Putin says Russia's economy to suffer from WTO entry

* Putin says import duty cuts may raise unemployment

* Says WTO membership overall still positive for economy

* Official says no security risks from "Magnitsky list"

MOSCOW, Nov 21 (Reuters) - Russia's energy-based economy

will take a serious blow from membership of the WTO coupled with

a global slowdown, President Vladimir Putin warned on Wednesday,

singling out the most vulnerable sectors of the $1.9 trillion

economy.

Higher unemployment and budget revenue shortfalls were

likely to result from moves to cut some import duties to comply

with WTO rules, Putin said, making domestically produced goods

less attractive to cash-strapped consumers and businesses.

"We should understand that the initial period in WTO will

require a serious adjustment of our economy," Putin told his

Security Council convened to discuss risks posed to national

security by the World Trade Organization membership.

Russia's domestic animal farming, agricultural machinery,

medical equipment, automotive, pharmaceutical, textile and food

sectors were particularly at risk, he said.

"Because of the negative trends in the global economy, the

risks linked to Russia's WTO obligations have grown," he said.

Russia joined the global trade club in August after 18-year

negotiations. Putin said entry talks were helped by the global

economic crisis which made developed economies more willing to

make concessions in order to gain access to new markets.

The president said Russia's so-called mono-cities, where at

least 25 percent of the economically active population work at a

single enterprise, were particularly threatened by measures

resulting from the country's WTO membership.

About 15 percent of the 143 million population live in about

300 mono-cities, a heritage of the Soviet planned economy.

Such cities are potential hotbeds for social unrest and

during the 2008-09 economic crisis the government spent lavishly

and sometimes applied political pressure on owners trying to

keep the enterprises they were built around afloat.

However, overall WTO membership remained positive for the

country's economy, said Putin, who did not question any of

Russia's WTO obligations and added Russia should defend its

interests in the organisation.

Putin, whose health has recently been under close scrutiny

amid reduced appearances and cancelled foreign trips, stuttered

during his speech saying "Russia will always lag behind" instead

of "Russia will always defend its interests", mixing two similar

Russian words.

NORMAL RELATIONS NECESSARY

The Council Secretary Nikolai Patrushev also told reporters

on Wednesday a U.S. bill, known publicly as the "Magnitsky

list", was also discussed at the meeting but noted it would not

threaten Russia's national security.

The bill would require the names of people believed

involved in the death of Sergei Magnitsky, a lawyer for equity

fund Hermitage Capital who died in jail in 2009, are published,

their U.S. visa applications denied and assets frozen.

Patrushev said the U.S. needed normal trade relations with

Russia "for its own sake" while the bill was dictated by the

U.S. domestic political agenda. He warned that Russia had

"something to respond with" in case the bill was passed.

Government sources say Moscow is also getting ready to

contest European Union energy rules, known as the Third Energy

Package, which restrict Russian gas giant Gazprom's

control over its European pipeline assets.

The EU, Russia's largest trade partner, has criticised

Russia's plans to levy scrappage fees on imported vehicles and a

ban on European live animal imports. The dispute has affected

work on the Russia-EU framework agreement.

Most Popular in Business