it's four thirty pm in moscow these iraqi headlines pakistan's a bloc of vital nato supply or drop again a stand in response to a fatal helicopter strike at a border checkpoint the alliance attack killed up to twenty eight pakistani soldiers injured more than a dozen as there and threatens to further strain relations between. chaos in cairo fresh clashes flare up in tahrir square is tens of thousands keep up protests against egypt's military rulers demonstrators are far from satisfied with

the newly appointed prime minister and even started forming their own salvation government. now so less than two hours away from launching its biggest most expensive rover mission to mars the probe is in a hands with a russian designed water detector that could be crucial to finding traces of life on the red planet if there ever were and. being part of the world trade organization is seen as essential to keeping the global economic wheels turning but there are creeks and leaks on the money now takes a look at. hello and welcome to on the money with the business of russia is business i'm peter all

about today we're talking about russia in the global economic context. discuss this i'm joined by years of use of all he's the chief economist at deutsche bank also in the studio with me is nick poole he's archy's business editor and enter told me look off he is head to head of asset management at gazprom bank but first and then let's have a look at the impact of the w t o increase for russia's economy. eighteen here is that when 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 out. and asian into mental sectors likely to get the most out of the w t o accession well agricultural and arctic industries are predicted to lose ground its korean companies production will do markham paktika so far this secretaries have been able to survive due to protective measures taken by

the russian government as we all know the whole point of the world trade organization is to reduce that is to level the playing field throughout the world so you've got an apparent contradiction on the one hand the long term future of the russian industry has been secured by this clever application of persistence times i saw on the other hand entreating to the utilities taking them for some steps. so clearly an apparent purpose but the w t o membership does not mean that companies will instantly have to play with a good ization sewell's the entrance implies a transition period that would allow companies to smoothly just for the w t o provisions opening up means industries will have to be screws competition from international companies and a very will to succeed a-w. to overt over the new creative markets and for in ohio a more competitive environment could contribute to the government's plan to modernize and their versified the economy in addition to that russian business will operate within a new legal framework. if for instance dumping prices by the european commission

with a double to a conditional obsession with the russian businesses to fool us international means defending them globally on the trade disputes not only could russia stands to benefit from the entrance but w. to all members to could expand their expertise capacity is begin access to one of the largest markets in the world with russian consumer. products cheaper prices at the same time let's make it from russian producers who will find themselves and prepared as a high quality and gold price goes into russia in the long run how well the global competition will force rise to. the international level and become a knowledge based economy in the supply of our poor on the money team. but here are some go to you first it's been eight teen years ok i remember what was

it four years ago if i told management i don't want to talk about it anymore we could go to. war if it isn't worth it for the weight 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 contribute to the creation of a better investment climate is going to put russia into a different legal framework and whole global legal framework whereby a russian producers finally may be able to play on a level playing field with other companies globally with foreign players abroad and if there are restrictions against russian exports abroad why should. 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 rational 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 most who's going to hurt the most who's going to hurt the most probably easiest to say it's going to be the car makers negra culture particularly since agriculture has caught on competitive car makers and we want our industry are going to suffer from increased competition from a poor people doesn't that make better cars for us will have to make better car 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 can enter the dumps here and so the eighteen year time lag not have been such a bad thing i mean we all know the grocer in the ninety's was in a parlous state it's entering now in from a position of strength processing and it'll you find are you one of the things that i you know being

a resident of moscow living in russia for so long how much should we as consumers welcome the entry of russia into the w t o we're going to feel it in how fast will it take them to feel it. well we all hope that. cheaper for the consumers make it. better products and. cheaper prices that we're consumers are really need. that will help to lower inflation and seems like it's a great thing we'll. wait to see how exactly it plays out but again theoretically and everywhere else in the world it worked when countries joined w g o actually help consumers or helped increase the quality and put a cap on the price pressures so it's going to be good ok i'm sorry

you're talking like i say with you it would flush it out for consumers because moscow is an amazingly expensive city to live in ok what do some of the areas that you mean would you think is going to see the consumer benefit from a tree into deputy oh well i think. obviously in the services sector this is something that is very important for moscow which is probably big capital of russia services sector in terms of the element 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 front 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 and import duty which in turn will have a direct effect on the prices of goods that are sold in russia i need how well are businesses prepared for this the entry because i mean if the others are putting out there's a lot of rules and regulations right now 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 over eighteen years 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 come within the w t o. they complain perhaps especially the smaller ones that it favors the larger nations and the resolving trade disputes through the w t o and those sorts of things is quite a tricky process since you do get the permission i suppose to in for sanctions

reciprocal sanctions or if you're a smaller country and you're trying to put sanctions against you it doesn't really work as in the case of ecuador or bananas. in italy where do you think the industry that is going to benefit the most you think as we talk about the car automotive sectors are going to be it's going to be very very difficult for them but what sector is going to be what will probably be the biggest beneficiary from entry into the. well we know that there are lots of protective measures around the world against russian still producers russian chemical products exporters so probably those would benefit the most. you know all the. all the exporters who really harvest inefficient business in russia and can now rely on these 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 efficiency industries makes a competitive product internationally competitive product but actually i wouldn't be that skeptical about you know the losers because again unless you are you cannot prepare for the w.g. or completely you know lets you start competing on the you know on the same rule the same 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's you know the support and support now would be completely out of those two sectors ok russia. is going to be hit with russia in entering the debate you know 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 into russia would be conditioned on russia becoming w t o member and we've seen some of the big deals that have taken place recently possibly being time for sites lean 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 and increase and of the inflows of nearly twenty 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 will be will stabilize because currently one of the factors that will only makes things difficult and try and trims of this positive a third of the eye is the global financial situation and this is really the one

factor that makes it a bit more questionable initially when you know that brings 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. in the world economy i have to prove yourselves very difficult to judge exactly how that will have an impact until the. terrible financial storm that sort of circulation the world cup abates goes away and then we'll see the let impact it should go to russia's economic growth quite considerably in the end i think in the short term but it's not about the growth and we come back after a short break we'll continue our discussion on russia in the global economy stay with r.t. . magine

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well. it's technology innovation all the list of elements from around russia we've got the future covered. welcome back to on the money i'm here over all right we're going to continue with discussion on russia in the global economy yourself 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 estimate 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. acceleration of probably one percentage point or more in terms of g.d.p. growth i think it's not even so much the quantity of quoth but the quality of

growth 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. it's our talking about whether it's run for some three percent five percent it's the quality of growth and i tell you i'm going to go to very interesting comment here because there's always been criticism of russia's economic policy that it doesn't diversify away from energy anough energy exports do you think the job yukio is actually an impetus an outside into tears that will actually push forward that agenda of diversifying away from energy. well as was

rightly said. well i think. it's a great boost because if you have a hero a competitive business which can produce efficiently and compete globally then those businesses get an additional support through promoting their product to the international markets so the competitive industries competitive businesses will definitely benefit because of the access to international markets because they can produce not now 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 if we in the w t o just gives. you know a much better much more organized. way to to compete and competition is good in this specially for the north in our oil and gas related industry as you know nic if

anything is a competition that's one of the things i regret there isn't enough of in the marketplace here how do you think it is 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 there is also in the world and gas sector actually as well where the three of us won't have much of an effect and that is the biggest industry in russia. that will so needs to become more efficient. one hopes that certainly it will make these industries more efficient toggle told as always if they don't then the the end result is they'll cease to exist i mean that if you put a level playing field the best team wins. there are mechanisms that within the upper tier to maintain terrorists to maintain. sort of border controls in that regard so it's not quite as simple as saying what it's all going to be. on the same

pitch basis then said. and i think we have to make clear to our viewers here is that a judge just because rush will be interviewed here doesn't mean you don't snap your fingers and of us and everything and. it's a number of years for different industries and a lot more complicated so we have had 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 old way and then now out for rough as they were you to accession for some of the sectors you will have by law on transition periods precisely in order to attenuate to soften the impact of growing foreign competition for example for the car sector the reduction in import 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 inside the sectors like an insurance transition periods are even greater up

to nine years so this is precisely the issue to understand right after russia's w t l session it's not like everything changes in one go. and if it only one of the things that are also russia has been working on is a customs union and greater. trading efficiency with. this interview keogh wintery does this change that kind of dynamic at all can you do both at the same time. well. i don't see what. 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 award the trade barriers to alarm the most efficient producers in each of this actors. are for the products to the consumers so it's pretty much in the same spirit of lowering the trade barriers of granting access to the markets for the most efficient products so i although i

think there would be some legal issues and some difficulties. i think the spirit is the same in the direction is the same so i don't see any contradiction directionally in those due process is the w.g. a customer i want to finish a bit of a through and they want to talk about the general issues here right now it is what is the next big ticket issue for russia after w t o in trees is it made it onto 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 all we see the accession. the construction 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 russia making unilateral concessions to w t o members in

order for russia to get into the club only now russia gets the possibility of recycle acidly in terms 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 far greater possibilities this is yet another major benefit that i see from the quality of russia's trade policy ok nick now it's going to. turn to the beyond happy news again no rush is getting in the deputy over what's it worth if they're all in 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's something doesn't trust some of the countries in the euro zone they are in a terrible terrible state and it would be absolutely no reason to trust them whatsoever i mean the market doesn't trust them and russia shouldn't either. it

doesn't want to help out the eurozone because without your approaching well russia doesn't function terribly good some of its biggest customers so it needs to do whatever it can the question is is there anything you can do is really think anybody can do and i think i mean yes i probably got to spend the night but the answer seems to be no i think the moment as he has 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 that 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 be allowed to euro if it were allowed to my advice on specific assets financial assets in the european union would you think it's not 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 the of how exactly the post-crisis european monetary union going to be structured you know if it were there will be fiscal union in any way you know and how actually they are going to put the end to the crisis because we see that they can in these is there you know when we do we see actually accelerate the speed accelerating so you know to grew a greece took almost two years in spain in italy in 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 you know agreed upon proposition of what exactly. you're in of this investment would be used for and how exactly the crisis with the n.c.o. but the reason. it doesn't seem there is a plan because the interest two different i think 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 it would be country. union would want to jump in the crisis and and us the money going to tell me 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 you would you agree with not because that clearly because i mean why would you want to buy an asset for in a currency that would be worth anything having because. it makes any sense i think doing it through the. renders a more orderly i think and more efficient uses essentially the framework of the

i.m.f. and looting of conditionality in order to make sure that that kind of financial assistance is provided in a way that really elicits generates quatre response from the countries that we see that kind of help and i completely agree with and that's all the end the end it's not about financial systems 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 past well . you know eighty eight a quite a lot of people actually predicted this would happen i mean. it wasn't the only people sort of understanding they were for the euro was seriously flawed for exactly the reasons that have come about ok gentlemen we've run 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 state party.

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