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. Last Updated: 07/27/2016

A Liberal Interpretation of 'Normal'

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The blockade by demonstrators at the Group of Eight summit this month in Heiligendamm, Germany, apparently made an impression on President Vladimir Putin. Or perhaps it was the rising tensions between Moscow and Washington. Whatever the reason, Putin's speeches since have been peppered with statements best characterized as anti-globalist.

Putin has criticized plans for U.S. anti-ballistic missile system sites in Central Europe, openly expressed his displeasure with Washington's policies, and at the St. Petersburg International Economic Forum even questioned the usefulness of the global economy's sacred cow -- the World Trade Organization. The G8 summit did not help overcome the disagreements among the participants. On the contrary, it brought to the fore just how serious they were. Western European leaders -- and German Chancellor Angela Merkel in particular -- made little headway with the United States on the environmental, and Moscow left without a single concession on military issues. Russia's entry into the WTO, despite repeated assurances that agreement had been clinched, has clearly been postponed again.

Recent events have made liberal members of Putin's administration especially nervous because the longer negotiations drag on, the better the public understands the WTO's real nature. The more the public understands, the less enthusiastic it is to join. Now that Putin president has joined the ranks of the skeptics, the situation has become serious.

The problem is that Putin's attack of the WTO contradicts his anti-globalism stance. He accuses the WTO of protectionism, although its main thrust is to remove customs barriers and other measures to protect domestic markets. The point of contention stems from Moscow's efforts to hold onto its few remaining legal tools for influencing its economy to maintain at least partial sovereignty in fields like transportation or intellectual property. But WTO bureaucrats desperately oppose this. The WTO's problem is that it has long disregarded not only national sovereignty, but also common sense in its battle against protectionism.

Putin's dilemma is that he cannot ignore the problems with the WTO, while the liberal economic ideology he embraces prevents him from realizing their causes. The market remains the guiding principle for Russia's ruling elite, even if that same elite realizes it can't live by its laws. The utopian vision of a pure market economy is for today's bureaucrats what the dream of a communist society bringing happiness to millions was to Soviet-era bureaucrats.

It is unlikely that Putin really frightened either the WTO or Washington by talking about an independent regional trade organization with Russia at its center. The economic reintegration of the former Soviet republics would be a long, slow process at best, and creating such a trade organization would be even more problematic for Moscow than WTO membership. However, if Putin and his experts looked at the international situation more closely, they would realize that conditions are ripe for the creation of an alternative trade organization to the WTO -- not only among former Soviet republics, but including countries in Asia and Latin America. Not only Venezuela, run by Hugo Chavez' revolutionary administration and Bolivia under Evo Morales, but also many Asian nations are clearly dissatisfied with international trade conditions. The same goes for Africa.

Putin's criticism of the WTO Putin might well spearhead a gradual process of realignment among discontented nations in the developing world. Their hopes for a new world economic order in the 1980s came to nothing, but the rules of the game still need to be altered.

The potential for the formation of a "Global South" trade bloc is real and the idea is gradually gaining ground. This is happening not because of, but despite efforts by current leaders. However unhappy the Kremlin may be about developments in its relationship with the West, in the eyes of officials, Western Europe and the U.S. remain the only examples of "normal societies."

Boris Kagarlitsky is the director of the Institute of Globalization Studies.