OECD

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Club rules
Dec 13th 2007
From Economist.com


Organise, cooperate, develop—and watch out


RUSSIA longs to join the Paris-based Organisation for Economic Cooperation and Development (OECD), a club mainly comprised of old rich countries that is anxiously trying to expand and stay relevant as the global economy’s centre of gravity shifts south and east.

Earlier this month Poland dropped its objection to Russia, and the OECD agreed to start negotiations. Now the question is whether Russia will manage to raise its standards to the required levels of transparency and good government. If it fails to do so, will the OECD will turn a blind eye, or will the accession talks fizzle out?

Russia first applied to join in 1996, when it was a basket case. Now it is a huge, if not altogether healthy, economy, with GDP over a trillion dollars. That alone is no ticket to membership: China and India are not OECD members, though the organisation is establishing other ties with them.

Since the end of the Cold War, the OECD has been a club strictly for democracies, either rich or nearly so. Now talks have opened with four other countries—Chile, Estonia, Israel and Slovenia—that easily meet that definition, and will likely join pretty quickly. Russia is a different question altogether, both on the demanding technical details of the “roadmap” to meeting OECD standards and on the broader question of “like-mindedness”.

The issue is divisive. Russia’s backers—chiefly Germany and France—prize engagement over the finer points of OECD integrity. Other countries, including but not only Sweden, Britain and America, are more dubious.

Such sceptics note the effects of Russia’s behaviour in other multilateral organisations: it has crippled the Organisation for Security and Cooperation in Europe, turning a once-lively democracy-promotion organisation into a sterile talking shop. It has discredited the Council of Europe, which is meant to be the continent’s human rights guardian.

Russia throws its weight around in the European Bank for Reconstruction and Development (though even that body flinched when it turned out last week that its partner in a planned venture-capital fund was in fact a Kremlin-sponsored corporate raider). Optimism (or wishful thinking) brought Russia into the then G-7 in 1998. Few would argue in retrospect that this was a wise move.

If Russia joins the OECD while making only pretend reforms, the problem is severe: predatory state activity and other forms of lawless capitalism are certainly not confined to Russia. Once the OECD loses its bark and bite, the developed world will be without its best watchdog on issues of global importance, including money laundering, bribery, corporate governance and reform of bureaucracy.

Will it happen? The OECD operates on the basis of consensus, so all 30 members will need to be satisfied that Russia has truly changed. In theory, that’s a big safeguard. But political pressure, particularly when exercised through big countries, has a way of flattening even the rockiest mountains.

A common Kremlin tactic is to escalate discussion of practical issues to a higher level where political or commercial considerations trump everything else. When President Nicolas Sarkozy of France congratulated Vladimir Putin on his party’s supposed victory at the polls, he demolished the already feeble common EU position criticising the blatant shortcomings of Russia’s parliamentary election. That the French auto manufacturer Renault clinched a juicy deal in Russia later that week was doubtless pure coincidence.

The danger is that Russia’s membership negotiations become politicised too. Objective, practical questions of shortcomings, remedies and evidence may become agenda items to be horse-traded elsewhere. So OECD members will need to stay focussed and resolute when considering Russia’s application. Alas, these aren’t words that leap to mind concerning the West’s approach to the Kremlin so far.