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 Agenda
2 Location
2 History
2 Soviet Union (1917-1991), Cold War
2 Economic, Political rise & influence of USSR
2 Political, Legal and Economic Risks
2 Opportunities in Russia
2 Impact of Russian Accession to WTO on Global
Economy
Galiningrad Oblast
 LOCATION & COUNTRY SIZE

2 Located in northern Eurasia

2 Largest country in the world with 9th of Earth͛s land

area

2 Boundaries shared with Arctic Ocean, Northern

Pacific Ocean & 14 countries

2 Spans over 9 time zones

 NATURAL RESOURCES & COASTLINE
2 Largest reserves of mineral & energy resources

2 Largest forest reserves

2 Approximately one quarter of world͛s fresh water

2 Much of 37,000 Km coastline is hemmed in by ice

for much of the year, complicating navigation

2 Unfavorably located in relation to major sea lanes

of the world
 CLIMATE, TOPOGRAPHY & POPULATION
2 The enormous size & the remoteness of many areas

from the sea

2 Climate either too cold or too dry.

2 Access to 3 oceans ʹ Arctic, Pacific & Atlantic

2 Terrain ʹ broad plain with low hills with forest cover

in Ural, Siberia, Tundra & southern border

2 Population 14.2 Cr in 2010, 9th in world

 HISTORY
2 Race is mainly Eastern Slavic tribes of Eurasia

2 Most Russian empire was built under Tsar Peter I in early 17th

century

2 Communist under Vladimir Lenin seized the power in 1917 by

overthrowing imperialism of tsar Nicolas

2 Russia͛s two grand social experiments

2 Socialist State ʹ (1917-1991)

2 Capitalist Democracy ʹ (1991-1999)

HISTORY
 SOVIET UNION 1917 - 1991
2 Union of Soviet Republics with a single-party political system lead
by the Communist Party

2 A planned economy with centralization of power,

industrialization & collectivization

2 Great emphasis on science and technology with specialisation in

Space, energy physics, medicines mathematics, military
technologies

2 Status of superpower along with United States post world war II

resulted into bipolar world
 SOVIET STATES
2 Russia 2 Uzbekistan
2 Georgia 2 Turkmenistan
2 Ukraine 2 Kyrgyzstan
2 Moldova 2 Tajikistan
2 Belarus 2 Estonia
2 Armenia 2 Latvia
2 Azerbaijan 2 Lithuania
2 Kazakhstan
SOVIET INFLUENCE DURING 60͛S
 DISINTEGRATION OF USSR IN 1991
2 Crumbling of the Soviet Union's economic and political
structures in the decade of 90͛s

2 Corruption, bureaucracy, deteriorating law & order, inflation

2 Lower price of oil

2 Afghan war

2 Failure of patchwork attempt at reforms introduced via

Glasnost, Perestroika
RUSSIA & 14 INDEPENDENT REPUBLICS
SOVIET UNION AND RUSSIA
 POLITICAL RISKS

RUSSIAN INVASION
A)RISKS: OF GEORGIA
LEADING TO
1.POLITICAL RISKS WAR AND TENSION.
2.LEGAL RISKS
3.ECONOMIC RISKS 2Russian entry into
an war between
B)OPPORTUNITIES: Georgia and Ossetia.

2Suspended flow
through pipelines.

×
 POLITICAL RISKS

HIGH LEVEL OF BUREAUCRATIZATION AND

A)RISKS: CORRUPTION.

1.POLITICAL RISKS 2Ranked 154th in Corruption perception Index

2.LEGAL RISKS 2Overlapping/Confused levels of government
3.ECONOMIC RISKS 2Opaque non-cash transaction
2Poor Systems of accounting and auditing
B)OPPORTUNITIES: 2Weak Legal Enforcements.
2Furniture Retailer IKEA halted further expansion in
Russia.

×

 LEGAL RISKS

INTELLECTUAL PROPERTY THEFTS.

A)RISKS:
2Ranks 126th on Intellectual Property Rights in Global
1.POLITICAL RISKS Competiveness Report.
2.LEGAL RISKS 2Lost Revenues, Taxes,Duties and Investment
3.ECONOMIC RISKS 2Obstacle to WTO accession.
2Theft of Kodak͛s kodak.ru domain
B)OPPORTUNITIES: 2United Distiller Vintner͛s (UDV) trademark
infringement.

Î
 LEGAL RISKS

A)RISKS:
ARBITRARY RULE OF LAW.
1.POLITICAL RISKS
2.LEGAL RISKS
3.ECONOMIC RISKS 2High Influence of State-known as ͛Telephone
Justice͛ .
B)OPPORTUNITIES:
2Mikhail Khodorkovsky case

Î×
 ECONOMIC RISKS

A)RISKS:
MAJOR IMPORTER OF PRIMARY GOODS.
1.POLITICAL RISKS
2.LEGAL RISKS
3.ECONOMIC RISKS 2Agriculture contributes 4.7% to GDP.
B)OPPORTUNITIES:
2World͛s 5th largest agri-food importer.

ÎÎ
 ECONOMIC RISKS

A)RISKS:
HIGHLY UNFAVOURABLE ECONOMIC STRUCTURE.
1.POLITICAL RISKS
2.LEGAL RISKS 2Large dependence on Oil and Natural gas Industry.
3.ECONOMIC RISKS
2Non-commodity sectors like Agriculture lacked
B)OPPORTUNITIES: competitiveness.

Î

 ECONOMIC RISKS

A)RISKS: RISKS IN BANKING SECTOR ARE HIGH & INEFFECTIVE

MONETARY POLICY
1.POLITICAL RISKS
2.LEGAL RISKS 2Dominance of Central Bank Of Russia, Sberbank,
3.ECONOMIC RISKS VTB and VEB.
2Under Capitalized Private sector banks.
B)OPPORTUNITIES: 2Non-performing loan increased to 13% of total loan.
2CBR unable to control double digit inflation.
2CBR could not avert sharp depreciation of Rouble.

Î
Î
 OPPORTUNITIES

A)RISKS:
SCIENCE AND TECHNOLOGY.
1.POLITICAL RISKS
2.LEGAL RISKS 2Russian Academy Of Sciences.
3.ECONOMIC RISKS
2Saint Petersburg University.
B)OPPORTUNITIES:
2Moscow State University.

Î
 OPPORTUNITIES

A)RISKS: SPACE EXPLORATION AND DEFENSE EQUIPMENT.

1.POLITICAL RISKS 2First earth orbiting artificial satellite, Sputnik.

2.LEGAL RISKS 2Largest Satellite Launcher
3.ECONOMIC RISKS 2Only provider of Space tourism services.
22nd largest exporter of defense equipments.
B)OPPORTUNITIES: (Tu-,Mu-Series, MiG fighter aircrafts, Mi-series
helicopters AK-47)

Î
 OPPORTUNITIES

A)RISKS: ENERGY(OIL AND NATURAL GAS INDUSTRY).

1.POLITICAL RISKS Reserves:

2.LEGAL RISKS
3.ECONOMIC RISKS 2World's largest natural gas reserves.
28th largest oil reserves.
B)OPPORTUNITIES: 22nd largest coal reserves.

Î
 OPPORTUNITIES

ENERGY(OIL AND NATURAL GAS INDUSTRY).

A)RISKS:
Producing and Exporting:
1.POLITICAL RISKS
2.LEGAL RISKS 2World͛sleading natural gas exporter.
3.ECONOMIC RISKS 2World's 2nd largest oil exporter.
2World's 2nd leading natural gas producer.
B)OPPORTUNITIES: 2World's largest oil producer.
23rd largest electricity producer in the world.
25th largest renewable energy producer.

Î

 OPPORTUNITIES

A)RISKS:
ENERGY(CIVILIAN NUCLEAR POWER).
1.POLITICAL RISKS
2.LEGAL RISKS
3.ECONOMIC RISKS 2first country to develop civilian nuclear power and
to construct the world's first nuclear power plant.
B)OPPORTUNITIES:
24th largest nuclear energy producer.

 OPPORTUNITIES

A)RISKS: MILITARY.

1.POLITICAL RISKS 2largest stockpile of nuclear weapons.

2.LEGAL RISKS 22nd largest fleet of ballistic missile submarines.
3.ECONOMIC RISKS 2only country apart from the U.S. with a modern
strategic bomber force.
B)OPPORTUNITIES: 2Russia's tank force is the largest in the world, its
surface navy and air force are among the strongest.

×
 OPPORTUNITIES

A)RISKS:
SOFTWARE INDUSTRY.
1.POLITICAL RISKS
2.LEGAL RISKS
3.ECONOMIC RISKS 2Cost effectiveness.

B)OPPORTUNITIES: 2High technical excellence.

2Location.

Î
 OPPORTUNITIES

A)RISKS:

1.POLITICAL RISKS
2.LEGAL RISKS LARGE MARKETS.
3.ECONOMIC RISKS

B)OPPORTUNITIES: 14.2 crore population.

 RUSSIA͛S ACCESSION TO THE
WTO
2 Soviet Union not invited to become a
contracting-party of GATT in 1947.

2 Trade and economic policy of Soviet Union.

2 Soviet Foreign economic policy ʹ self sufficiency

2 Council for Mutual Economic Assistance

(COMECON).


 RUSSIA͛S ACCESSION TO THE
WTO
2 In 1993, Russia formally applied for accession

to GATT.

2 Its application was taken up by WTO in 1995.


 IMPETUS FOR JOINING THE WTO
2 Dismantle the Soviet economic system of central
planning
2 High poverty rate , poor health conditions,
Uneven Economic Growth and income
distribution.
2 2006 most trade outside former Soviet union.
14.3% exports and 15.4% imports with former
Soviet union


 IMPETUS FOR JOINING THE WTO

2 Eliminated two pillars:

ban on foreign investment

State monopoly on foreign trade

2 Another Legacy eliminated: Russian ruble was made

convertible into foreign currencies


 ISSUES IN THE ACCESSION TO WTO

2 Energy Pricing
2 Intellectual Property Rights Protection
2 Agriculture
2 Sanitary and Phytosanitary Regulations
2 Services
2 Civil Aircraft
2 Customs Regulations

 IMPLICATIONS OF RUSSIA͛S
ACCESSION TO THE WTO
2 Major Trade Powers- U.S, EU, Japan strongly supporting.
2 Export intensive sectors likely to gain
2 Highly protected domestic sectors are likely to lose
2 Russia͛s industrial output as a nation will expand as a result
of the greater openness to trade
2 Reduction in Tariffs:
Unemployment
Ruble Depreciation

 IMPLICATIONS OF RUSSIA͛S
ACCESSION TO THE WTO
2 Liberalization of barriers to FDI in services.
2 Improved resource allocation from reductions in Russian
tariffs
2 Enhanced antidumping and countervailing duty rights and
improved market access.
2 The World Bank has estimated that entry could increase
Russian GDP by as much as 3.3 % in the medium term and
11 percent in the long term.

 IMPLICATIONS OF RUSSIA͛S
ACCESSION TO THE WTO
2 Russians will have say in shaping the rules of trade.
2 A multilateral forum for Russia to settle trade disputes with
other WTO members.
2 For U.S. exporters and investors it will improve business
climate which has been unpredictable
2 U.S. import-sensitive industries may face increased
competition from Russian producers e.g Steel.
2 Russia expected to challenge positions of U.S and other
countries in WTO

×
 CURRENT DEVELOPMENTS
2 EU and Russia signed an agreement on sidelines of
an EU-Russia Summit in Dec 2010
2 As per EU commission President quoted that Russia
becoming member of WTO in 2011 is real
perspective now.
2 A U.S.-Russia bilateral deal is one of the last hurdles
to Russian membership in the WTO

Î
 c
c  
2 HBR ʹ The Globe article by Rawi Abdelal
2 http://www.government.ru/eng
2 http://www.russianembassy.org/
2 http://www.history.co.uk/encyclopedia/
2 http://www.realussr.com/
2 http://www.worldwariihistory.info/in/USSR.html
2 http://www.studyrussian.com/history.html
2 http://www.wto.org/
2 https://www.cia.gov/library/publications/the-world-factbook/
2 https://members.weforum.org/pdf/gcr/2008/rankings.pdf
2 Transparency International



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