Russia WTO Bid, GCC: More than One Way to Skin Cat

Sometimes when encountering adversity, determined countries figure out another way to achieve the objective.

Russia has been trying to join the World Trade Organization for more than 15 years. Ascension requires achieving bilateral agreements with all members. One country--Georgia--effectively vetoed Russia's membership well before the hostilities last summer. Russia retreated,seemingly to give up on is pursuit, but today announced a new initiative. It will form a customs union with Belarus and Kazakhstan. Prime Minister Putin says the customs union will begin on 1 Jan 2010. The customs union itself then will seek WTO membership. The WTO rules allow for this, according to reports. Trade between the three is extensive. It could potentially be disruptive if one joined and the others did not.

Although many observers suspect Putin would want to formalize its "sphere of influence" among several former republics of the Soviet Union, today's announcement is surprising. As recently as late last week Russia's Economic Minister Nabiullina gave no sign of this when discussing Russia joining the WTO. Reports indicate that the WTO has not been formally notified of the potential joint bid.

Turning to the Gulf Cooperation Council, the recent decision to locate the central bank of the potential Gulf Monetary Union in Saudi Arabia annoyed to such a degree the UAE that refused to go ahead with plans to have a single currency. This might have been the end of it, but Saudi Arabia, Kuwait, Qatar and Bahrain appear to be going forward with their plans. Early signs suggest that the new currency will likely be pegged to the US dollar. All but Kuwait peg their currencies to the dollar. Kuwait adopted a basket approach a couple of years ago.