Russia calls for new economic world order

ST PETERSBURG, Russia (Reuters) - Russian President Vladimir Putin on Sunday called for practical steps to redraw the world economic order to reflect the growing role of fast-growing emerging nations.

He told an economic forum in St Petersburg many global trade and financial institutions tailored to meet the interests of a few key economies were ineffective and pointed to flexible regional groupings as an alternative.

Putin told the gathering of foreign officials and top executives 60 percent of the world’s GDP was produced outside the Group of Seven (G7) leading nations -- the United States, France, Germany, Britain, Japan, Italy and Canada.

“The interests of stable economic development demand the creation of a new architecture of international economic relations based on trust and mutually beneficial integration,” Putin said, days after attending a summit of the Group of Eight industrial nations, which includes Russia.

Putin, who has pledged to stop the Group of Eight from turning into a club of “fat cats”, said the principle of international investment was not applied fairly in practice.

Making an apparent reference to the rebuffs Russian companies have received when trying to invest in some Western markets, Putin said:

“We see the doctrine of free investment being replaced in the developed countries by completely different approaches.”

“It turns out that foreign investment is not always seen as positive and foreign participation is practically closed in sectors such as infrastructure, telecoms and energy.”

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Putin said Western protectionism was damaging the work of the World Trade Organisation (WTO), of which Russia wants to become a member.

“Today protectionism, which the WTO is meant to fight, often comes from developed economies,” he said, adding that new regional unions and agreements were already being formed.

Putin made clear he saw the Commonwealth of Independent States (CIS) -- a grouping of 12 ex-Soviet states -- as one of potential core structures of the new world.

Russia, resurging after years of post-Soviet decline, is building up its positions in ex-Soviet states, especially in the energy-rich countries of Central Asia.

Last month it signed deals with Turkmenistan, Uzbekistan and Kazakhstan to revive the Soviet-era united system of gas pipelines, which will help Russia strengthen its role of the monopoly supplier from the region.

But Kazakh President Nursultan Nazarbayev, who spoke after Putin, poured cold water on his optimism, saying the CIS had failed to become an effective instrument of cooperation.

“The inertia of separation (in the CIS) turned out to be stronger than integration efforts.”

Nazarbayev also said Kazakhstan’s energy policy would not be driven by political considerations. “We need different routes and it is natural that oil and gas will flow along routes that will turn out most beneficial for us,” he said.

Putin also rang a skeptical note about the current financial system based on few currencies and financial centers.

“There is only one possible response to this challenge -- the creation of several international reserve currencies and more financial centers,” he said.