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Russian Economy May Slow in ‘Worst Case’ WTO Entry Outcome

Nov. 16 (Bloomberg) -- Russia’s economy may slow after it joins the World Trade Organization, while the government hopes to use its membership to defend the interests of state-run OAO Gazprom, said Maxim Medvedkov, Russia’s chief WTO negotiator.

Under the “worst-case” scenario, entry may wipe 0.5 percentage point a year off economic growth, Medvedkov, told reporters today in Moscow. After acceding, Russia may challenge European Union moves to force Gazprom to give competitors access to its transport networks, he added.

“The third energy package violates bilateral agreements and aims to nationalize and expropriate investments of Russian companies in the energy sphere,” Medvedkov said, referring to legislation approved by the EU in 2009 to spur competition and investment in the industry. “It’s not clear if WTO entry will allow Russia to reexamine these agreements but we would like to of course.”

The EU rules, which affect Gazprom as it owns assets in the 27-member bloc, would separate companies’ control over energy infrastructure and supplies. Gas export monopoly Gazprom, which provides about a quarter of Europe’s gas, has been seeking to expand further in the region, its biggest market by revenue.

To comply with the EU legislation, Lithuania is splitting the ownership of gas utility Lietuvos Dujos AB’s gas sales and transmission divisions. The company is part-owned by Gazprom.

To contact the reporter on this story: Alena Chechel in Moscow at achechel@bloomberg.net

To contact the editor responsible for this story: Paul Abelsky at pabelsky@bloomberg.net

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