Window on Eurasia: Could Water Replace Oil and Gas as Russia’s Main Export?

Paul Goble

            Staunton, December 29 – Many believe that once Russia runs out of oil and gas to export, it will have to modernize its economy and thus its political system. But if some in Russia’s development ministry have their way, such changes could be put off more or less indefinitely because soon Russia might then sell another raw material it has in abundance: water.

            Natural Resources Minister Sergey Donskoy said that the Russian Federation would be able to extract and export oil and gas at their current levels for “a maximum of ten years,” something that means, experts say, Russia can maintain Vladimir Putin’s favored “raw materials economic model” only for a few more years (svpressa.ru/economy/article/79757/).

            Last week, as Arina Raksina of “Novyye izvestiya” reports, Russia’s Ministry of Economic Development published a National Export Strategy for Russia through 2030 to address the question of what Russia might do if and when it can no longer export oil and gas at current levels (newizv.ru/economics/2013-12-26/194850-potoki-soznanija.html).

            This year, 71 percent of Russia’s exports consist of oil and gas, a historic high and up from “less than 50 percent” a decade ago. At the same time, the share of exports made up by machinery has fallen from 10 percent to five percent and 40 percent of these are now made up of military goods.

            Most of the ministry’s proposals call for a diversification of Russia’s exports by means of a diversification of its industrial production, but one calls for substituting another natural resource – fresh water – for the oil and gas which Russian experts say the country will run short of in the coming years.

           

            The ministry notes that the Russian Federation has ten percent of the world’s fresh water supplies, second only to Brazil.  Moscow could export such water – the idea has been floated before in the form of Siberian river reversal – without having to change its economic model or the political system based on it.

            Most independent experts, however, are deeply skeptical about this idea, Raksina notes.  Nikolay Mezhevich, a scholar at the Moscow Institute of Regional Economic Problems, says that “it is very premature to speak about the export of fresh water,” especially since “Russia at present does not have adequate technological possibilities for exporting water” to the places I the Middle East or Africa which need it most.

            To do so, he continues, would require that the price of water rise far beyond what many expect so that the means of exporting it could be profitable.

            Diverting Siberian river water to Central Asia is more immediately possible, he acknowledges, although he notes that concerns about the environmental impact on Russia itself appeared to have killed this idea in Gorbachev’s time.  Now, however, there may be new interest in such a possibility.

But Mezhevich remains pessimistic. “Unfortunately,” he says, “Russia does not now have a chance to reorient its exports away from fuels and in the near term it won’t acquire one.” Thus, talking about replacing the export of one kind of resources by another ultimately is “not serious.” But while he does not say it, what is interesting is that some in Moscow are doing just that.

And the reason they are doing so is obvious: the kind of political system that Vladimir Putin has erected is possible only if Russia remains a raw materials exporter.  If it became a more modern and diverse economy in order to sell a wider range of goods abroad, pressure to change the political system would grow to the point that current arrangements would be threatened.