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UNCLAS SECTION 01 OF 03 PARIS 000022 
 
C O R R E C T E D  F O R ADDITION OF COUNTRY TAG (RS) 
 
SENSITIVE 
 
SENT FROM US MISSION TO OECD 
 
SIPDIS 
 
12958:  N/A 
TAGS: ECON ETRD EFIN PREL OECD XG XH RS
SUBJECT: Russia's Accession to the OECD 
 
PARIS 00000022  001.4 OF 003 
 
 
REFTEL: 08 State 99736 
 
¶1. (SBU) Summary:  The slow pace of Russia's accession to the 
Organization for Economic Cooperation and Development (OECD) 
reflects poor internal coordination by the Russian Government and 
the significant hurdles that Russia faces in demonstrating 
consistency with the OECD's open market principles.  Russia's 
continued non-membership in the WTO is also a major obstacle.  As a 
result, the timetable for OECD internal review is likely to be 
extended to late 2011 and early 2012.  Russia's interest in OECD 
membership provides unique leverage points for encouraging Russia to 
make domestic reforms and become a more responsible international 
actor.  Post recommends that the USG use the U.S-Russia Bilateral 
Presidential Commission as a vehicle to encourage Russia to stay on 
track with the accession process. Guidance is requested on questions 
of timing for Committee reviews in areas which would be impacted by 
eventual WTO membership.  End Summary 
 
RUSSIA LAGS BEHIND OTHER ACCESSION COUNTRIES 
--------------------------------------------- 
 
¶2. (SBU) In May 2007 the OECD Council of Member State Ambassadors 
invited Russia, Estonia, Slovenia, Israel and Chile to begin the 
accession process to become members of the OECD based on a "Roadmap" 
which laid out the criteria by which the OECD Council would 
eventually asses the countries' willingness and ability to assume 
the obligations of OECD membership.  The Russian Roadmap (as with 
the other accession countries) includes acceptance of the 
established body of OECD instruments, standards and benchmarks and a 
commitment to fundamental values which include pluralistic democracy 
based on the rule of law and the respect of human rights and 
adherence to open and transparent market economic principles.  In 
the case of Russia, the Road Map also stipulates that World Trade 
Organization (WTO) membership is considered essential for becoming 
an OECD member. (All current OECD members are also members of the 
WTO.) Chile completed the accession process in December 2009; 
Israel, Estonia and Slovenia are expected to complete the process by 
late spring 2010.  Russia, however, only submitted its Initial 
Memorandum - the first step in the process -- in June 2009. 
 
¶3. (SBU) In its Initial Memorandum (a 249 page document), Russia 
either took a reservation to, requested an unspecified transition 
period or refused to adopt certain OECD legal instruments in areas 
such as anti-bribery, liberalization of capital markets, 
co-production of films, control of trans-border movement of waste, 
environment and tourism, tax, fisheries, governance of 
multi-national enterprises, national treatment on access to local 
bank credit and shipbuilding.  (Russia's reservations are discussed 
in more detail in septel.)  OECD accession candidates (similarly to 
OECD members) are permitted to take reservations to most OECD 
instruments, but these reservations must be accepted by the 
respective OECD subject matter committees - and ultimately by the 
OECD Council.  The Roadmap notes that rejections and reservations to 
OECD instruments should be used as "sparingly as possible." 
Transition periods are permitted, but under the same terms - that 
they must not nullify the country's willingness and ability to 
assume the obligations of OECD membership. 
 
PART OF THE PROBLEM: LACK OF GOR COORDINATION 
--------------------------------------------- 
 
¶4. (SBU) Following the presentation of the Initial Memorandum, OECD 
committees commenced review of Russia's application, supplementing 
the information contained in the Initial Memorandum with extensive 
committee-specific questionnaires which Russian authorities were 
requested to complete.  To date only 5 out of 22 OECD bodies have 
done an initial review (see septel for committee-by-committee 
analysis) and Russian responses continue to be slow and incomplete - 
despite the high-level affirmations of political will. Russia's 
Ministry of Economic Development nominally acts as Russia's OECD 
accession coordinating authority along with the Ministry of Foreign 
Affairs.   However, OECD staff members have noticed that the line 
ministries - Finance, Health, Environment, etc., ignore requests for 
information from their lateral counterparts in Economic Development. 
 The OECD Secretariat is unsure whether Russia's lackluster 
engagement is a result of a lack of capacity or simply reflects 
disinterest among the ministries receiving the questionnaires. 
Based on experience with other accession countries, the OECD 
 
PARIS 00000022  002.4 OF 003 
 
 
Secretariat believes that a better mechanism would be a central 
coordinating authority in the Office of the Prime Minister or Deputy 
Prime Minister Shuvalov. 
 
WTO MEMBERSHIP - AND OTHER HURDLES 
--------------------------------------------- ---- 
 
¶5. (SBU) WTO Membership: The Accession Roadmap calls WTO membership 
essential to OECD accession.  Given the status of Russia's WTO 
accession negotiations, the OECD Secretariat is also becoming 
increasingly concerned about the ability of the OECD accession 
process to proceed beyond a certain point in certain committees. 
This view is shared by members, including the United States.  USDels 
to the OECD Trade Committee Working Party in December 2009 delivered 
the message that the U.S. was not in a position to provide 
substantive comments on a market openness review until Russia's WTO 
accession process advances.  The issue is likely to come up in other 
committees such as agriculture, insurance and private pensions, and 
possibly banking and finance. 
 
¶6.  (SBU) "Core Values:" While the OECD invitation to commence the 
accession process states that invited countries are expected to 
share OECD "core values," this can be reviewed at any time during 
the accession process (and Russia's respect for core values will be 
part of the final evaluation conducted by the OECD Council.) By way 
of example, the Russian invasion of Georgia in 2008 was seen by the 
USG as calling into question Russia's adherence to OECD norms and 
values.  The U.S. Delegation was instructed at the time (reftel) to 
request that OECD desist from high-level contacts with the GOR 
(while continuing with working-level contacts).  On Rule of Law 
issues, the Secretariat reports that Russia has been sending all the 
right signals with regard to adoption of the OECD's Anti-Bribery 
Convention, but that it is unlikely to make the March 2010 deadline 
for its preliminary review by the OECD's Working Group on Bribery. 
At a recent bilateral meeting in Paris (septel) between Russian 
First Vice Minister of Justice Aleksander Fedorov and Department of 
Commerce General Council Cameron Kerry, Fedorov indicated that the 
lead on anti-bribery efforts had recently been transferred to the 
Ministry of Justice -- it is unclear whether this will lead to an 
improvement in Russia's ability to meet deadlines. 
 
NEXT STEPS 
---------- 
 
¶7. (SBU) According to the OECD Legal Directorate, in February, the 
Secretary General intends to ask the OECD Council to take stock of 
the pace and quality of Russian accession.  The Secretary General is 
likely to pose three scenarios in an attempt to solicit reactions 
from member states:  1) to allow the process to continue at its 
current pace; 2) to begin consideration of suspension of the 
accession process if Russia does not start responding more quickly 
and thoroughly, allowing Russia to pick the process back up when it 
is ready; or, 3) to set a future deadline to withdraw from the 
process with Russia, if the situation does not change.  Scenarios 
two and three if posed by the Secretary General would likely be 
framed as "worst case" given the political difficulties that either 
would cause. 
 
COMMENT AND GUIDANCE REQUESTED 
------------------------------ 
 
¶8. (SBU) Moving the process forward:  Russian accession is very much 
in the U.S. interest, and the process itself provides important 
leverage points. (Among other things, Russia will only become 
eligible for membership in the International Energy Agency (IEA) - a 
USG priority - after it accedes to the OECD.) The recently 
established U.S.-Russia bilateral Presidential Commission could be a 
useful vehicle for the U.S. to encourage Russia to consider how it 
is handling the OECD accession process, and suggest that a 
higher-level coordination unit may be useful.  Russian responses on 
sectoral issues, such as health (which we understand has been 
lagging) can be encouraged as well by U.S. sectoral counterparts 
 
¶9.  (SBU) Active participation in OECD Committees:  As an accession 
candidate, Russia has carte blanche to attend most OECD Committee 
meetings.  However, Russian participation has been spotty (with the 
exception of participation in the Competition and Employment 
Committees) and is often a Paris Embassy observer, rather than a 
 
PARIS 00000022  003.4 OF 003 
 
 
technical expert.  We recommend USG encouragement of more active 
Russian participation in additional committees such as Environment, 
Financial Markets, Fiscal Affairs, Insurance and Private Pensions 
and Investment 
 
¶10. (SBU) Working in tandem with other OECD members: Other OECD 
member states can provide the same encouragement and support.  This 
issue could be raised with EU and APEC partners. 
 
REQUEST FOR GUIDANCE 
------------------- 
 
¶11. (SBU) The United States will need to respond to the Secretary 
General's proposals concerning the pace of accession.  In Post's 
view we should continue the accession process (option 1) and not 
support suspension.  At the same time, we note that Committee 
accession reviews normally result in lengthy and detailed reports. 
Preparation of these reviews consumes considerable Secretariat 
resources, including travel by staff to Russia, and extensive legal 
review before dissemination to member states.  In our view, given 
the demand on resources that these reviews take, it might be best to 
signal that the U.S. does not support advancement in some potential 
problem areas: such as trade, agriculture, insurance and private 
pensions, and possibly banking and finance, until WTO accession 
negotiations reach an advanced state where Russia's concessions are 
known. 
 
Monroe