The invitation last week for Russia to join the OECD underscores the urgency for industrialized countries to engage meaningfully with emerging economies, according its secretary general, Angel Gurria, just months after the grouping issued a damning report into Moscow’s alleged anti-free market practices.
In an interview yesterday with Emerging Markets, Gurria said that developed countries need to recognize that “unless you have the BRIC [Brazil, Russia, India and China] and developing economies engaged in platforms such as ours, things cannot happen in trade and economic co-operation.”
The invitation places the question of market reform firmly in Russia’s court, said Gurria who is in Kazan for the EBRD meeting: “I will be speaking to [Russian economy minister] Gref about how we organize this work. It all depends how fast the Russian government wants to move.” He cautioned that “there will be long political considerations in order for the accession to be successful”.
In a report last November, the OECD slammed the Russian government’s anti- free market practices in both energy and financial sectors. Gurria, a former Mexican finance minister, said that Russia’s invitation is indicative of the country’s desire to improve its market economy. “It’s going to be as substantial for Russia as it shows the desire of Russian authorities to improve their laws and regulations up to OECD levels. It may also be a signal to investors of Russia’s improved standards and means economic policies will be emboldened” he said.
The organisation’s olive branch to Russia comes eleven years after the country first requested membership. The OECD, which co-ordinates economic policies among industrialized countries, on May 16 invited Chile, Estonia, Israel, Russia and Slovenia to open discussions for membership of the organization and offered to step up “engagement” with a view to possible membership to Brazil, China and India.
Gurria explained that the invitation for these countries to join was in response to the changing global economic climate. “When the OECD was founded almost 50 years ago, it accounted for 75% of global wealth, now the figure is just 60% and rapid growth in the BRIC countries could reduce this to 50%”
Russia’s invitation comes amid a souring of relations between Russia and the EU and US over trade, energy supplies and human rights. Gurria argued that recent political tensions do not necessarily bode ill for long term economic cooperation. “We cannot depend on the mood of the day, it is in the best interest of OECD members and the organization for countries like Russia to join and this a decision member states have made,” he said.
Gurria argued that the Russia’s accession would help maintain the OECD’s relevance: “We are not just a think tank because we get our mandate from the political representatives of these 30 members. This is why the OECD is unique”.