Russia has no place among free nations

July 14, 2006|By ED FEULNER

WASHINGTON -- Leaders of the world's freest countries will flock to an increasingly unfree nation beginning tomorrow. That's when the annual Group of Eight, or G-8, meeting draws the leaders of Britain, Italy, France, Germany, Canada, Japan and the United States to Russia.

The first seven have plenty in common, including a commitment to democracy, liberty and the rule of law. It's no surprise that in the post-World War II era, these countries have built the strongest economies in the world.

The odd man out of that gang is the host country, Russia.

It was invited to attend meetings of what was then the G-7 in the early 1990s. The idea was to prop up the flailing Boris N. Yeltsin by making Russia look like a member of the club, even though it didn't qualify based on income or economic growth. Eventually, though, this Russia photo-op turned into a full membership.

But the Russian economy falls woefully short of First World standards. Economic growth slowed to 5.9 percent for 2005, with high inflation. Recently, in fact, the economy has regressed.

Russia claims to support free markets and the rule of law, but under President Vladimir V. Putin, a former KGB official elected in 2000, it increasingly serves as a haven for corrupt government officials and uneven law enforcement.

Ask William F. Browder, the founder and CEO of Hermitage Capital Management, an American company that specializes in Russian equities; he works extensively in Russia. At least he used to, until about six months ago, when Moscow denied him a visa to return to the country.

Mr. Browder, who Newsweek says is the biggest foreign investor in Russia, recently told Newsweek International that dealing with the Russian government is "like trying to fight the shadows. You'll never know who your opponent is."

Mr. Browder notes that many Russian companies aren't merely linked to the Kremlin, they're partially owned by the government. That includes energy giant Gazprom, which is 51 percent state-owned.

That socialist approach breeds corruption. "In 2000, we discovered that the management of Gazprom had stolen 9.6 percent of the reserves for their own economic benefit," Mr. Browder told Newsweek. Still, it took eight months for Mr. Putin to fire Gazprom's CEO.

Because the government is so involved with the economy, businessmen such as Mr. Browder often find themselves dealing with the Russian secret police. That's a particular problem, Mr. Browder says, because "they are accountable to nobody; they don't ever justify their actions."

Businessmen aren't alone in struggling against the Russian government. Nonprofits are being targeted as well. With a recent law, the Kremlin gave itself the power to regulate some half a million nongovernmental organizations in Russia, including 148,000 public policy groups. In May, Mr. Putin signed executive orders that gave the Russian bureaucracy broad control of these NGOs.

The Heritage Foundation's Yevgeny Volk, a Moscow-based analyst subject to the new law, says the regulations spring from the Russian government's concern about the famed "color revolutions" in Georgia, Ukraine and Kyrgyzstan. Foreign NGOs supported those revolts, which replaced autocratic, Soviet-style rulers with democratically elected governments.

Mr. Putin is obviously concerned the same thing could happen to his government, so he's making it clear he won't allow foreigners to finance political activities in Russia. His government will hassle NGOs and tie them up in so much red tape that they won't be able to function effectively.

For example, NGOs now must explain how much they spend for office supplies. Mr. Putin wants to highlight that his government's sword is mightier than an NGO's box of pens.

The world's freest economies aren't doing the Russian people any favors by pretending that Mr. Putin's government belongs in the G-8.

It's time for the democratic leaders to drop the charade and insist that Russia prove it is dedicated to open markets and the rule of law. When it does, it can earn its place in the international community and make life better for its citizens.

Ed Feulner is president of the Heritage Foundation and co-author of the book "Getting America Right." His e-mail is ed.feulner@heritage.org.

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