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Putin calls for world economic relations shift

Russian President Vladimir Putin on Sunday called for a revolution in world economic relations, saying institutions created by the West were "archaic, undemocratic and inflexible."

Speaking to an audience of world leaders and top chief executives at a showcase business forum, Putin said the emergence of developing economies "demands the creation of a new architecture of international economic relations based on trust and mutually beneficial integration.

"Structures that were made taking account of a small number of active members look archaic, undemocratic and inflexible ... This is clearly visible in the example of the WTO," he said.

The Russian leader proposed the creation of "regional Eurasian free trade organizations" that would draw on the experience of the WTO.

Russia demonstrated its new economic clout during the two-day Saint Petersburg International Economic Forum by agreeing to investment deals worth US$13.5 billion, forum organizers said.

"To tell the truth, we were astonished" by the sum, which included US$7.5 billion in deals between private companies and US$6 billion in private-public partnerships, Russian Economic Development and Trade Minister German Gref said.

It seemed evidence that the world's business elite had accepted Putin's assurances during the forum that Russia was a safe bet, in spite of rising tensions between Moscow and the West.

It also reflected a wider surge in developing economies that Putin said had turned the old world order on its head.

"If 50 years ago, the G8 countries accounted for 60 percent of the world's GDP, the situation is now vice versa -- about 60 percent of world GDP is produced beyond their borders."

His attack on the 150-member WTO, however, reflected Moscow's frustrations in its struggle for recognition, not only as a rapidly growing economy, but as a major world power.

Russia has clashed repeatedly with the US and Europe in recent months, both over political issues such as the status of Kosovo and US missile defense plans, and on economic issues related to Russia's WTO accession.

Gref held talks on Sunday with EU, US and WTO negotiators trying to finish off Russia's more than decade-long struggle to join the world body. The minister said he still hoped Russia would join by the end of the year.

US Trade Representative Susan Schwab said this was possible "as a technical matter," but would depend on the pace of Russian reforms and commitments.

Putin's outburst was "an extension of the argument he has been making all along: We ought to be in the WTO and we're being kept out for political reasons," said John Litwack, chief economist of the World Bank's Russia office.

Pascal Lamy, director general of the WTO, said his organization was working "very hard" on the negotiations.

Putin stressed Russia's openness to foreign investment, saying that Russia had invested US$140 billion abroad last year, nearly equal to the US$150 billion of incoming investment.

He also charged that "today, the protectionism that the WTO is called on to combat is frequently coming from the economies that created the structure" -- an apparent reference to European wariness about Russian investment and what Moscow calls unfair US trade practices.
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