paper co-written with Sterling Burnett of NCPA (extract follows jump).

While many governments of developed nations argue for a worldwide reduction in fossil fuel use in order to combat climate change, those same governments also subsidize energy use and production.

In 2001, the countries of the EU-15 (the “old Europe” nations in the European Union) spent $16.77 billion (in 2009 dollars) subsidizing coal and $11.23 billion subsidizing oil and gas.

The International Energy Agency (IEA) estimates that developing countries spend around $220 billion annually on subsidies for energy production and consumption, of which $170 billion subsidizes fossil fuels [see Figure I]. Including developed countries, subsidies for energy production and consumption worldwide amount to around $300 billion, the majority of which are for fossil fuels.

Such subsidies reduce energy prices below what the market would set, encouraging greater use and raising emissions levels. Direct subsidies include grants to producers and consumers, government investment in research or infrastructure and preferential loans or tax treatment. Indirect subsidies include trade restrictions, price caps and market regulations that guarantee sales volume and restrict competition.

Many signatories to Kyoto subsidize carbon-based fuel use and production. Such subsidies “tilt the playing field,” discouraging research expenditures by private energy companies in developing alternative energy sources. Producers and consumers of other energy sources then demand subsidies to “level the playing field.” Thus, government intervention causes significant distortions in energy markets.

British Petroleum estimates that countries that subsidize transportation fuel use accounted for 96 percent of the increase in oil demand in 2007.13 Many of them are less-developed nations that subsidize both production and consumption of fuels. The IEA estimates that removing domestic price subsidies in China, India, Indonesia, Iran, Russia, Kazakhstan, South Africa and Venezuela would reduce global energy use 3.5 percent and reduce global CO2 emissions 4.6 percent.

U.S. Energy Subsidies.

The U.S. Energy Information Administration (EIA) calculates that federal energy subsidies amount to $16 billion annually [see Table II]:

In 2007, the federal government spent approximately $5.5 billion on subsidies for the coal, oil and natural gas industries— principally tax breaks for investment — including $3 billion for coal and natural gas, and more than $2 billion for research and development of clean-coal technology to reduce greenhouse gas emissions from coal.

The government spent an additional $1.2 billion for electricity production and use (not fuel specific), and $2.8 billion to increase the energy efficiency of homes and businesses.

It spent an additional $5 billion for renewable energy production and use, mostly in the form of tax breaks.

Finally, $1.2 billion went to the nuclear industry.

The EIA found that subsidies doubled from 1999 to 2007, due mainly to expanded subsidies for renewable energy and clean-coal technology.

Policy Recommendations. There are a number of neutral energy policies that could be implemented at the national or international level to reduce subsidized production and use:

International trade talks should include eliminating subsidies for fossil fuel production and consumption.

National budgets should be reviewed with the goal of eliminating programs that encourage energy use.

Subsidies and tax breaks, or tax penalties, for specific energy technologies should be eliminated to remove price distortions in energy markets.

A neutral energy tax policy, for example, would include replacing the federal tax-depreciation schedule for investment in new capital stock with immediate expensing. New equipment almost always produces fewer emissions per unit of output than older equipment.

Changing the depreciation schedule so that new investments could be written off immediately would make it profitable to replace old equipment at a much quicker pace. This simple change could do more to increase energy efficiency throughout the economy than the current complicated expensing regime.

Unfortunately, given the President’s praise for loan guarantees and tax credits elsewhere in the speech, he is failing to pursue a neutral energy tax policy, but I’ll give him due credit for at least addressing half of the market distortion.

Russia introduces strict new antitrust law

by Tatiana Kryzhanovskaya on July 29, 2009

in International, Legal, Odds & Ends, Regulation

Russian President Dmitriy Medvedev has signed into law amendments that will bring increased penalties for price collusion and unfair competition. The new amendments will allow the authorities to bring unscrupulous businessmen and bureaucrats to justice. Government officials will be subject to disqualification and sufficiently large fines if they will restrict the movement of goods across the country. Section 178 contains a very harsh sanction – up to six years imprisonment for committing a crime in the area of restriction of competition. This is unprecedented measure for Russia but it is unlikely to work because of corruption among bureaucrats at all levels of government.

Cold friendship

by Tatiana Kryzhanovskaya on July 15, 2009

in International, Odds & Ends, Politics as Usual

It has been almost 20 years since the end of the Cold War yet the agenda of the U.S.-Russia summit remains unchanged. In the middle of a global economic crisis, the two leaders discussed many important military matters, but neither broached the subject of the economy. Presidents Obama and Medvedev have signed no less than six different documents, none of which addressed economic cooperation and development. No trade agreements or investment initiatives were even discussed.

Unsurprisingly, U.S.-Russia trade relations are much worse than U.S. relations with other, less developed countries. For their next meeting, Presidents Obama and Medvedev should make time to consider worthy economic initiatives like reducing trade barriers and eliminating visas to encourage tourism in both countries. It’s time to change the tone of negotiations and turn our backs on our Cold War past.

Between the Headlines: “Russian Voting Tinged with Green”

by Fred Smith on April 20, 2009

in Energy, Environment, Global Warming, International

“Russian Voting Tinged with Green”

This Washington Post headline from earlier this month illustrates one of worrisome side-effects of authoritarian rule.  Political freedom is denied the citizenry but the pressures to allow some form of dissent remain.  Religious dissent often is treated more liberally – and the eco-theocratic values of today are the dominant religion of our secular society.  The risk the Russians face is that in their effort to escape Red tyranny they may rush into the hands of the Greens.  That would be tragic — Virginia Postrel noted long ago that she preferred the old Reds to the new Greens.  Both restricted economic and individual freedom but, at least, the Reds aimed at helping humanity.  That goal is rarely given much priority by green zealots.

On Stalin’s Endurance

by Ivan Osorio on January 2, 2009

in Culture, International, Odds & Ends, Personal Liberty, Zeitgeist

In a recent poll conducted in Russia on who is the “greatest” Russian ever, Joseph Stalin came in third (after Alexander Nevsky, who repelled Western invadesr in the 13th century, and reformist prime minister Pyotr Stolypin).

As disturbing as this result may be, it is, sadly, understandable. Russia has not gone through a process similar to de-nazification in postwar Germany. And many older Russians, having experienced the upheaval of the collapse of the Soviet Union, long for a time when their country was powerful and feared around the world — while comfortably ignoring the political repression and poverty of the time. Arseny Roginsky, a Russian historian and human rights advocate, at a recent conference on the history of Stalinism, posited another factor in Russia’s ambivalent attitude toward that period:

In the Soviet terror, it is very difficult to distinguish the executioners from the victims. For example, secretaries of regional committee in August 1937 all wrote death sentences by the bundle, but by November 1938 half of them had already been shot themselves.

In national, and particularly regional memory, the “executioners” – for example, the regional committee secretaries of 1937 – are not unambiguously evil: yes, they signed execution warrants, but they also organized the construction of kindergartens and hospitals, and went to workers’ cafeterias personally to test the food, while their subsequent fate is worthy of sympathy.

And one more thing: unlike the Nazis, who mainly killed “foreigners”: Poles, Russians, and German Jews (who were not quite their “own” people), we mainly killed our own people, and our consciousness refuses to accept this fact.

In remembering the terror, we are incapable of assigning the main roles, incapable of putting the pronouns “we” and “they” in their places. This inability to assign evil is the main thing that prevents us from being able to embrace the memory of the terror properly. This makes it far more traumatic. It is one of the main reasons why we push it to the edge of our historical memory.

There is no easy way out of this mindset, though there are at least some things that could be done to keep the situation from getting worse. Unfortunately, the problem of the “inability to assign evil” seems persistent. Roginsky notes:

In the new history textbooks, Stalinism is presented as an institutional phenomenon, even an achievement. But the terror is portrayed as a historically determined and unavoidable tool for solving state tasks. This concept does not rule out sympathy for the victims of history. But it makes it absolutely impossible to consider the criminal nature of the terror, and the perpetrator of this crime.

The intention is not to idealise Stalin. This is the natural side-effect of resolving a completely different task – that of confirming the idea of the indubitable correctness of state power. The government is higher than any moral or legal assessments. It is above the law, as it is guided by state interests that are higher than the interests of the person and society, higher than morality and law. The state is always right – at least as long as it can deal with its enemies. This idea runs through the new textbooks from beginning to end, and not only where repressions are discussed.

Attitudes like this cannot be changed overnight, but that’s no cause for despair — the collapse of the Soviet Union caught everyone by surprise.

See former CEI Brookes Fellow Neil Hrab, in the National Post, on the endurance of Stalin here.

Is Iceland the New “Cuba of the North”?

by Richard Morrison on October 8, 2008 · 1 comment

in Economy

Former CEI Warren Brookes Journalism Fellow Neil Hrab has an interesting take on Russia’s offer to help out Iceland with its own personal portion of the current global financial meltdown.

The West’s list of grievances against Russia is long…

But one can hear no peep of opposition today from any western country following Moscow’s offer to lend 4 billion euros to Iceland. Full Comment reported on that tiny nation’s current financial difficulties yesterday. Of all the countries affected by the crisis, Iceland may be hurting the worst.

Western elected officials, academics, professional diplomats and military high commands have spend the years since the USSR’s breakup laughing at the very idea that Russia might ever again be a great power. They might have to start stifling that laughter. In Iceland, at least a few people are openly wondering why it is that their old foe of the Warsaw Pact era (Iceland is a NATO member) is solvent enough to afford to advance them a loan in their hour of need — while no other western democracy was willing or able to do so. One Icelandic newspaper editor is even referring to Russia’s loan as a major “PR coup” for the Kremlin.

If the Russian government wants to drop some assistance on the Icelanders that’s fine with me, but I’d advise them that such gifts rarely arrive string-free. If Putin and his Kremlin lieutenants are confident enough to play hardball with nearby major powers, I doubt they’ll be subtle about dropping the other shoe on their newest NATO friends.

Russia Bears Down on European Energy

by Iain Murray on August 26, 2008 · 1 comment

in Energy, Environment

Incisive article in the Wall Street Journal today on how Russia is using energy supply as part of its strategic renaissance. An excerpt:

Despite Russia’s repeated use of energy as a political weapon in Eastern Europe, Western Europeans keep repeating the mantra that Russia has been a reliable supplier to “Europe.” They also choose to ignore that natural-gas giant Gazprom serves as the Kremlin’s leading foreign-policy arm. The company is primarily state-owned, and many members of Gazprom’s leadership are current or former government officials. The Kremlin’s present occupant, Dmitry Medvedev, until recently was the chairman of Gazprom. His replacement there is former Prime Minister Viktor Zubkov.

The Russian plan is rather simple: Punish countries that refuse to come under its influence by building new gas pipelines that bypass them, while rewarding countries and political leaders that cooperate with Russia with lucrative energy deals. Maintaining a monopoly over the transport of Caspian gas to Europe is essential for Moscow to ensure that all those countries that have submitted to a Russian “partnership” will acquiesce to the return of the former Soviet space to the Kremlin’s control.

It is vital to understand that Russia has designs on Eastern Europe and is using its energy supply to buy off Western Europe. The future looks bad if this is the case.

Yet there is a question here that needs answering first. Natural gas, while cheap to burn and an efficient form of energy, is not the only source of electricity Western Europe has. Germany and Britain both possess abundant coal. France has based its energy profile on nuclear. Both could provide Russia-free energy across Western Europe, yet both are reviled by environmentalists. Wind power and renewables, beloved by environmentalists, are simply not up to the job.

It therefore seems that when faced with a choice between empowering Russia and annoying environmentalists, Western Europeans are less afraid of the former.

Let’s also remember that the Kyoto Protocol is designed to see large amounts of Western European money transferred to Russia as European nations purchase credits for emissions reductions banked by Russia following the collapse of communism. European nations can’t reduce emissions on their own, for the aforementioned reasons, so they need to buy credit from elsewhere. This was the central reason behind Russia’s ratification of the Kyoto Protocol. To put it bluntly, the Kyoto Protocol is subsidizing Putin’s military retrenchment. If supposed oil wealth funding madrassas is a problem, then this certainly is as well.

This is, needless to say, a terrible situation to be in. When environmentalism gets its way, Putin gets his. If Putin’s energy weapon is to be neutralized, Western European governments need to face down the environmental lobbies in their countries, and allow digging for coal and new nuclear build. Political calculus, however, suggests otherwise. And Putin knows this.

Cross-posted from The Really Inconvenient Blog.