Bonds News

Russia's Medvedev says no new protectionism

IZHEVSK, Russia, Nov 18 (Reuters) - Russia will meet all the commitments it gave with other G20 nations to fight the global economic crisis and will not resort to protectionist measures, President Dmitry Medvedev said on Tuesday.

Russia’s commitment to free trade has been questioned after it announced it will raise import duties on second-hand cars and intends to review trade agreements with several countries, including the United States.

Russia has been among the biggest losers from the turmoil on world markets. Its stock markets have lost more than 70 percent of their value and capital flight is estimated at over $50 billion since the crisis started.

Falling energy prices and the need to support a weakening rouble and inject liquidity into the financial system are draining the more than $500 billion in reserves accumulated during the years of economic growth.

Avoiding protectionist measures was one of the key pledges made by G20 heads, who met in Washington on Saturday to discuss a new global financial architecture.

“I expect the Russian government to take every step needed to carry out these obligations,” Medvedev told officials in the Urals city of Izhevsk.

“We have long ago made choices in favour of deep integration into the global economy. There is no alternative,” he said.

Medvedev and Prime Minister Vladimir Putin have said the crisis started in the West and have urged bankers to make sure that tens of billions in credits issued as part of the rescue package are not siphoned out of the country.

The crisis erupted with Russia and the West at odds over the August war in ex-Soviet Georgia, when Moscow crushed Tbilisi’s attempt to retake the pro-Moscow separatist region of South Ossetia.

Putin, who is viewed by analysts as the senior partner in the ruling double act with Medvedev, said in harsher remarks on Monday that Russia would only subscribe to certain global rescue plans.

“All this work will make sense only if it is equal, rather than a set of attempts to use our resources to solve problems which have emerged not through our fault,” he told Finance Minister Alexei Kudrin.

Last week Putin agreed at talks with Finnish Prime Minister Matti Vanhanen that Russia would postpone by up to 12 months the introduction of new export tariffs on timber.

The European Union deeply opposed the tariffs, saying they were a breach of free trade rules and could bankrupt timber processors in Scandinavia. (Writing by Oleg Shchedrov; Editing by Richard Balmforth)