Russia in the Spotlight

Even with more dramatic events playing out elsewhere in the world, Russia has drawn added attention this past week in connection with the G8 Summit and World Trade Organization (WTO) discussions.

The G8 summit was hosted by Russia this year. Russia had hoped it could finally win membership in the WTO following meetings with U.S. representatives before the summit started. The United States is the only nation yet to okay Russia's membership in the 149-nation trade group. The reported impediment at present is various barriers on U.S. farm products, though lukewarm-to-cool U.S.-Russian relations are also slowing progress.

Energy was one of the key topics discussed during the summit. This is one area where Russia is regaining some of its super power status. According to one report, Europe relies on Russia for 70% of the natural gas it uses. The significance of that was made apparent when delivery through pipelines was interrupted this winter as Russia and Ukraine squabbled over pricing.

Earlier this year, Russia signed agreements with China to build two gas pipelines from Siberia to China by 2011. China is becoming a major trading partner for Russia in energy and many other areas, including timber and pulp. Ilim Pulp, for example, shipped 906,000 tons of pulp and kraft liner to China in 2005, and it is increasing production capacity at its Siberian facilities, which export to China.

The potential drawback of Russia's economic dependence on natural resources is also apparent in that about 60% of state revenues come from oil and gas exports. Undoubtedly that dependence influences the country's political decision-making. It may also stimulate efforts to diversify.

Globalization is another matter, however. Various analysts contend that Russia's leaders are wary of the openness and internal changes associated with economic globalization. that may reduce the government's ability to maintain stability, protect national financial systems, and resist open debate and a more free flow of information.

Even so, Russia, the United States, and the other G8 members committed to "open, transparent, efficient and competitive markets for energy production, supply, use, transmission and transit services as a key to global energy security," among other principles which all will be challenged to achieve.