Russia-EU Trade Pact Boosts Kyoto Prospects

Russia signed a landmark trade agreement with the European Union on Friday in a deal that President Vladimir V. Putin said will encourage Russia to “speed up” consideration of the Kyoto global warming treaty.

Giving a boost to European hopes that Russia might bring the protocol to reduce greenhouse gases back from the brink of failure, Putin said agreement with Europe on the trade pact -- which could aid Russia’s chances of joining the World Trade Organization -- would prompt Moscow to move quickly toward a ratification vote on the Kyoto accord.

“This cannot but have a positive influence on our attitude toward the Kyoto Protocol,” Putin said. “We will speed up Russia’s moves toward ratifying the protocol.”

Putin stopped short of pledging a positive vote on ratification, cautioning that his government still had concerns about the “obligations” imposed by the treaty. He also said it was still “not 100% certain” parliament would endorse the Kyoto treaty.

“That there was a deal at all indicates very clearly that there was horse trading going on,” said a senior Western economic analyst based in Moscow, who requested anonymity. The analyst added that Putin’s positive statements about Kyoto “means they’re basking in a moment of glory. They’ll do whatever they want to do later.”

However, economist Mikhail G. Delyagin, chairman of the Institute for Globalization Problems in Moscow, said it was clear that Russia struck a deal, agreeing to move forward on Kyoto as the price of winning European trade concessions on natural gas pricing and other issues.

“What Putin said about the ratification of the Kyoto Protocol means that today’s summit was not Russia’s diplomatic victory at all -- in fact, Russia has paid for its accession to the WTO by giving up its positions on Kyoto,” Delyagin said.

Without Russia’s signature, there is little hope for adoption of the 1997 protocol, which aims to reduce greenhouse gases to 5.2% below 1990 levels by 2012. The U.S. decision not to participate has left Europe pushing Russia to sign on, despite Moscow’s misgivings that the treaty will not provide the economic benefits it had once hoped for.

In an interview with Echo of Moscow radio this week, Richard Wright, head of the European Union’s delegation in Moscow, said ratification of the protocol could mean substantial gas-saving infrastructure investment and thus could open the way for significant European investment in Russia. Some analysts believe that Putin’s nation could also sell surplus carbon emission “credits” -- earned because of a temporary decline in production in Russia since the treaty’s benchmark year in 1990 -- worth as much as $10 billion.

“We believe it’s in Russia’s ecological interests, we believe it’s in Russia’s economic interests, and, therefore, we very much hope that Russia ... will ratify the protocol,” Wright said.

Kyoto critics in the Kremlin fear that Russia will not earn a windfall from selling credits and that compliance with the treaty’s rules could reduce the nation’s economic growth.

In a report to Putin on the eve of the summit, the Russian Academy of Sciences concluded that compliance would cost the nation “tens of trillions of dollars” over the next century while providing minimal environmental benefits.

The report may have helped Putin strike a bargain with the EU on trade issues. Possibly in exchange for his positive words on Kyoto, he won a compromise on the EU’s previous demand that Russia fully liberalize its natural gas market, especially for industrial purchasers.

Instead, the trade deal allows Russia to increase gas prices somewhat while maintaining the monopoly of the state-owned gas company, Gazprom.

Friday’s agreement with Europe, Russia’s largest trading partner, moves the nation closer to joining the WTO, possibly as soon as the end of this year, although Moscow must conclude similar agreements with the U.S. and China before it can do so.

Alexei V. Kuznetsov in The Times’ Moscow Bureau contributed to this report.