The fruits of “import substitution”

At the end of February, Rosstat published data on foreign trade results for 2014 and the first months of 2015.
The results reveal a complete failure of all the hopes placed by the Russian authorities on their latest global economic course. The "turn of trade to the East" did not turn into a flourishing of multifaceted commodity exchange, but by desperate efforts to increase the supply of cheaper Russian oil to this region. And here are their fruits: Russia's share in the oil markets of China, Korea and Japan increased over the past year from 7.2% to 8.7%.

It is somehow inconvenient to call this a victory, because Arab deliveries have been and will be many times larger. At the same time, the revenue of Russian suppliers is falling along with the oil price, despite the growth in supplied volumes. In 2014, Russian trade with Korea was still able to grow, counting in dollars, by 8.5%, while with China it has already decreased by 0.5% (to $88 billion). And this is despite the fact that oil supplies to this country have increased by a third.

And in January 2015, Russian-Chinese trade collapsed in earnest - by 36% against January 2014. Putin's dreams of growing trade with China to $100 billion in 2015 and up to $200 billion in 2020 can be forgotten. The impoverished Russian consumer is not ready to buy Chinese consumer goods in the same quantities. And Siberian oil, the only commodity that the Chinese are seriously willing to take from Russia, requires investment in production. They are now being humiliatedly begged for by the highest Moscow officials, already directly offering their elder brother to become his economic colony. But Beijing is capricious and does not give money.

The vaunted Customs Union, now menacingly called the Eurasian Economic Union and presented as a counterbalance to the European Union, is being torn apart by squabbles, and its weight in Russian trade, already modest (about 7%), is also decreasing. In 2014, trade with Belarus decreased by almost 8%, and with Kazakhstan - by 10%.

None of the countries with which geopolitical hopes were placed on trade justified them. Let's say trade with Turkey fell by 5%. The ideology of exchanging more expensive foreign consumer goods for one's own cheaper oil dictates the same dynamics everywhere.

But with the main enemy, the United States, trade in 2014 just grew - to almost $30 billion (by 6%). It's just that in America, while it still agrees to sell something, they are hastily trying to acquire something that is not and cannot be either in China or, even more so, in Turkey. And the same logic forced to maintain the broadest ties ($70 billion) with the main European enemy, Germany. Although trade with the Germans has decreased, but not as sharply as with the allied Kazakhs and Belarusians.

However, the saddest thing is the self-imposed food embargo. So far, 30% of Russia's food needs have been covered by imports. The annual import of food fluctuated around $40 billion. And now, in January 2015 alone, food imports from far abroad fell by 42% (by $1.5 billion) compared to last year's January. And the production of domestic agricultural products increased in the same month by only 2.8%. And retail sales of food products in the Russian Federation in January 15th amounted to only 94.5% of January 14th. Here are the fruits of "import substitution".

Such is the property of the Kremlin's dreams: the economy does not obey them, but ordinary people are now obliged to eat less.