future. past the hour ahead in the capital the headlines for thousands of current voices are as they are spread around to stick to their demands for change despite the leadership promise of a better future. two sides of the crisis americans line up at the store for an all black friday bargain queues are also at record levels elsewhere in the shelters and in stations. a tale of riches to rags american

wants to cover them when looking for now the crane that ended up. being part of the world trade organization is seen as vital to keeping the global economic wheels turning but it's not all plain sailing on the money explains next. hello and welcome to on the money with the business of russia is business i'm peter labelle today we're talking about russia in a global economic context. discuss this i'm joined by years of

we suppose he's the chief economist at deutsche bank also in the studio with me is nick poole he's archy's business editor and we look he is head to head of asset management at gazprom bank but first gentlemen let's have a look at the impact of the w t o entry for russia's economy. eighteen here is a wing pros and cons and overcoming obstacles before russia has made it clear it will join the w t o the benefits range from boosting russia's expats potential to attracting more of. an ancient metal secretaries likely to get the most out of the w.t. no exception well agricultural and want to industries are predicted to lose ground its parent company its production actually to so far this sector has been able to survive to two protective measures taken by the russian government as well the whole point of the world trade organization is to reduce the sum but it's to level the playing field. so you've got an apparent contradiction on the one hand the long

term future of the russian industry has been secured by this placation distance times but on the other hand and treats of the taking those for some stars. so clearly a power outage but the w.g. on membership does not mean that companies will instantly have to play with a good is a chanst rules the entrance implies a transition period that would allow companies to smoothly just to the w.g. over visions opening up means industries will have to face peers competition from international companies and a very will to succeed the w.t. or the new critic markets and for a new home and more competitive environment could contribute to the government's plan to modernize and diversify the economy in addition to that russian business will operate within a new legal framework. if queues for instance dumping prices by the european commission where did i go to a commission on. the roster and businesses to international

means of defending them globally on the trade instance not only could russia stands to benefit from the entrance but other w two could expand their expertise capacity and begin access to one of the largest markets in the world with russian consumers to chose their products here prices at the same time this week if i'm correct from previous owners who will find themselves unprepared as a pool of high quality and well priced goods into russia in the long run however global competition will. grade its industries to an international level and become a knowledge based economy in that support from up there on the minority. here are some go to you first it's been eight years ok i remember what was it four years ago if i told me that i don't want to talk about it anymore. is it worth it is it worth it for another wait i think this is the biggest thing for us in the

past twenty years in terms of the quality of economic policy i think. it is going to contribution to the creation of a better investment climate is going to put russia into a different legal framework into a global legal framework where by russian producers finally need be able to play on a level playing field with other companies globally with foreign peers abroad and if there are restrictions against russian exports abroad russia. finally and that means that the intensity of foreign protection of protectionism against russia i think will subside now that russia is likely to become a w t o member but most importantly i think the most important issue. is the legal framework russia playing by the rules being more predictable and liberalizing in a predictable way in the next five seven nine years. when industries that have

benefited the most who's going to hurt the most who's going to hurt the most probably the easiest to say it's going to be the carmakers negra culture particularly since agriculture has quite a competitive car makers and the water industry are going to suffer from increased competition from abroad give it doesn't that make better cars rush will have to make better cars it does make better cars eventually but it takes a long time to make a good car and so you have to wait until your industry is competitive perhaps before you enter the top tier and so the eighteen year time lag might not have been such a bad thing i mean. we all know that rust in the ninety's was you know parlous state it's entering now and from a position of strength to speak and italy if i can go to you one of the things that i you know being a resident of our of moscow living in russia for so long how much should we as consumers welcome the entry of russia into the don't eat year we're going to feel it in how fast will it take them to feel it. well we all hope that w.

cio will make it cheaper for the consumers make it. better products and. cheaper prices that what consumers are really need. will help to lower inflation. seems like it's a great thing we'll. we'll we'll wait to see how jerkily plays out but again theoretically and everywhere else in the world it worked when countries joined w t o it actually helped consumers a lot helped increase the quality. cap on. price pressures so it's going to be good ok i'm sorry to say with you it would push this out for consumers because moscow is an amazingly expensive city to live in ok do some of the areas that you mean would you think is good we will see the consumer

benefit from our entry into the b.t.o. well i think. obviously in the services sector this is something that is very important for moscow which is probably be capital of russia services sector in terms of the elements of banking a real estate etc this is going to be a significant issue and i think we will see greater penetration of insurance companies for an insurance companies foreign banks which is likely to boost competition and render the price of services lower. including in other regions i think this is probably even going to be more pronounced where there is more of an element of monopolism from from the russian side and then we tailors food retailers prices on food prices from food retailers i think are going to be lower the competition between retailers is likely to intensify as new entrants come in and then on top of this you're going to have the effect of agricultural goods being

likely. cheaper because of the reduction in import duty which in turn will have a direct effect on the prices of goods that are solved in russia i need how well are businesses prepared for this the entry because i mean if the owners are putting up as a lot of rules and regulations we know russia will have recourse to go to the world the world trade organization if it feels that it's not being treated well as a trading partner but our business is prepared well the very thing is to prepare so one should hope so. i think it's important to point out that it's not a silver bullet secure russia's economic ills the history of other countries within the w t o. they complain perhaps especially the smaller ones that favors the larger nations and the resulting trade disputes from the w t o and those sorts of things is quite a tricky process since you do get the permission i suppose to enforce sanctions reciprocal sanctions however small a country and you're trying to put sanctions against the e.u.

it doesn't really work as in the case of ecuador bananas and italy what do you think the what industry that is going to benefit the most do you think as we talked about the car automotive sectors are going to be very very difficult for them but what sector is going to be probably the biggest beneficiary from entry into the w t o. well we know that there are lots of protective measures around the world against russian still producers russian chemical products exporters so probably those two sectors would benefit the most. or all the. all the exporters who really how this inefficient business in russia can now rely on this w t o framework to make sure you know they have a fair access to the international market so they can sell more you know they can develop and basically it's a great boost to the fish and the industry makes

a competitive product internationally competitive product but actually i wouldn't be that skeptical about you know the losers because again the less you you cannot prepare for the w t o exert completely you know less you start competing on their you know on the same rule it is in rules with international producers you don't get better so you you need to start at some point and also you know we all know that in the united states and in western europe every culture producers get state support you know car producers get sometimes they support so it doesn't mean that you know the support and support now would be completely out for those two sectors ok russia . is just going to be hit with russia in entering a different area would encourage foreign investment i think so. we've seen some of the c.e.o.'s of large companies in the u.s. for example proclaiming that their entry and to russia would be conditioned on

russia b w t o member and we've seen some of the big deals that have taken place recently possibly being time for sightly towards that w t o session so we're starting i think to see some of these first signs of the. coming in to russia. and some of the examples out there include china has a witness increase and the inflows of nearly twenty three twenty five percent during the first stages of w t o accession and i think a similar effect we may expect in russia with one condition however that things lobel we will stabilize because currently one of the factors that will only makes things difficult and in terms of this positive of the eye is the global financial situation and this is really the one factor that makes the question of the. point you know something's up here i want to talk about the crisis later on the program

but the. intrinsic lowers the risk to invest in this country and this is something that investors will probably be give russia still another look still another look even though we have all this tsunami if we can the world economy i have to prove yourselves very difficult to judge exactly how that will have any impact until the . turtle financial storm and sort of circulation the world cup about abates goes away and then we'll see the letter impact it it should add to russia's economic growth quite considerably in the end i think in the short term that it's not about the growth when we come back after a short break we'll continue our discussion on russia in the global economy stay with our two.

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welcome back to on the money i'm peter all right we're going to continue our discussion on russia in the global economy you know so i want to ask you. to what how many percentage points will russia's economy grow because a number of estimates out there one two three five percent but your estimates well there are estimates and those suggest that over the course of the next five to ten years russia's g.d.p. growth will be getting an additional input. it's always of probably one percent that point or more in terms of g.d.p. growth i think it's not even so much the quantity of cloth but the quality of work and really the best thing out of this could be that russia's growth is more driven by other sectors of the economy not just oil the thing about w.t. accession. is that step by step in the longer term it will lead to a greater diversification of russia's economy by allowing more breathing space for

sectors outside of the oil and gas sector for such competitive sectors such as. steel chemicals agricultural goods as well so i think this is the most important aspect that has to be emphasized a lot of experts are talking about whether it's one percent three percent five percent it's the quality of growth going to tell you to go to your to very interesting comment here because there's always been criticism of russia's economic policy that it doesn't diversify away from energy enough energy exports do you think so but it was actually an impetus an outside impetus that will actually push forward that agenda of diversifying away from energy. well as was rightly said. well i think it's it's a great boost because if you have the russian competitive business which can produce efficiently and compete globally then those businesses get an additional

support through you know promoting their product to the traditional markets so the competitive industries competitive businesses will definitely benefit because of the access to international markets because they can produce more and actually. you know you can not if unless you want to build this efficient businesses you cannot avoid international competition it will be here somehow so the we are just gives. you know a much better much more organized. way to compete and competition is good and especially for the north you know it well and related industries you know if anything is competition that's one of the things i would regret if there isn't enough of in the marketplace here how do you think it is and some of the bigger companies are going to take it a little bit more seriously now that we'll have a medium sized players that can actually have access to outside markets and smaller players coming in here you think it'll kind of shake up the works because there's

a lot of complacency with some of the big guys out there is also in the oil and gas sector actually is well aware that if you don't have much from the threats and that is the biggest industry in russia and that will so needs to become more efficient. one hopes that certainly will make these industries more efficient time will tell as always if they don't then then what the the end result is they'll cease to exist i mean if you put a level playing field the best team wins. there are mechanisms that within that are but here to maintain terrorists to maintain. sort of border controls in that regard so it's not quite as simple as saying well it's all going to be. on the same pitch basis so. and i think we have to make clear to our viewers here is the term jerk just because rush will be in a debate here doesn't mean you don't snap your fingers and no obvious and everything and kicks into gear it's a number of years for different industries it's a lot more complicated to have eighteen years you know we have a number of more years exactly you know exactly so as was rightly. eighteen years

was a transition period in a way away and then now after a rough as w two accession for sounder sectors you will have quite a long transition period precisely in order to attenuate to soften the impact of growing foreign competition for example for the car sector or the reduction in your duties. from thirty percent to fifteen percent roughly will be done over the course of a seven year period and sold out will give additional time for russian producers to adjust in some of the sectors like an insurance sector transition periods are even greater to nine years so this is precisely the issue to understand right after russia's w.t. obsession it's not like everything changes in one go. if only one of the things that are also russia has been working on is a customs union and greater. trading efficiency with giru so does this interview

keogh intreat does this change that kind of dynamic at all can you do both at the same time. well. i don't see what the why there would be a problem because the custom duty as actually designed you know at least from what we. understand about it is designed to ward the trade barriers to allow the most efficient producers in each of these structures. for the products to the consumers so it's pretty much in the same spirit of lorien the trade barriers of granting access to the markets for the most efficient products so although i think there would be some a legal issues and some difficulties. i think the spirit is the same in that direction is the same so i don't see any contradiction directionally in those two processes new w.q.

accession any custom game they want to finish it would have to do and they want to talk about the general issues here right now and what is the mix big ticket issue for russia after deputy o. injuries is it meted out to the pantheon or is it next step after worked the next step there will be a lot of steps basically entry into the w t o allows russia to finally target but we see the accession. the construction of the creation of a free trade area with the european union and finally greater freedom at creating these free trade areas across the globe because previously until recently it was all about w.t. accession it was all about what you're making unilateral concessions to w t o members in order for russia to get into the car only now russia gets the possibility of the entrance of trade accession concessions and it can build alliances trade alliances across the globe already new zealand vietnam as young countries free trade area with european union are possibilities this is yet another

major benefit that i see for the quality of russia's trade policy ok nick now it's good. turn to the beyond happy news ok this is getting in the deputy of a what's it worth after all the world economy is in this huge slump right now russia's most important trading partner is the european union and the european union has the euro what's going on there i mean russia has been very hesitant to get involved in any kind of rescue of the euro doesn't trust the euro doesn't trust its most important trading partner well it certainly doesn't trust some of the countries in the euro zone they are in a terrible terrible state and they would be absolutely no reason to trust them whatsoever and the market doesn't trust them and russia shouldn't either. it does want to help out here as only because without europe functioning well russia doesn't function terribly good for its biggest customer so it needs to do whatever it can the question is is there anything you can do is there anything anybody can do and i think i mean you're as are probably going to spend the night but the

answer seems to be no i mean the moment as is absolutely no solution anybody's got seems to be able to work every time they put something forward the market then responds with the idea it's not enough and there's insufficient political will to push it forward anyway let me tell you if i can go to you a lot there's been some talk russia would be interested in helping to bail out the euro if it were allowed to my advice on specific assets financial assets in the european union what do you think is that a possibility or is russia still be very much in a defensive posture when it looks at the euro. well i guess it's all about you know the european members you know the members of e.u. you know making clear of what exactly the design of the new system would be because it's obvious that all the countries have their own view of how exactly the crisis you're being treated in going to be structured you know if it were whether

there will be fiscal union in any way you know and how actually they go into the end to the crisis because we see that the contagion is is there you know did we did we see actually accelerate the speed accelerating so you know to do it greece took almost two years in spain in italy. you know a couple of months you know to get their interest rates in the crisis territory now it was a question about france so basically i don't think russia or china or any other country would really answered saying you know substantial investment in the euro zone alas there is a cure here you know and agreed upon a proposition of what exactly the europeans of this investment would be used for and how exactly the crisis with the answer but the reason so far it doesn't seem there is a plan because their interests are too different and i think it will take some time

for the you know for the major countries to agree on exact plan of how the issues are going to be a result but before that i'm not sure anybody any huge sovereign wealth fund or any big country. in the union would want to jump in the crisis and invest the money and if i mean it looks like to me that russia will only go through the i.m.f. if that's what it's going to be any kind of rescue of the euro and you do you agree with that because that clearly because i mean why would you want to buy an asset to any currency that would be worth anything i mean it has. make any sense think that doing it through the. render is a more orderly i think and more efficient uses essentially the framework of the i.m.f. including i.m.f. conditionality in order to make sure that that kind of financial assistance is provided in a way that willie elicits generates quatre response from the countries that receive that kind of thought and i completely agree with anatoly in the end it's not about

financial assistance in the end it's all about what these countries do to adjust their fiscal paths their budgets that's what is really important it's whether russia give sell it or not in the end this is not going to solve the issue it's really about europe. who would have thought the european union would be under a conditionality of the i.m.f. because so many countries in the world have complained about that in the press well . you know eighty eight but quite a lot of people actually predicted this would happen that. it wasn't beyond people sort of they all thought that the euro is seriously flawed for exactly the reasons that have come about ok jim when we brought out of time and i want to thank all of my guests and thanks to our viewers for watching us here on on the money stay with our team.

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