Russia drops unilateral WTO bid for ex-Soviet pact

By Gleb Bryanski

MOSCOW (Reuters) - Russia threw its 16-year bid to join the World Trade Organisation into jeopardy on Tuesday when Prime Minister Vladimir Putin said Moscow would only join the trade body in partnership with two former Soviet republics.

Putin, announcing plans to form a customs union with Belarus and Kazakhstan, blamed tortuous WTO accession talks for blocking integration with its ex-Soviet neighbours, only days after the European Union said the Kremlin's wait could be over this year.

The surprise move by Russia, the largest country outside the 153-member WTO, implies talks will start afresh on the basis of a new agreement between the three former Soviet states, which intend to form the customs union from Jan. 1, 2010.

Russia has previously accused the United States and the European Union of hindering its WTO bid for political reasons.

Putin, speaking at a joint news conference with the Kazakh and Belarussian prime ministers, Karim Masimov and Sergei Sidorsky, said the three countries would notify the WTO that their separate negotiations will be stopped.

"It's a sign of frustration on the Russian side, but it's also recognition that WTO membership is no longer such a priority," said Roland Nash, chief strategist at investment bank Renaissance Capital.

Five days ago, EU Trade Commissioner Catherine Ashton said she had agreed with Russian Economy Minister Elvira Nabiullina that Moscow's WTO accession should be completed by year-end, saying the two sides had a "common understanding".

But the creation of a customs union with countries whose WTO negotiations are less advanced may force the EU to think again.