International

Moscow urged to seek E.U. membership

By Batuk Gathani

BRUSSELS MAY 31. Mikhail Gorbachev, the last President of the Soviet Union, has appealed to the Russian leadership to seek the European Union's "associate membership'' for the country.

This comes in the background of the E.U. bolstering Russia's bid for WTO membership. This week, the Russian President, Vladimir Putin, won a key concession from the European Commission with formal recognition of Russia as a "market economy". The E.U. is Russia's biggest trading partner and the move is regarded as a "reward" for the progress Russia has made in reforming its economy.

European officials agree that an "associate membership'' of the E.U. would be the "first step'' to Russia's possible full membership. Mr Gorbachev, who is currently touring the E.U., said the deal by Russia and NATO signed in Rome on Tuesday, could be matched by a similar "interim arrangement'' with the E.U. Associate membership would entitle Russian to take part in the E.U. mechanisms of discussions and decision-making.

Although Russian officials are delighted by the E.U.'s decision to grant market economy status to the country, the fact is that its implementation would be withheld until Moscow liberalises the energy sector. It is also required to close the large gap between prices for electricity on the domestic and international markets.

The United States is also debating whether to classify Russia as a market economy, even as both the countries are shedding "the economic and strategic baggage of the Cold War''.

The E.U. Trade Commissioner (Minister), Pascal Lamy, said, "After the next E.U. enlargement, more than half of Russia's trade in goods and services will be within the borders of the E.U. Russia enjoys a substantial trade surplus with the E.U., and we will continue to rely on Russia for a significant portion of our energy needs''.

Russia desperately needs huge amounts of foreign investment in its energy, industrial and manufacturing sectors for modernisation and developing a competitive edge. Investment is crucial if Russia is to diversify and create jobs. By joining WTO, Russia will reassure potential investors at home and abroad that it wants to play its full part in the global economy on the basis of stable and predictable frameworks. Even with Russia's lucrative energy sales, the country ranks 17th among the global exporters.

Russian officials have complained that European companies are still reluctant to invest in their country.

The Europeans feel that the investment risks are too high, the rule of law too weak and the so-called regulatory framework inadequate.

With the spectre of corruption and criminal gangs roaming menacingly, there is no guarantee of secure energy supplies.

Mr. Putin's administration has first to address such short-comings.

It is also obvious that the Russian yearning for a better relationship with the U.S. and the E.U. has intensified.

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