Russia fails a leadership test

On Jan. 1, the day Russia assumed a one-year chairmanship of the world's top club of democracies, it also sharply reduced its natural gas in a Ukraine pipeline supplying Europe. The move confirms the obvious: Russia doesn't fit the membership profile of the "Group of Eight" (G-8) industrialized nations.

As the world has witnessed, Russia's been turning back the clock on democracy. "The country has stopped being free and democratic," said Andrei Illarionov, who resigned last week as President Vladimir Putin's outspoken chief economic adviser.

Neither does this Eurasian behemoth qualify for the G-8 as a global, market-driven financial powerhouse. And in the one area where it does have economic prowess - the energy sector, where it has the world's largest gas reserves and is a major oil supplier - it just misused its hydrocarbon muscle by bullying a turned ally, Ukraine, and perhaps attempting to influence elections there. So much for Russia's insistence that it will be a reliable energy exporter.

One lesson from Russia's hardball tactics is that memberships in international organizations must be earned, not handed out as political favors or inducements. That's what happened in 1998, when the G-7 invited Russia to join in order to support its fledgling democracy.

But that lesson comes too late in this case (though it may apply to Russia's bid to join the World Trade Organization). The Big Bear is in the G-8 now, though it doesn't participate in the key meetings of finance ministers and central bankers. Throwing it out would simply generate a Russian backlash against the West, obviating a potential learning - and reforming - opportunity for Moscow.

The best course now is for the rest of the G-8 (the US, Japan, Britain, Germany, Italy, France, and Canada) to urge Russia to calmly resolve this particular crisis. Indeed, after the cutback affected gas supplies in a slew of countries from France to Hungary, pressure from Washington and around Europe caused Russia to reverse course, and turn up the gas. But that leaves unresolved the dispute that caused the disruption: Moscow wants Kiev to overnight pay natural gas market rates (a nearly five-fold increase), while Kiev insists new prices be phased in.

More broadly, the G-8 must use Russia's chairmanship as a chance to encourage Moscow toward constructive global leadership among market-oriented, democratic countries. From sound bites, it seems like Mr. Putin has some of that in mind for the G-8 summit in St. Petersburg in July. He wants to make global energy security the priority, emphasizing diverse sources (an issue just driven home through the Ukraine cutback), technology, safety, and the environment.

But the reality is that Russia is diversity-averse, wanting to promote its own fossil fuel reserves. And by renationalizing almost a third of its private oil-and-gas sector, it's drifted from a market approach that would otherwise encourage essential technology investment and innovation.

The annual G-8 summits may generate a yawn in the West, but Russia places great significance on them as a route to restoring its respect and influence in the world. This gives the other G-8 members leverage. They should use it.

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