International organisations must be cautious about Russian membership

Over the last month, world leaders, reluctant to enter into direct confrontation with Russia by heeding to Zelensky’s plea to enforce a “no-fly” zone over Ukraine, did what they know best: introduce, and subsequently, intensify economic sanctions on Russia. And yet, the experience of Iraq, Cuba, North Korea and Venezuela clearly demonstrate that the threat sanctions, especially given their ample carve outs, is insufficient to stop Vladimir Putin’s senseless war.

In 2006, I penned an article accepted for publication in the Wall Street Journal, which argued that economic sanctions advanced by the United States on Syria were ineffective. However, this article never saw the light of day. Given that I was an official at the Organisation for Economic Co-operation and Development (OECD), which I joined to develop engagement with the Middle East, it was difficult to go public with this view.

A few years later, Bashar Al Assad launched his economic liberalisation project—known in Arabic as “infitah”—substantially similar to measures undertaken by the governments of Ben Ali in Tunisia and Hosni Mubarak in Egypt. In ensuing years, Assad saw himself elevated from pariah to a reformer poster child. Since then, all three have all been subject to condemnation, having used measures disguised as liberalisation to tunnel profits to themselves and cronies associated with them.

While leading work in the Middle East, I was also asked to assume responsibility for the review of Russia, which had applied to be a member of the OECD in 2007. As a native Russian speaker, I duly combed through hundreds of pages of relevant Russian laws, before being dispatched to Moscow for discussions to explore whether Russia’s corporate governance framework was up to the OECD standards.

I had never understood the rationale of Angel Gurria, then the Secretary General of the OECD, for encouraging members of the Organisation to invite Russia to membership talks, along with six other countries whose economic and governance record was rather different. My trip to Russia only confirmed this, in terms of everything we were and were not told since our counterparts had used official translation to stall discussions.

Prior to that, I had only been to Russia once as a teenager when my father used a professional trip as an opportunity to bring me to visit Saint Petersburg from Odessa where we then lived. To this day, I remember our visit to McDonald’s as the highlight of that trip since I had never been to a restaurant, much less a foreign one serving ketchup-covered patties in cheerful paper boxes. Not much in the Soviet days was made to hit a jovial note.

And returning to Russia, more than 15 years after my first trip there, I felt as if visiting a foreign land, despite the fact that everyone around me was speaking my mother tongue. Not only that, but I also somehow felt that despite Russia’s incredible “Westernisation” in the intervening years, the Soviet mentality was alive and kicking. That was clear from the start when, checking in a hotel in Moscow, our passports received a note that informed us that hotel management is required to notify the police of our whereabouts.

The next day, our driver was stopped on the highway where a policeman informed him that if he wishes to see his driving license again, it will cost him. As I was about to protest, the director of my department who also came on the trip gave me a look that made me immediately grasp that he has no desire to spend the evening in detention in Moscow. Before our trip, he had been in contact with William Browder, previously the largest portfolio investor in Russia, who had once said something inopportune about the regime and saw not only his residency visa cancelled but also his companies confiscated from him overnight.

William shared the story with us before its gruesome consequences fully unravelled: before his lawyer, 40-year-old Sergei Magnitsky was viciously beaten by Russian police and died in prison from health complications a year later. And yet, we continued examining Russia’s corporate governance rules against the OECD standards, pursuing a dialogue with various entities of the Russian government, the only country that refused to work in the Organisation’s two official languages.

And while important progress was realised in 20 years of OECD’s work on corporate governance in Russia, looking at all that effort pushing for better rules in Russia’s boardrooms seems even more pointless now that it did then. MICEX, the Russian stock exchange, for which all those governance rules were intended has been largely closed since the  invasion of Ukraine, while Putin is proceeding to nationalise assets of foreign companies who dare to exit Russia in protest.

“All in the Family” was the name of an infamous World Bank report about the reign of Ben Ali in Tunisia. I had met its authors, who had worked painstakingly to demonstrate how under the veneer of economic liberalisation, Ben Ali managed to single-handedly tunnel assets from the Tunisian economy, as a majority shareholder from a company. Once the dust of this war settles, we might borrow the same title for a report on Russia.

And yet, for all its failures, the experience of Russia’s attempted accession to the OECD is instructive. Indeed, it should teach us something about that important word—“like-mindedness”—lurching in all descriptions of the OECD, a word that was overlooked when Russia applied to be its member. If the organisation was indeed, as the Economist referred to it—“a rich countries club”—Russia’s accession may have been justified. But it was not the case.

After being paused in 2014 when Russia annexed Crimea, Russia’s membership application was definitively terminated the day after Putin’s invasion of Ukraine. This experience offers instructive lessons for governance of all international organisations, including the UN Security Council, which—in a twist of ultimate irony—found itself presided by Russia as it began its invasion of Ukraine. As much as Russia may masquerade as a “like-minded” nation with a modern economy that has evolved from the Soviet control-and-command system, the latter is still very much engrained in Putin’s modus operandi.

Without changing that, the decision “to include or not to include?”, to paraphrase from Shakespeare, should have only one—by now evident—answer. Until proven to the contrary, Russia should be excluded from the international governance architecture, including from the upcoming G20 meetings. Letting the size of its economy dictate which international fora it may have a voice in is at this point clearly perilous for the stability of the world order.