Russia may be one step closer to joining the World Trade Organization after being recognized as a market economy by the European Union Wednesday. The breakthrough came during a Russia-EU summit in Moscow.
The Russia-EU summit came on the heels of the much-touted NATO-Russia summit in Rome and the Moscow summit between Presidents Bush and Vladimir Putin.
While the earlier meetings concentrated on issues relating to security and nuclear weapons, Wednesday's summit focused on trade and commerce.
Speaking to reporters at the end of the summit, EU Commission President Romano Prodi said Russia had made important economic changes in recent years and therefore deserved to be granted market economy status.
"This is both recognition and a reward for the many reforms Russia is undertaking in the recent years. The European Union is the first trading power to grant this recognition to Russia," he said.
The EU recognition of Russia as a free-market economy should greatly boost its chances of gaining acceptance into the World Trade Organization, an international body that promotes trade and economic development by reducing tariffs and other restrictions on trade. Russian President Putin has been pushing for a long time to be part of the World Trade Organization.
The market economy status will also help Russia gain access to key European markets. Europe is already one of Russia's main trading partners, and its exports to Europe are now expected to increase even more.
But the two sides disagreed sharply on one issue: the future of Kaliningrad, a Russian enclave on the Baltic Sea that borders on Lithuania and Poland. It is completely separate from the rest of Russia.
Russian officials are afraid that when Lithuania and Poland join the European Union, residents in Kaliningrad will be shut off from Russia.
Right now, residents there can freely travel through Poland and Lithuania without a visa. But once those two countries join the EU, possible as early as 2004, Kaliningrad residents will be forced to get visas to travel to Russia.
Russian President Vladimir Putin linked Russia's future relations with the European Union to the future of the Kaliningrad region. "Mr. Putin said this is a very hot (important) question for Russia since there are one-point-three million people living in the region, many of whom have relatives outside of Kaliningrad. Mr. Putin said the situation there is a question of human rights," he said.
But EU officials are reluctant to grant visa-free status to Kaliningrad. They fear it will become a route for illegal immigration into Europe as well as contraband goods and crime. Kaliningrad also has a large AIDS problem, which E-U officials fear may spread to neighboring areas.