US-Russia rift widening, despite pact

Though the Kremlin-dominated State Duma is expected to easily ratify the deal, critics are concerned that it will inflict more short-term pain than can be justified by hypothetical long-range gains.

"We could face a severe recession in several branches of industry, including autos, aircraft, and agriculture," says Olga Belenkaya, chief economist of Finam, a Moscow brokerage. "It could lead to a big jump in unemployment, and Russia's dependence on imports will grow."

A bigger worry is that the accord could be held hostage to what many experts perceive as a deepening slump in US-Russian relations.

"The image of Russia in the US today is an authoritarian state with nuclear weapons and an aggressive energy policy that acts in tough ways toward its neighbors," says Mr. Kremeniuk. "And that's mutual. In Russia, the US is widely regarded as an enemy in public opinion, TV news, and the Duma."

A September poll by the independent Public Opinion Foundation in Moscow found that 55 percent of Russians regard the US as a "hostile" power, while just 27 percent saw it as "friendly."

Yet another looming obstacle is the opposition of small post-Soviet states of Georgia and Moldova, who say they'll block Russian WTO ascension until Moscow starts treating them fairly. "Russia cannot become a WTO member without Georgia's approval," Georgia's minister for economic reform, Kakha Bendukidze, was quoted as saying Monday by the official ITAR-Tass agency.

"With Georgia's objections, the political logic seems stronger than economic concerns," says Nikolai Liventsev, a professor at the official Institute of International Relations, which trains Russian diplomats. "Georgia may delay the process for awhile, but it cannot derail it."

As part of the bargain ,the US agreed to lift sanctions imposed on Sukhoi, a leading maker of Russian warplanes, for allegedly selling restricted goods to Iran. Russian officials say they hope similar measures against Russia's state arms exporter, Rosoboronexport, will also be removed.

The trade deal was altogether a stunning triumph for Putin, say Russian experts, and one that adds much to his growing political leverage. Putin, like Bush, is slated to step down in 2008, and he needs to engineer a smooth transition for his hand-picked successor, as yet unnamed.

Putin's personal popularity ratings are soaring after seven years of roaring economic growth in Russia. Thanks to oil-fueled windfall trade surpluses, Russia this year paid off its Paris Club debt of $25 billion, and launched the once-ridiculed ruble as a convertible currency.

"Signing of the WTO deal will be taken by Russian leaders as more evidence that Putin's policies are succeeding and being accepted by the world," says Gennady Chuffrin, deputy director of the official Institute of World Economy and International Relations in Moscow.

"As Russia heads into election season next year, Putin will need to use every possible advantage to prove to the Russian public that his choices and his policies are incontestable," he says.

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