In most places, a feminist punk rock band and the official body that governs international trade would not have much common ground, but this column is not about most places. It is about Russia.
Pussy Riot, meet the World Trade Organization.
Pussy Riot was on front pages all over the globe this summer after band members Nadezhda Tolokonnikova, Maria Alyokhina and Yekaterina Samutsevich were convicted on charges of “hooliganism.” At around the same time, the much-less-hyped business press was reporting Russia’s long-awaited entry into the WTO.
Russia’s entrance into the trade organization was a big win for recently returned President Vladimir Putin, who long has pushed to secure a bigger role for Russia in the global economy. WTO membership is expected to add about $162 billion to Russia’s economic output each year, according to the World Bank, largely by making it easier foreigners to invest in Russian companies.
As a result of Russia’s new status, the U.S. will likely be forced to repeal its remaining Cold War-era trade restrictions and to establish permanent, normal trade relations with Russia. WTO rules require countries that benefit from the organization to apply consistent trade rules to every member country.
Russia is the final major economy to be granted entry into the organization, following China, which entered last year. The WTO has now successfully united all of the world’s significant economic powers under a single set of trade standards. By bringing in additional, economically developing nations, the WTO has already done a great deal to raise living standards around the world. It has overcome protectionist backlash from industrial groups, labor unions and workers to promote freer trade in goods and, to a lesser extent, services. Developing and developed nations alike stand to benefit.
But if the foreign investors that the World Bank expects to flood Russia with new capital really exist, they are naive. As I have written before, Russia remains a place where trial outcomes depend on politics and money, not on facts. Because of that, anyone whose business operations require predictability and transparency – that is, anyone with business interests – has good reason to stay away.
The Pussy Riot convictions are just the most recent demonstration of Russian judicial caprice. According to the court verdict, the three band members committed a hate crime against the Russian Orthodox community by producing a video criticizing the close ties between Putin and the Russian Orthodox Church, along with the conservatism of both. In the course of making this video, band members entered an area of a church that was not open to the public. For this, they were given two-year prison sentences.
The convictions sent a clear, if familiar, message: Russian courts are not in the business of administering justice, and no one should expect to find it there. While on Russian soil, musicians, dissidents, domestic business leaders, ordinary citizens and foreign investors are all subject to the whims of the Kremlin.
Some investors, domestic and foreign, may be inclined to try to fight the system rather than forego opportunities for profit. Against a sovereign nation, however, even the largest multi-national stands little chance. As if to demonstrate that a bigger name, a foreign passport, and a better-funded bank account provide no immunity in Russia, Madonna was sued shortly after the Pussy Riot convictions for discussing her support for gay rights during a concert in St. Petersburg. Her statements supposedly violated a local law against promoting homosexuality to minors. In the same concert, Madonna expressed solidarity with the members of Pussy Riot.
Russia’s admission to the WTO probably means more companies and individuals around the world will risk running afoul of the country’s politicized courts. For now, even though Russia may be part of the global economic club, the business community would be wise not to get too cozy.
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