G7 plus 1: the elephant in the dining room

Moscow -- Saint Petersburg has hosted a meeting of the world's leading industrialised democracies -- plus Russia -- with the G7 politely ignoring the elephant in the dining-room.

The G7 allowed Russia to join them in 1998 hoping it would be lured into consolidating democracy and freeing its economy. The unintended consequence of Russia proudly hosting this summer's G7+1 jamboree is to shine a spotlight on its repression, state monopolies, cronyism and protectionism -- not to mention its predatory economic expansionism towards Western Europe's energy companies.

The agenda is supposed to concentrate on energy, education and healthcare but the real focus is energy, meaning Russia's stranglehold on natural gas. The top unofficial item no-one can ignore is Russia's undeserved place at the table.

Giving autocratic President Vladimir Putin centre stage legitimises the illegitimate at the expense of the very values the G7 joined forces to protect. His former economic adviser Andrei Illarionov has said it will 'demonstrate their indifference to the fate of freedom and democracy in Russia'. This 'appeasement' undermines 'the survival of West's basic institutions, such as the market economy, liberal democracy and human rights,' he said recently.

To boost his democratic image, Putin held a 'Civil G8' forum last week and offered free flights and accommodation to friendly organisations. In a friendly Q&A session, among 700 delegates including Amnesty International, Greenpeace and Oxfam, he lamented that human rights were not on the G8 agenda and said he was happy to be among 'kindred spirits'.

An independent gathering of Russian civic groups called 'Another Russia' on 11-12 July, with such luminaries as Illarionov and chess champion Garry Kasparov, did not get a friendly chat from Putin because they have launched a petition to bring their plight to the attention of countries that do have free speech.

Economically, Russia has immense natural resources but its peformance reveals the incompetence of the kleptocracy's central planning. Moscow has the world's largest population of US dollar millionaires but that wealth is still dependent on close ties to the Kremlin rather than economic freedom: Russia as a whole is 91st in the world by Gross National Income per capita, well below Gabon, South Africa and Turkey.

Central control has actively discouraged growth throughout the rest of the economy. Abuse of power is nothing new in Russia: unaccountable bureaucrats reap riches with arbitrary regulation and confiscation, forcing businesses to succumb to a culture of bribery and shady dealings. Russia currently ranks 124th in Transparency International's corruption perception index -- a position it shares with Sierra Leone, still recovering from a hideous civil war.

Bribery in the court system undermines property rights and contracts, especially for foreigners. This discourages investments that the country so desperately needs. For Russians, the absence of the rule of law is the reason why more than 46% of Russian income is from the informal sector.

This litany of misrule puts Russia 122nd in the Heritage index of economic freedom, just behind Mozambique and Chad.

The Kremlin's influence on every day life extends further. Most radio, television and newspaper sources are either directly controlled by or under intense pressure from the regime. Putin recently welcomed the World Association of Newspapers (WAN) annual meeting by saying: "A progressive state requires a free press." But WAN president Gavin O'Reilly told him: "Your country and your administration have been severely criticised internationally for an alleged unwillingness to forego control and influence over the media." The Moscow Times estimates that the ruling elite controls roughly 90 per cent of news. Putin must have regretted allowing that particular spotlight to shine on Russia.

The assault on individual liberties makes Russia less like the G7 countries and more like oil-rich but dirt-poor Venezuela, where President Hugo Chavez is conducting a war of his own against civil society, prohibiting civil associations from getting foreign donations. After some efforts, Putin brought in a similar law in April this year, cutting foreign donations and setting up a bureaucracy with 5,000 staff to monitor the activity of civil organisations. While this was justified as an effort to stop outside influence on domestic politics, the new law looks more like an effort by the Kremlin to silence anyone who might question the status quo.

Some of us attending the Kremlin-sponsored 'Civil-G8 Forum' were talking with Russian groups trying to raise awareness. Shining a bigger spotlight on this crackdown was the 'Another Russia' meeting of civic groups this week, with speeches by Illarionov and chess champion Garry Kasparov - but not Putin.

When a government is free to write its own rules, history tells us it is also free to break them. Unless the G7 reverse their policy of appeasement and demand that Russia behave itself, the elephant will stay out of control.

It is in the interest of the West to help the Russian people to economic freedom and growth: only prosperous democracies make safe neighbours.

Alec van Gelder is a research fellow at International Policy Network, a development think-tank in London