Friday, July 5, 2019

Despite Kremlin Claims, Moscow hasn’t Moved Russia toward Soviet-Style Isolation, Shelin Says


Paul Goble

            Staunton, July 3 – If one listens to senior Russian officials, one would think that the Kremlin is working overtime to promote import substitution, restrict the importation of food from abroad, and keep Russians from travelling abroad, Sergey Shelin says; but statistics show that it hasn’t moved the country much in those directions at all.

            And that in turn means, the Rosbalt commentator continues, that “it hasn’t been able to drive the country into real isolation of the Soviet model – and that it is hardly likely to be able to do in the future.” Russia is too integrated in the international market, and Russians are too interested in travelling abroad for that (rosbalt.ru/blogs/2019/07/02/1789995.html).

            In 2018, Russia imported 249 billion US dollars’ worth of goods, “not radically less than in 2013, the last pre-Crimea and pre-sanctions year (341 billion US dollars),” and in the first quarter of this year, Shelin continues, it imported only one percent less than it did in the first three months of 2018.

            Very little of this has had to do with import substitution. Far more important has been the decline in the price of oil and Russia’s ability to purchase goods because of that. When oil prices rose from 2001 to 2008, Russian imports rose along with them from 51 billion US dollars to 289 billion US dollars.

            During these “’fat years,’” Russians became accustomed to buying foreign goods, something they have not lost to this day.

            By 2008, they were buying an average of 27 billion US dollars in imported goods. A year later, that figure fell to 14 billion. Between 2011 and early 2014, they purchased every month about 28 to 30 billion US dollars’ worth. Then, together with oil prices, it fell to 15 billion a month in early 2016 before rising to 22 billion a month in 2018.

            Throughout this period, the chief driver of changes in imports was the price of oil, not efforts by the powers that be to restrict imports. There is no sign that there has been or will be any return to the asceticism as far as foreign goods are concerned that was on display before the oil price boom of the early 2000s.

            That pattern is also on display with regard to the purchase of food from abroad. The embargo on food products from the EU, Canada and the US “has not been converted into food isolation.” Russians continue to import more than they export, and to do so in large amounts. The only difference is what they buy and where it comes from.

            “If product import substitution were seriously working,” Shelin continues, “then the size of imports of food from year to year would have fallen. But instead, they fell together with the exchange rate of the ruble” and then have stabilized when the ruble stabilized, a pattern that suggests government policies have had a minimal effect in this sector as well.

            And in a third sector, Russian tourism abroad, the same pattern has held. Their spending on foreign travel rose from 9.5 billion US dollars a year in 2001 to approximately 25 billion in 2008 as oil prices rent up. In 2013, they spent 60 billion, before falling by half and then recovering last year to 40 billion US dollars annually.

            Russians have become accustomed to travelling abroad despite all the government bans on countries they can visit, restrictions on government employees’ travel, and limits on flights.  Russians have acquired the habit of travelling to other countries, and there is little evidence to suggest that the regime has been able to limit it, despite official claims.

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