Posted on 03/20/2022 7:26:22 AM PDT by dennisw
Russia’s Push for Self-Sufficient Economy Fails Before Western Sanctions Building Fortress Russia was supposed to protect the country from sanctions. It is still highly dependent on imports.
A Uniqlo store in Moscow this month. Sanctions have hit consumers who are used to getting imported products.
Russia spent years trying to wean itself off imported goods to fortify its economy against Western sanctions.
Now, the impact of sanctions imposed after Russia’s invasion of Ukraine has made it clear that Moscow’s efforts didn’t work. Russia’s continued dependence on imports means it is facing a painful economic readjustment.
Parts of Russia’s auto industry are shutting down for lack of foreign parts. The country’s flagship homemade passenger jet gets its engine and other key parts from overseas suppliers. Foreign pet food and medication have disappeared from store shelves.
“Import substitution has failed to achieve its goal of making Russia less vulnerable to sanctions like these,” said Janis Kluge, a specialist in the Russian economy at the German Institute for International and Security Affairs. “The Russian ambitions were unrealistic to start with because a small economy like Russia’s isn’t able to produce complex and high-tech goods by itself. It’s just simply not possible.” Replacing the foreign products could take years, he added.
Import substitution is supposed to replace foreign goods with homemade ones. Though most economists believe that building everything domestically is costly and inefficient, the Kremlin embraced the strategy to combat sanctions that followed its takeover of Crimea in 2014. It was part of a multiyear plan to protect the economy, dubbed by observers as Fortress Russia.
(Excerpt) Read more at wsj.com ...
FULL VERSION from Wall St Journal IS ARCHIVED HERE >>>>>>> https://archive.is/lYjdU
There is an interesting analogy in the efforts of the woke to end dependance on fossil fuel. A zealot thinks the impossible is achieved by mandate.
The real Russian problem isnt autarky or an attempt at such. Its simply a failure to convert its export earnings into productive investments in the country. Vast amounts of Russian money leaves the country and goes to London.
And this predates 2014, or Putin.
Good point!
S&P slashed Russia’s debt to junk and says there are already 30 corporate ‘fallen angels’ as a result of the war. Here are 5 charts that show the hit to ‘Russia Inc’s’ creditworthiness
https://www.msn.com/en-us/money/markets/s-p-slashed-russia-s-debt-to-junk-and-says-there-are-already-30-corporate-fallen-angels-as-a-result-of-the-war-here-are-5-charts-that-show-the-hit-to-russia-inc-s-creditworthiness/ss-AAVheC8?ocid=msedgntp
Sanctions have cut off Russia’s access to much of its foreign reserves, threatening to plunge the country into default as it could struggle to meet its foreign debt payments. The ruble has plummeted to record lows and the country’s stock market has been paralyzed for weeks.
S&P Global this week cut Russia’s credit rating to “CC”, which it defines as “default imminent with little prospect for recovery.” Four years ago, almost to the day, the agency awarded Russia an investment-grade “BBB-” rating.
It’s not just the government that will struggle to raise capital on the global market. Sanctions have thrown the future of many of its biggest companies into doubt. S&P Global said this week it had made 121 changes to the ratings of companies that cited the Russia-Ukraine war, rising energy prices, or both as reasons. Of that total, 77 were Russian.
“In terms of creditworthiness, the Russian-Ukraine conflict has had the largest impact on banks, with 28% of total related rating actions,” the agency said.
And investors are taking no chances. S&P Global Ratings noted the risk premium on European emerging-market corporate debt is now almost double its five-year average, compared to a roughly in-line reading at the start of the year. Formerly lucrative firms, such as banks, energy producers and mining companies, have been reduced to junk status. Commodity traders are deliberately shunning Russian shipments of key raw materials and countries are scrambling to wean themselves off Russian energy supplies.
At least they’re trying to preserve their sovereignty — whle we are growing ever more dependent on China, the EU, and foreign energy surces.
What a bull crap. Gas was 45 rubles per liter, now it is 43.
Rice, chicken same as three months ago.
“Gas was 45 rubles per liter, now it is 43”
And you can make an appointment to buy it a year from next Wednesday, at 3:00 p.m. Just bring the receipt you used to pay for it in advance.
And how was the rally in moscow to cheer Putin? Did you meet your pals there?
For about six years Great Britain had to be mainly economically self-sufficient starting in 1939.
It still needed to import fuel and food.
Putin’s Russia does not lack for food or fuel.
Nazi Germany was largely self-sufficient.
Russia can import medicines from India, just like the US does.
Who told you so? Why should it happen?
One of the things Russia imports is Ukrainian wheat. Irony you are such a b....
> Nazi Germany was largely self-sufficient.
Nazi Germany was badly hurting for oil IIRC.
I agree that it is the biggest problem. If they invested their export earnings to grow domestic industries, they would have been in much better shape. They could export a lot of products to the West, and make them depend on the products. It will give more leverage to fight sanction attempt and make it easier to create self-sufficient economy.
However, they chose to be another Saudi Arabia. It is a trap for resource-rich country. Temptation is high that they can make quick and easy bucks by extracting natural resources, and not bother with headache of creating new industries.
Yeah, namely the part that builds German cars for export.
German auto manufacturers use Russia to build cars for their domestic market like US auto manufacturers us Mexico.
Another example of US sanctions hitting European consumers much harder than Russians.
I see the subs have to work on Sunday, the pros have all taken the day off.
Globalist’s left Russia and their factories remian.
Russia has energy, land, fertilizer, water, minerals, and manufactured goods from China.
Seems Russia is set to rise from a Main Street foundation
Russia is breaking down the globalist economic system and it has plenty of countries go along with it, including China, India.
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