/ world today news/ The lion’s share of Russian foreign exchange earnings, as before, does not work for Russia
For more than three decades of its existence, the Russian Federation has been deeply integrated into the world economy and has become very dependent on its foreign trade.
In the last decade alone (2012-2021), the total excess of exports over imports, according to the Bank of Russia, amounted to $1558.5 billion. For comparison, I note that in 2021 the GDP of the Russian Federation, calculated at the official exchange rate of the ruble amounts to 1,776 billion dollars.
After February 24, it became difficult to study trends in the sphere of foreign trade of the Russian Federation, because the Federal Customs Service of the Russian Federation and other Russian departments stopped publishing many statistics, including on foreign trade. But still something can be learned, since the customs offices of other countries with which Russia trades provide statistics on Russian exports and imports. And you can study the foreign trade of Russia with the help of “reflected light”.
A group of experts from The New York Times conducted a study of Russia’s foreign trade before and after February 24, 2022, presenting the results in the article “How Russia Pays for the War” published on October 30.
The purpose of the research is to show how serious the changes in Russia’s foreign trade are after February 24 and how these changes may affect the Russian Federation in the future. The figures characterizing foreign trade until February 24 are average values calculated for the period from January 2017 to December 2021. The main source of statistical data was the specialized information resource The Observatory of Economic Complexity (OEC).
Sanctions imposed by the US and its allies affected both exports and imports of the Russian Federation. However, the effectiveness of the sanctions leaves much to be desired. It turns out that the collective West is also very dependent on Russia, especially for energy imports. Therefore, sanctions harm not only Russia, but also those countries that have introduced and are introducing anti-Russian sanctions.
The article acknowledges: “But the data so far underscores how deeply intertwined Russia is with the global economy, allowing Moscow to receive significant sums of money even as the war enters its ninth month.” Western attempts to use sanctions and other measures to undermine the Russian economy have so far had limited effect.
The United States, as well as Canada, Australia and some other allies, initially did not depend much on Russian energy resources, so they more quickly and consistently imposed anti-Russian sanctions. But with Europe, the situation is different: “The European Union, which is heavily dependent on Russian energy and like many countries is already struggling with inflation, is moving more slowly. Europe stopped importing Russian coal in August. It will ban all imports of oil shipped by sea from Russia in December and all petroleum products in February [2023 г. – В.К. ] “.
The authors of the article draw attention to the fact that the West expected sharper counter-sanctions from Moscow, but it is acting slowly. Among the goods for which Moscow has imposed restrictions and bans are some types of agricultural and pharmaceutical products.
The authors acknowledge that many countries have become dependent on Russia not only for oil and natural gas, but also for a number of other goods: In addition to energy, Russia continues to be a leading exporter of other essential goods such as fertilizers and wheat to asbestos and nuclear reactors. International automakers continue to depend on palladium and rhodium metals from Russia for catalytic converters. French nuclear power plants depend on Russian uranium, and Belgium still plays a key role in the diamond trade with Russia.
By the way, I will note that at the end of last year, the share of the Russian Federation in the world GDP, calculated at the parity of the purchasing power of the ruble, according to IMF estimates, amounted to a modest amount of 3.07%. And the share of Russia in world exports in 2020, according to the World Bank, was only 1.78%, the share in world imports was 1.46%. However, there is a fairly wide range of goods for which Russia’s share in world exports is many times larger in the world economy and trade in general.
The authors hint that Moscow could eventually impose its own counter-sanctions on a fairly wide range of goods. The material contains a table of such goods, indicating the share of Russia in world exports (until February 24, in %): asbestos – 60; cast iron – 28; nuclear reactors – 26; iron-reducing products – 24; linseed – 20; unprocessed nickel (raw nickel) – 20; wheat – 20; nickel ingots – 19; iron semi-finished products (semi-finished iron) – 19; seed oils – 18; railway wagons – 17; platinum – 17; ammonia – 16; coal briquettes – 15; brown coal – 15; potassium fertilizers – 14; mixed mineral or chemical fertilizers – 13; carbon – 13; asphalt mixtures – 13 percent.
Following are quite a large number of goods, for which the share is 12 percent: sunflower seed; radioactive chemicals; barley; other (other than those listed above); crude oil; nitrogen fertilizers.
The next group of goods with a share of 11 percent: timber; aluminum wire; frozen fish; calcium phosphates; refined honey; sulphur. The list of Russian goods that are in great demand on the world market is long, I will not reproduce it in full.
Perhaps the most interesting part of the material published in The New York Times are the figures that reflect changes in the Russian Federation’s trade with other countries after February 24. These figures are monthly averages of trade, exports and imports. Until February 24, Russia’s main trading partners were China and Germany. The average monthly turnover of trade with them was 9.2 and 5.0 billion dollars. And what happened after the beginning of the SVO?
At the behest of Washington, a number of countries sharply reduced exports to Russia, cutting off supplies of goods vital to our country. A number of countries have begun to reduce imports from Russia. First of all, the physical volumes of imports. But due to the sharp rise in the prices of energy and some other goods, cost reduction often does not happen.
The survey indicates the countries that have achieved a total decrease in trade with the Russian Federation after February 24 (decrease in monthly trade volumes compared to the average values before February 24, %): USA – 35; Sweden – 76; Great Britain – 79; Germany – 3; South Korea – 17.
At the same time, a significant number of countries increased their trade turnover with Russia after February 24 (%): India – 310; Turkey – 198; Brazil – 106; China – 64. These are countries that are not included in the list of “enemy countries”. But there are also countries from the “unfriendly” group (%): Belgium – 81; Spain – 57; Japan – 13, etc.
The main reason for the increase in trade turnover is the sharp increase in the value of Russian exports, mainly the supply of oil and natural gas. Here is the growth of Russian exports after February 24 for individual countries (%): India – 430; Turkey – 213; China – 98; Netherlands – 74; Germany – 38.
Almost all countries of the “unfriendly” group reduced the supply of goods to Russia after February 24 (%): USA – 84; Great Britain – 71; Germany – 51; Netherlands – 52; Spain – 44; Japan – 42; South Korea – 43, etc. However, there are discounts from some countries that we consider “friendly”. Thus, India reduced supplies to Russia by 19%.
An increase in the supply of goods to Russia after February 24 was observed by two countries (%): China – 24; Turkey – 113.
In general, after February 24, the traditional gap between Russian exports and imports widened even more. Here I will refer to the data of the Bank of Russia. So, according to the results of the first quarter, exports of the Russian Federation amounted to 168.1 billion dollars, and imports – 88.8 billion, and according to the results of the second quarter, the figures were 162.2 billion and 71.9 billion dollars, respectively. For the third quarter, respectively, 159.6 billion and 84.6 billion dollars
The excess of exports over imports according to the results of the three quarters is almost double. The figures above show that the country’s net foreign exchange earnings (export earnings minus import costs) for the period from January to September of this year inclusive amounted to $238.0 billion. For comparison: this figure for the three quarters of m .g. year is equal to $107.9 billion. If the trend continues, the Russian foreign trade surplus may exceed the bar of $300 billion.
The authors of an American study on Russia’s foreign trade believe that the huge amounts of surplus foreign exchange from exports are a powerful source of financing for Russia’s military activities in Ukraine. But it’s not like that. The lion’s share of foreign exchange earnings do not work for Russia.
Part of the proceeds accumulate in the Russian financial and banking system and lie there, remaining under the sword of Damocles of new “freezes” that will eventually end in confiscation. Another (and, apparently, a large) part of the foreign exchange proceeds is outside Russia and is placed in the financial and banking systems of other countries, mostly “hostile”. Therefore, they are working against Russia.
Another confirmation of financial starvation in the country is the draft federal budget of the Russian Federation for 2023. It is very limited in spending on many items, even for some military expenses. And the entire budget was reduced to a deficit of 2% of the country’s GDP.
Returning to the study of The New York Times, I note that its authors expect the “currency holiday” that Russia is experiencing in 2022 to end next year. I agree with this prediction.
Translation: ES
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