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Published: Saturday, 7/20/2002

U.S. legs lose to Russian steel

The legs of millions of American-born chickens languish in Russian ports, tangled in red tape. Meantime, shiploads of Russian steel glide into American ports, duty-free.

This is what will happen, come Aug. 1.

It looks as if Russia has won the chicken-and-steel trade war with the United States. So far, the United States has little to show for the bargains it has made with Russia, one of its “partners in the war on terror.”

Last week, U.S. trade officials said they will allow 200,000 more tons of Russian raw steel onto American markets this year. The European Union followed suit and raised its Russian import quotas. Russian steel producers soon will recoup much of the $500 million they would lose each year if the United States steel-maker protectionism still applied to them.

But Russia is not holding up its side of the deal. When the United States levied tariffs on all foreign-made steel, Russia retaliated by banning imports of U.S. chicken parts, a $640 million annual export that had become a dinnertime mainstay in poor Russian homes since the first Bush era. The ban has since been lifted. But starting Aug. 1, Russian health inspectors who say they are worried about bacteria and antibiotics detected in some samples of the fowl are putting in certification and inspection rules that all but outlaw chicken imports anyway.

So U.S. chicken farmers lose, and Russian steelworkers win, at least for now.

So why did the almighty United States choose to lose even a single, limited trade war to struggling Russia?

Politics.

Russia is important to the this nation as an ally against the war on terror, even though it is for propaganda rather than for practical purposes. The United States has been practically alone in its quest to topple the Iraqi regime, unsupported by anyone, save maybe by Israel and the United Kingdom.

The Bush administration appears ready to sacrifice the “Bush legs” (the nickname Russian wags have given the chicken parts) by lifting the steel quotas. America would like Russia to stand silently by while Western powers topple Saddam Hussein.

But the Iraqis are longstanding Russian trade partners. And Iraq owes Russia up to $9 billion. It's no surprise, then, with so much to lose, that Russia has not kept quiet on the subject of Middle Eastern warmongering. Russian Foreign Minister Igor Ivanov clearly states that Russia opposes any U.S. military action in Iraq.

“News of preparation of military action against Iraq worries us,” Mr. Ivanov told reporters after meeting British Defense Secretary Geoff Hoon in St. Petersburg last week. “Russia will oppose any unilateral military action undertaken against Iraq without the approval of the United Nations Security Council.”

Only days before, Russian President Vladimir Putin summoned 500 Russian ambassadors and envoys home to Moscow to mark the Foreign Ministry's 200th anniversary. He told them that U.S.-Russian relations and trade partnerships with European Union countries should be their top priorities.

Mr. Putin stuck to generalities about foreign policy. He left the unpleasant details to his foreign minister. So it looks as if the Bush administration can still secure Russia's diplomatic inaction.

Mr. Putin is clearly making sure he has enough “wiggle-room” to silence the Russian critics of U.S. anti-Iraqi policy for now. He knows the U.S. administration is working on a much juicier “carrot” to offer Russia in the coming months, its all-but-promised membership in the World Trade Organization.

Economically this membership would more than offset Russia's loss from Iraq's uncollected (and probably uncollectable) debts. As to the U.S. chicken legs, only a fool would let them stand in the road to WTO membership.

When the cock crows, however, there will be a truce in the chicken-steel war. I expect that sometime next year, about the time Russia joins the WTO and begins salivating over the prospect of $4 billion in additional annual state revenues.

There's little doubt that Mr. Putin will suddenly develop a taste for chicken, and personally see that restrictions are lifted in time for the United States to confirm its invitation to Russia to join in the WTO feast.



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