Illarionov Makes His Case On Kyoto

Andrei Illarionov, President Vladimir Putin's top economic adviser, has fast become Moscow's most consistent and vocal messenger on the Kyoto Protocol, rising above the cacophony of voices emanating from the Kremlin.

Europeans are accusing Russia of "playing poker" with the treaty to limit emissions. But Illarionov's message is clear: Kyoto contradicts Putin's stated goal of doubling gross domestic product by 2010.

Russia's ratification is crucial to the success of the treaty, which the European Union is championing but other key countries like the United States are boycotting.

Without Russia on board, an EU official said this week, it would be "suicide" for Europe to follow the protocol, which calls on signatory countries to limit greenhouse gas emissions.

But Illarionov, who says he speaks for Putin, claims Russia has no choice.

"It will slow down economic growth. Even a 1 percent slowdown in economic growth is a huge amount for us," he said earlier this month.

"The president's position is that the Kyoto Protocol cannot be ratified in its current form, because it is discriminatory, ineffective and not universal," he told reporters Tuesday night.

Illarionov argued that GDP growth and carbon dioxide emissions are fundamentally linked, and that Moscow's targeted economic expansion will soon put Russia above the greenhouse emission limits set by Kyoto.

"In those countries we analyzed, each percent of GDP growth is accompanied by an increase of carbon dioxide emissions by 2 percent," he said. "Starting in 2012, the need for carbon dioxide would exceed those limits set by the Kyoto Protocol, even by the most conservative scenario set by the Economic Development and Trade Ministry."

But a high-ranking official in the European Commission, who asked not to be named, firmly rejected Illarionov's calculations, calling his 1 percent GDP to 2 percent emissions formula "absolutely counterintuitive."

"That would mean the Russian economy is becoming less energy efficient. These figures contradict the experience of the European Union," the official said.

The Kyoto Protocol calls on signatory countries to cut greenhouse gas emissions to 5.2 percent less than 1990 levels by the year 2012, and for some of them, Russia included, to reduce emissions in years after.

Supporters have argued that Russia could earn money through the treaty: Kyoto provides an opportunity for under-polluting countries to sell their extra emissions quotas to over-producing states, meaning Russia -- which produces about a third less greenhouse gases than it did in 1990 -- may face a multibillion-dollar bonanza from such deals.

Illarionov disagreed.

"Russia can't earn anything from quota mechanisms," he said. "This is a myth. [Russia] will be in a position where it has to buy quotas to continue economic growth. This is well known to us and to our [negotiating] partners, who do not deny this fact."

But the EU official firmly contradicted Illarionov's account.

"We have all said many times that we are absolutely certain that Russia will benefit economically from the Kyoto Protocol," the official said. "The Russians know this, and they accept it, although they may deny it in public. They are playing poker."

Analysts are split over Illarionov's assertions.

Ksenia Yudayeva of the Carnegie Moscow Center said she finds some of Illarionov's economic arguments quite convincing.

"The Russian economy is growing quite fast," she said. "I would not exclude the possibility that by 2008, Russia would reach the point where the emissions are at 1990 levels."

But Igor Leshukov, director of the Institute of International Affairs in St. Petersburg, said Illarionov's position rests on extremely dubious economics.

"For me this is scientifically and academically groundless," he said. "If we are going to double GDP with the introduction of more efficient technologies, do we necessarily increase energy consumption? If we're going to recreate heavy Russian industry, that being a major source for carbon dioxide emissions, then yes, of course. But there's no market for this industry. And even if this industry reemerged, it would reemerge through more efficient technology.

"So when Mr. Illarionov, who is a fairly good economist, says things that don't make any economic sense, the question is: Why is he saying this?" Leshukov said. "And the answer is, he's acting politically."

Some observers say Russia may be holding out for better terms for entry into the World Trade Organization. Earlier this month, Putin slammed EU bureaucrats for blocking Russia's entry into the WTO over "unfounded and rigid demands" that Russia raise domestic gas and electricity prices as a precondition for accession.

During a visit to Tokyo this week, Prime Minister Mikhail Kasyanov was quoted as saying that Russia is preparing to ratify the Kyoto treaty.

"If you look at Kasyanov's statements, he is talking about Kyoto in one sentence and the WTO in the next," the EU official said. "And that raises suspicions on our side that there might be a linkage. But we've not received any official proposals to link such issues."

Illarionov flatly denied such speculation.

"I don't see any relation here [with the WTO]," he said on Tuesday. "European Union officials have also said they don't see it."

Illarionov went on to argue that the Kyoto Protocol is also biased against Russia in particular.

"The Kyoto Protocol discriminates against Russia," he said. "The United States is responsible for three times as much [greenhouse gas] as Russia, and China twice as much. Russia is not among the richest countries, but neither the United States nor China have any obligations whatsoever to reduce greenhouse gases."

The exclusion of these countries would lead to an excess of "about 2 billion tons" in carbon dioxide credits, Illarionov said, so Russia's spare quotas, even if they existed, wouldn't even enter the picture.

EU sources called Illarionov's figures unfounded.

"All these numbers are more or less informed estimations," the official said. "It's very difficult to say whether it will be 2 billion or 4 billion. This is not possible, I can't comment on these figures. I don't know where Mr. Illarionov has got them from. There will be big demand, but we cannot quantify it."

On the question of climate change itself, Illarionov said the science simply isn't sufficient. Since global temperatures have changed naturally over centuries, he argues, the very idea that greenhouse gases endanger the Earth's climate remains in doubt.

But Dr. Myles Allen of the atmospheric physics department at Oxford University said that while the science may be inconclusive, most specialists agree the risk is paramount.

"It is of course physically possible that we might be seeing changes as large as those we are seeing now through natural variability," he said. "But the chance of that is low. It all comes down to what sort of risk [Illarionov] is ready to take. To assume that changes of this magnitude and speed will be beneficial for Russia is a very risky strategy."

Illarionov has, however, outlined a way forward: other major polluters, such as the United States and China, must sign on to the treaty; or the terms of the treaty must be softened for Russia.

"Until the largest emitters join in the protocol and make it universal, its ratification would be an illusion of the Europeans that the problems are solved," he said. "One option is for the protocol not to require any reductions in emissions."

The EU official rejected the possibility of changing Russia's commitments. "This is no go," he said. "[Illarionov] is suggesting Russia undo a treaty it has signed. Russia has to think about its political credibility on the world stage."

But without such changes, the treaty is simply inoperable, Illarionov said.

"Someday, although I can't say specifically when, the EU and Japan will thank Russia for its position on the Kyoto Protocol," he said. "We should not make hasty decisions based on uncertain evidence."

Even so, officials from signatory countries have said they remain convinced Russia will ratify the Kyoto Protocol eventually.

"Our assumption is that Mr. Illarionov speaks for himself," the EU official concluded. "We know that he is a critic of the Kyoto Protocol. We are very confident that Russia will ratify."