Takeaway: The countries to which “anti-war” Russians have fled in the greatest numbers since February 24, 2022, also figure prominently among the list of countries which have significantly increased their exports to Russia since its invasion of Ukraine. I’ve never seen this issue addressed, much less mentioned, by the “Russian diaspora” or the “Russian anti-war movement.” I wonder why. ||| TRR
Amid the departure of a number of foreign brands, Ladoga Group is the first in Petersburg to launch the production of Irish whiskey under its own brand.
The products will be produced at the plant in Petersburg from Irish grain and malt distillates aged in oak barrels for more than three years. The company is counting on the new product’s success due to Irish whiskey’s growing popularity in Russia and the withdrawal of several foreign brands from the market, Ladoga president Veniamin Grabar said.
“If bottling Scotch whiskey in Russia is already a familiar thing, then Carrygreen is one of the first whiskeys from Irish distillates bottled in Russia. It is now a rapidly growing product in its category,” he said.
Grabar claims that the volume of imports on the market is about 70%. And yet, Irish whiskey’s share of this market has been growing — from 16% in 2017 to 25% in 2021. Since 2017, the number of Irish whiskey brands on the Russian market has doubled, growing to fifty.
As the company told DP, the first batch of products under its own brand will total 63,000 bottles. The planned annual volume is 400,000 half- and .7-liter bottles. At the moment, the project is aimed at the domestic market: the company plans to take a 30% share of Russia’s Irish whiskey segment, and the entire Ladoga Group (including its own import distribution companies) aims to grab 7-8% of the domestic whiskey market. If its resources and feedstocks allow, the group does not rule out starting exports to the CIS countries.
According to Maxim Chernigovsky, head of the Club of Alcohol Market Professionals, whiskey in Russia is currently produced by about twenty factories.
“A significant part of the whiskey market in past years was taken up by imports from the UK and the USA. After the departure of a number of foreign brands, there was a shortage. Russian producers eliminated it by ramping up the production of this alcoholic beverage by 37% in 2022 compared to 2021,” he notes.
Thus, the shortage of whiskey in Russia has already been surmounted by domestic producers. Competition in this segment will definitely be intense, says Chernigovsky. “The segment is interesting: it is premium and high-margin. In fact, there is competition only among our own Russian homegrown factories. Foreign-made whiskey, delivered to Russia through parallel imports, show up on store shelves at a price at least 20% higher,” the expert argues. “Irish whiskey will be bottled in St. Petersburg for the first time, and Ladoga’s prospects can be called positive.“
According to estimates by the Club of Alcohol Market Professionals, 2,838,000 decaliters of whiskey were produced in Russia in 2021; in 2022, production increased by 37% to 3,891,000 decaliters. Among the largest players in this market are the Stavropol-based Alvis Group, the Stellar Group, Beluga’s Georgiyevsk distillery, as well as Tula’s 1911 Distillery. In addition, Bacardi bottles whiskey under the William Lawson’s brand at a Russian plant.
The Ladoga Group consists of several companies, including a production facility with an annual capacity of 4.5 million decaliters and a network of wholesale distributors. In 2021, Ladoga Distribution’s revenue increased by 18% to 12.9 billion rubles, and its net profits amounted to 121.9 million rubles, compared to 345.2 million the previous year.
Barrister gins have won three medals at the UK’s Gin Of The Year™, considered the most important gin competition in the world. Barrister Organic and Barrister Blue gins won gold medals, Barrister Dry was awarded silver.
Once a year, the world’s most successful gin producers gather in London to present their production to prestigious jury of the UK’s most authoritative gin buyers. Gin of the Year organizer Peak Publishing is “the world’s most influential beverage competition entity” with 1 billion bottles sold since 2006. Barrister family gins traditionally show high results in international competitions such as CWSA, The GIN Masters, Beverage Tasting Institute, World Gin Awards, Frankfurt International Trophy, International Wine & Spirit Competition, New Zealand Spirits Awards and others. Today Barrister gins are available in overseas markets in Europe, Australia, New Zealand, India, China and the Middle East.
International economic institutions, which recently doubted Russia’s economy could survive under Western sanctions, are now sounding more optimistic than even the Russian government. The International Monetary Fund (IMF), known for its gloomy forecasts, this week predicted Russia’s GDP will grow at 0.3% this year.
The typically conservative IMF was much more upbeat than usual in its most recent forecasts for the global economy — for which it anticipates 2.9% growth (up 0.2 percentage points from its October forecast) because of “unexpectedly stable” dynamics.
Russia’s forecast was upgraded even more than the global figures: in October, the IMF expected a 2.3% fall in Russian GDP in 2023, now it is talking about 0.3% growth. In 2024, they believe Russia’s GDP will increase by as much as 2.1%.
IMF economists explain this surge of optimism with a familiar narrative: the stability of Russian oil exports. “At the current oil price cap level, Russian crude oil export volumes are not expected to be significantly affected, with Russian trade continuing to be redirected from sanctioning to non-sanctioning countries,” the report stated.
The IMF’s latest figures are the most optimistic forecast around. They are well above the February consensus among Russian economists (decline of 1.5% in 2023) and the official projections of the Russian authorities: the Ministry of Economic Development currently predicts a fall of 0.8% in 2023, while the Central Bank expects a drop of up to 4%.
If Russia’s economy is to live up to the IMF’s expectations, output needs to increase by 0.4% every quarter from the fourth quarter of last year to the fourth quarter of 2023, according to a Telegram channel run by Bloomberg Economics’ Alexander Isakov. The economist thinks this is realistic. “The shocks of losing the European gas market, the departure of car manufacturers and others remain… while retail lending is accelerating to finance a recovery in consumer demand,” Isakov wrote. “Thus, the IMF’s figures seem persuasive.”
Russia’s economy has adapted quicker than expected after the shocks of 2022. Central Bank analysts see five underlying reasons for this:
The stability of the banking system. Thanks to ample capital reserves, banks have remained in reasonable shape — while lending was supported by regulatory easing;
Falling export volumes offset by rising prices;
Rapid redirection of exports toward Asia;
An effective reshaping of logistics chains by import-based businesses;
Government support, with an increase in budget spending.
Business activity in Russia continues to recover. According to an updated State Statistics Service (Rosstat) estimate and the Central Bank’s figures, in the third quarter the economy turned a corner (+0.86% compared with the previous quarter). Russia’s economy moves into 2023 with a higher level of activity than was expected in the spring, Central Bank analysts wrote last month. Demand has been underpinned by government spending.
However, it’s important to point out that the economic recovery is patchy.
Constraining factors include a growing preference for saving rather than spending among the general population, difficulties with maintaining imported equipment and staff shortages.
In November, almost half of Russian businesses (45%) reported staffing problems. The dwindling workforce and the significant wartime brain drain could result in fierce competition to hire the remaining talent. And that will likely push up salaries faster than productivity can match, bringing inflationary risks (The Bell recently spoke at length with Vladimir Gimpelson, director of the Center for Labor Studies at the Higher School of Economics about current trends on the labor market).
“The IMF scenario is clearly the most optimistic of the possible outcomes that have some chance of happening in 2023,” said Dmitry Polevoi, investment director at Loko-Invest.
“However, from our point of view, GDP will still fall by 1.5-2.5% in 2023 due to weak demand at home and abroad, coupled with high levels of uncertainty.”
This newsletter from the Russian streaming service Amediateka showed up in my inbox a few minutes ago.
What is Amediateka? What does it have to do with HBO?
Russian streamer Amediateka has struck an exclusive deal that allows it to offer all series from WarnerMedia’s HBO Max, in addition to library content from the US studio.
The agreement, which is effective immediately, hands Amediateka shows including the reboot of cult TV series Gossip Girl, Steven Soderbergh’s film No Sudden Move, sci-fi series Raised By Wolves, Israeli war drama Valley Of Tears and teenage drama Genera+ion.
HBO Max hit The Flight Attendant is also available, along with Sex And The City sequel And Just Like That…, with shows accessible on the streamer in Russia and the CIS.
Animal Kingdom, 11.22.63 and Person Of Interest are among library series available, along with documentaries including 15 Minutes Of Shame, Persona: The Dark Truth Behind Personality Tests and docuseries Generation Hustle and the upcoming One Perfect Shot.
Tatyana Kalita, CEO of Amediateka parent Amedia TV, said the deal would provide “resonant and highly sought-after” shows to its audiences, adding that the streamer had enjoyed “stunning success” with the recent special episode Friends: The Reunion, which Amediateka exclusively released in Russia and CIS in May.
But didn’t HBO’s parent company WarnerMedia stop doing business in Russia this spring to protest Russia’s brutal unprovoked invasion of Ukraine?
Major media companies continue to join the exodus from Russia, with Discovery and WarnerMedia making announcements on Wednesday about halting all programming in the country.
WarnerMedia, CNN’s parent company, previously paused the release of “The Batman” in Russia, citing the “humanitarian crisis in Ukraine.”
As of Wednesday the company is now “pausing all new business in Russia,” CEO Jason Kilar said in an internal memo. “This includes ceasing broadcast of our channels, halting all new content licensing with Russian entities, and pausing our planned theatrical and games releases.”
WarnerMedia had been broadcasting CNN and Cartoon Network in the country. CNN said on Tuesday that the network is not shutting down its Moscow bureau, “but we have ceased reporting from there until we have assessed the impact of this new law.” The law makes it a crime to disseminate what Russian authorities consider to be “fake” information about the invasion of Ukraine.
Discovery, which has 15 channels in the country, said Wednesday that the channels are going dark as well. “Discovery has decided to suspend the broadcast of all its channels and services in Russia,” the company said.
Discovery and WarnerMedia are preparing to merge this spring.
The statements are part of a much broader corporate shunning of Russia that has escalated in the two weeks since the Russian invasion of Ukraine began.
Amediateka is currently offering a 12-month subscription to its streaming service at the bargain basement price of 2,499 rubles — or 41 dollars and some change. That’s for an entire year. In the US, WarnerMedia is currently offering a yearly, prepaid subscription to HBO Max for $69.99 with ads or $104.99 with no ads. ||| TRR
Five months into the Russian invasion of Ukraine, there remains a startling lack of understanding by many Western policymakers and commentators of the economic dimensions of President Vladimir Putin’s invasion and what it has meant for Russia’s economic positioning both domestically and globally.
Far from being ineffective or disappointing, as many have argued, international sanctions and voluntary business retreats have exerted a devastating effect over Russia’s economy. The deteriorating economy has served as a powerful if underappreciated complement to the deteriorating political landscape facing Putin.
Maxim Katz, “How the economy of Russia is dying,” 21 July 2022: “Today we’ll talk about the branches already affected by the upcoming crisis. We’ll talk about the automobile industry and real estate, cinemas, and air traffic. We’ll also discuss why China is not going to help Russia” (with English subtitles). Mr. Katz was declared a “foreign agent” by the Russian Justice Ministry on 22 July 2022.
For Russian President Vladimir Putin, a two-word phrase sums up the current state of world geopolitics: “golden billion.” Speaking this week in Moscow, Putin declared that the “model of total domination of the so-called golden billion is unfair. Why should this golden billion of all the population on the globe dominate over everyone and impose its own rules of behavior?”
The golden billion “divides the world into first- and second-class people and is therefore essentially racist and neocolonial,” Putin continued Wednesday, adding that “the underlying globalist and pseudo-liberal ideology is becoming increasingly more like totalitarianism and is restraining creative endeavor and free historical creation.”
For most readers in the United States or Europe, a “golden billion” probably means nothing. But in Russia, this phrase has been around for decades as a doom-saying shorthand to describe a future battle for resources between a global elite and Russians. And since February, the Russian government has been deploying the theory to argue that Russia’s isolation after its invasion of Ukraine was not because of its actions — but because of an inevitable global conspiracy against it.
These complaints about inequality may seem rich coming from a man who has led an invasion that could help partially restore an empire, who has clung to power for decades while banishing his biggest opponent to prison and whose personal wealth wasonce estimated to be$200 billion. But at least some members of the Russian government seem to sincerely believe in the ethos behind these theories. And it may not just be Russians who find the idea persuasive.
Putin’s vague allusions to a golden billion over recent months obscure a far more conspiratorial history. The phrase comes from an apocalyptic book published in 1990, just as the Soviet era came to a crashing halt. Titled “The Plot of World Government: Russia and the Golden Billion,” the book was written by a Russian publicist named Anatoly Tsikunov under the pen name A. Kuzmich.
Tsikunov described an end-times conspiracy against Russia, with the wealthy Western elite realizing that ecological change and global disaster would see further competition for world resources, ultimately rendering the world uninhabitable for all but a billion of them. This elite realize Russia, with its natural resources, immense mass and northern location, needs to be brought under their control by any means necessary for their own survival.
This thesis was a twist on the widely disputed fears about global overpopulation developed by British cleric Thomas Robert Malthus in the late 18th century. However, it’s been given a modern, Russocentric update. In his 2019 book “Plots against Russia: Conspiracy and Fantasy After Socialism,” New York University scholar Eliot Borenstein writes that the idea fits into a broader, paranoid history.
The golden billion “gathers together many of the most important tropes of benighted, post-Soviet Russia (the need to defend the country’s natural resources from a rapacious West, the West’s demoralization of Russia’s youth, destruction of Russia’s economy, and destruction of public health) into one compelling narrative, a story combining historical touchstones (the Great Patriotic War) with science and pseudoscience,” Borenstein wrote.
Tsikunov died in unclear circumstances a year after his book was published, only adding to the mystique. But his idea was soon popularized by the anti-liberal Russian intellectual Sergey Kara-Murza, who stripped away its stranger edges and wrote in the later 1990s that the golden billion meant the population of higher-income democracies like those in the OECD or G-7 who consume an unfair proportion of the world’s resources.
More than two decades later, the theory is everywhere in the Russian government. Despite its conspiratorial beginnings, high-ranking Russian officials like former president Dmitry Medvedev and Russian Foreign Minister Sergei Lavrov have repeated it in public settings since the Feb. 24 invasion.
Even wild theories can have tactical uses.When Putin speaks about a golden billion, he uses it to tie Western exploitation of Africa and Asia recently with the backlash to the conflict in Ukraine. Though Putin has long presented himself as a voice of global conservatism, the righteous anger of anti-colonialism is no doubt a more potent force globally.
“Of course, this golden billion became golden for a reason. It has achieved a lot. But it not only took such positions thanks to some implemented ideas, to a large extent it took its positions by robbing other peoples: in Asia, and in Africa,” Putin said Wednesday. “Indeed, it was like that. Look at how India has been plundered.”
In South Asia, Africa and Latin America, stories of anger against domination and colonialism find a receptive audience. And these are three regions where countries have so far failed to rally behind Western efforts to isolate Moscow.
But the contradictions in Putin’s logic could undermine his story. Another tale of colonialism and domination is playing out now in Ukraine, which Putin has suggested is rightfully Russian land. As The Post’s Robyn Dixon reports, Putin is moving rapidly to annex and absorb the parts of Ukraine it currently holds, “casting himself as a new version of the early-18th-century czar Peter the Great recovering lost territory.”
Source: Adam Taylor, “The apocalyptic vision behind Putin’s ‘golden billion’ argument,” Washington Post, 22 July 2022
The phenomenal Petersburg photographer Alexander Petrosyan snapped this hyperrealist folk-conceptual photo at this week’s international economic forum in Petersburg, where the honored guests include the Taliban and the “president” of one of the fake Donbas “people’s republics.” There has been a lot of coverage of the remarks made at the forum by this snapshot’s ostensible subject. I have excerpted one article about them, below. This excerpt is followed by my translation of an interview with Sergei Khestanov about the forum and the broader Russian economic outlook in the light of the war and western sanctions.
As is traditional, the forum was dominated by a plenary session involving Putin. Earlier in the week, Peskov announced that Putin would make “an extremely important speech”. A couple of days later, he went out of his way to insist that the president was not about to announce a mobilization. It’s unclear why this was necessary – it’s no longer early March when this rumor was widespread.
The speech itself (which lasted for almost 90 minutes) contained no surprises. Putin spoke Friday about how “crazy sanctions” were not hurting the Russian economy, but, instead, causing pain for the Western countries as they wrestle with a crisis caused by an ill-conceived coronavirus response. “Our special military operation has nothing to do with it,” Putin said. More than once, Putin insisted the Russian economy remained open for business and reaffirmed his belief that the West would come to its senses and that Western companies would soon return to operating in Russia as normal.
But the most interesting part was when the moderator, Margarita Simonyan (head of state-owned RT and a prominent hawk on Ukraine) began putting questions to Putin and Tokayev. Along with the president of Armenia, Tokayev was one of only two heads of state to travel to the forum. It was painfully clear that Tokayev’s presence was repayment for Putin’s support back in January when troops from the Russian-led Collective Security Treaty Organization (CSTO) helped to re-impose order in Kazakhstan and, at the same time, marginalize Tokayev’s predecessor, Nursultan Nazarbayev.
However, Tokayev’s gratitude knows some bounds. That was apparent two days before he shared the stage with Putin when he gave an interview to state-owned Rossiya 24 in which he confirmed that his country would fully comply with Western sanctions on Russia.
Judging by what followed, Putin was aware of that interview. The highlight of the session was Putin’s attempt to pronounce his colleague’s name and patronymic – Kassym-Jomart Kemelevich. In January, when Kazakhstan was at the center of international attention as a result of civil unrest, Putin was already struggling with this difficult – but not impossible – name and twice uttered something incoherent. This time, at the start of his speech, Putin got it right – but during the Q&A session he again referred to Tokayev as “Kemel-Zhemelevich”, prompting a highly suspicious look from his supposed ally (this is clearly visible in the video).
Tokayev’s answers to Simonyan’s questions were far from the platitudes of an ally and some of what he said ran directly counter to Putin’s position. Diplomatic and courteous (Tokayev is a former UN Deputy General Secretary), the Kazakh president told Putin:
Kazakhstan “takes sanctions into account” (a response to a question from Simonyan suggesting the West must be pushing Kazakhstan to stop cooperation with Russia).
No economy can successfully pursue a policy of self-reliance and import substitution.
Ukraine’s accession to the European Union must be accepted as a new reality, even though its economy is in a dreadful condition.
The U.S., and the West in general, are not in the throes of a major crisis. At present, the U.S. economy is “modern and dynamic.”
That there are some Russian politicians, journalists and cultural figures who make “absolutely incorrect statements about Kazakhstan” and other states and “sow discord between our peoples.” This is likely to refer to occasional calls in the Russian parliament to protect the Russian-speaking population of Kazakhstan, which is concentrated in the north of the country. Such pronouncements are very reminiscent of the rhetoric in Russia about the Donbas region of eastern Ukraine.
Finally, without prompting, Tokayev dismissed the possibility of Kazakhstan recognizing the People’s Republics of Donetsk and Luhansk. He dismissed the republics – recognized by Russia – as “quasi-state entities.”
You can watch the whole of the plenary session here, or read a transcript here.
The scandal continued Saturday when Kazakh media reported Tokayev had turned down the Order of Alexander Nevsky bestowed on him by the Russian government. The official reason was that Kazakhstan’s president is not permitted to accept honors from foreign countries while in office – Russian state-owned media devoted half a day to reporting this explanation.
Source: “Showcasing Isolation,” The Bell, 19 June 2022
The St. Petersburg International Economic Forum (SPIEF) wrapped up this weekend. The feelings it generated are complicated. On the one hand, there was a heated discussion of the forum in social media; on the other hand, it was mainly not economic news that was discussed, but the juicy scandals that happened at the forum. Does the international forum have a future in the face of total western sanctions? And have the speeches at the SPIEF made it clearer what will happen next with the Russian economy? We talked about this with Sergei Khestanov, a well-known economist who has developed dozens of financial theories and techniques. He also serves as an adviser on macroeconomics to the CEO of Otkritie Investments.
— Judging by the discussion of SPIEF on social media, the hottest guests were the Taliban (an organization that is banned in Russia) and Philipp Kirkorov. Is this due to the exoticism of their being at the economic forum or the absence of significant guests?
— The Taliban were just a kind of exotic highlight, I think. By the way, they were not particularly visible in the latter part of the forum. There weren’t many notable guests, really, but then again there hasn’t been an abundance of such guests for many years. What was unusual was that some guests of the forum (Russians, by the way) were asked not to advertise their participation and to wear name tags that did not spell out their companies and positions, lest they be hit by sanctions. From the economic point of view of, it doesn’t mean anything, but it is a quite interesting reflection on how the forum is seen.
— Was western business represented at the forum in general?
— It was practically absent. Many [western businessmen] simply cannot attend without spoiling their reputations, even those who have not yet abandoned the Russian market.
— And what was interesting from a substantive point of view?
— In terms of the forum’s substance, I would draw attention to the statement made by [Sberbank chief] Hermann Gref that the Russian economy would be able to reach the level of 2021 in ten years. That’s quite a frank recognition of the state of our economy. Vladimir Putin’s statement about banning audits of businesses is also welcome if the number of such audits is really reduced. However, it bothers me that they have been talking about this for so many years [without doing anything about it.]
— Putin also announced a reduction in the preferential mortgage rate to seven percent.
— Volumes of orders have been falling in the construction industry, so we need to support it. And since, as a rule, the construction industry is closely affiliated with local and, sometimes, regional authorities, the desire to support it is quite understandable. Plus, the industry is a multiplier, so helping it helps the metals industry, manufacturers of cement, lumber, and so on. However, the decline in volumes is not yet tremendous, so nothing terrible would happen without help, but nor do I expect the support to trigger a boom.
There is another danger here: real estate prices in Russia, especially in the megacities, are overheated. if the decrease in mortgage rates is not coupled with an increase in down payments, we could end up with a mortgage bubble. And then, under certain unfavorable circumstances, of which there might be many going forward, we could face a terrific downturn in prices and a serious mortgage crisis. I would not say that the danger is great now, but it cannot be ignored.
— Wait, what collapse? What crisis? It followed from Vladimir Putin’s speech that we have been successfully coping with western sanctions. Supposedly, foreign exchange earnings are so great that they almost equaled the volume of the frozen portion of Russian gold and foreign exchange reserves.
— Russia is bursting with money that it cannot digest because of import restrictions and the threat of frozen accounts. It turns out that money has been earned, but what to do with it? It isn’t possible to use it constructively. And this madness with shoring up the ruble is due to the fact that there is no demand for non-cash payments: exporters need controls, but they cannot sell currency. So, it’s like a pear is dangling in front of you, but you can’t eat it.
— But Central Bank head Elvira Nabiullina in her speech suggested a way out for exporters: they should focus on the domestic market.
— Those are pretty words, but most exporters have been working for the domestic market for a long time. The problem is that the domestic market’s capacity is limited. For oil and petroleum products, for example, domestic demand accounts for about a quarter of current production. That is, if we refocus on the domestic market, we need to cut production threefold. Will that make things better?
Export industries perfectly satisfy domestic demand, and everything else is exported. This also applies to the metals industry, both ferrous and non-ferrous metals, and the oil industry, and the petrochemical industry. Nizhnekamskneftekhim, the world’s largest producer in its class of raw materials for plastics, supplies its products to both the domestic and foreign markets, but only a very small portion of what it produces goes to the domestic market, because such is the demand.
— And, for example, aluminum and titanium are used mainly in aircraft construction. Given current conditions in the domestic market, they can be used, at best, to make kvass cans.
— Exactly. The domestic Russian market is simply not able to absorb everything produced by exporters. So, this call to pivot to the domestic market is like that joke. “Bunnies, become hedgehogs, so the foxes won’t eat you.” “Great, but how do we do it?” “I don’t know — I’m a strategist, not a tactician.”
— To be fair, Nabiullina had also talked about structural adjustment in the past.
— What the Central Bank head said about structural adjustment is right, but it doesn’t make much sense yet. Unless we note the speech made by [Alexei] Kudrin, who said that it would take two to three months to develop a strategy. I consider him one of the most serious public figures in terms of macroeconomic analysis, so his words carry a lot of weight for me. Two or three months is a realistic amount of time, I think. It would bring us to the beginning of autumn, and all over the world at this time, business picks up after the summer lull. Plus, statistics for macroeconomic indicators will have been reported, and the relevance of the data will have increased. So I’m eighty to ninety percent in agreement with him.
— But what don’t you agree with?
— My main disagreement is that, since the sanctions have not yet ended, the effectiveness of strategies is low. No matter how good a plan is, it will have to be changed quickly and often. Moreover, so far most of the sanctions have impacted imports, and that is not so terrible. Of course, it’s sad that Ivan Sixpack can no longer buy a new smartphone, but this has little effect on the economy. Export sanctions are much more serious when it comes to filling the state coffers. But I think it’s too early to talk about them before next year.
— Well, so far, Ivan Sixpack does not seem to be suffering much. Many people say that the sanctions are not really hurting us.
— Since demand has dropped a lot, people are under the illusion that nothing terrible has happened. But by the second half of September, I think that stocks in the warehouses will be exhausted, and it will become clear what is happening with durable goods.
— Especially with spare parts for cars. This topic is now of concern to many people. A friend of mine is now glad that she didn’t buy a foreign car, as she had originally wanted, but a Russian-assembled Renault.
— She shouldn’t be too glad. Some of the spare parts for inexpensive Russian-assembled foreign cars are made in Russia, but only some. The rest are imported.
— So, we will have to establish a shuttle trading business for the delivery of spare parts.
— Maybe, but the whole business will be tedious, time-consuming and, accordingly, much more expensive. As in the 90s, people will have to buy cars that Russian spare parts fit. They will have to learn how to do their own repairs. In Soviet times, I went abroad to buy a used car with cardboard templates in tow to determine whether the wheels from a Lada would fit it, whether the filters would fit. I knew how to re-rivet brake pads. Basically, I can fix anything on a car, except the carburetor. Most of the motorists of that time could do the same. Maybe they couldn’t do everything, but they could do the most basic things like cleaning the spark plugs and changing the oil and filters. Those were the necessary skills. But nowadays, many people don’t even know how to change tires.
— They’ll have to learn. Once again the menfolk will gather in garages on weekends, although many people don’t have their own garages anymore. They only have spaces in multi-story parking lots, and you can’t repair a car there.
— And the skills have been lost. Of course, a parallel import market will be established, and people will learn how to do repairs, but it will be difficult for motorists. It will become immensely more expensive and more difficult to maintain a car.
— Speaking of cars. Industry and Trade Minister Denis Manturov announced plans to resume production not only of the Moskvitch, as discussed by Moscow Mayor Sergei Sobyanin, but also of the Volga and even the Pobeda. The latter, by the way, was produced in the 50s. Is the [Russian] car industry really that bad off? What about the Chinese? Wouldn’t they help us? After all, they are switching to electric vehicles. Could they transfer the production of internal combustion engines to Russia?
— As I understand it, Manturov was actually talking about reviving the brands, not the cars of that generation themselves. Because if there is a demand for classic Ladas now, it’s not very big. In the back country, the fact that they can be repaired easily is appreciated. But all the other cars [of the period] were total tanks. I used to drive a Pobeda back in the day. It really, you know, encourages you to develop your shoulder muscles, because turning the steering wheel involves great physical exertion. The brakes are the same way.
But what they probably have in mind is producing new models under those brands, maybe even stylized to look like the old ones. Aesthetically, the Pobeda is beautiful — it’s just hard to drive it. The Volga 21 is beautiful, and so are the Moskvitches up to the 412 model. And if you also give it a two-tone paint job, like the Moskvitch 403, you could make a very popular model. Volkswagen also produced an updated replica of the Beetle.
— And how will they make them?
— They will probably buy the platforms from the Chinese, or [the Chinese] will even supply the assembly lines. Then designers will be commissioned to come up with designs, maybe even stylized to look like Soviet cars. And so the brands will be reborn.
— In conclusion, let’s return to the guests at SPIEF. In terms of foreign leaders, Kazakhstan President Kassym-Jomart Tokayev attended the forum. Chinese President Xi Jinping also made a short speech via video link. There is probably no point in asking whether SPIEF can now claim the role of the “Russian Davos.” I wanted to ask you abpit something else. Given the current conditions, is there any point to this event?
— Tokayev, I think, just couldn’t help but show up. Everyone paid attention to how he spoke relatively harshly about the DPR and the LPR. Of course, he is a professional career diplomat and spoke in such a way that you can’t find fault with him, so it’s quite difficult to extract any one definite message from his speeches.
— What about when he said that Kazakhstan had no choice but to support western sanctions?
— But this is quite obvious: he didn’t say anything new. It is clear that the economy of Kazakhstan cannot fight a consolidated decision by the western economies. This would not only be difficult, but also not really necessary. So, where its own interests are not affected, Kazakhstan can help Russia — but no more than that. By the way, the Chinese have the same attitude towards us.
— Is that why Xi Jinping not only did not come to SPIEF, but was also brief in his video message?
— There is not much to talk about in the current circumstances. So it’s not that Xi didn’t want to talk. There was nothing in particular for him to talk about. It is clear to everyone that the Russian economy is not doing very well. So, our corporations signed contracts with each other, which they happily reported before going their separate ways.
The question of whether SPIEF should be held is another matter: the degeneration of such forums is not only a Russian problem. The Davos forum has also been experiencing a lack of serious ideas. Ten years ago, the substantive part of it was much larger, but nowadays everyone is for all the good things and against all the bad things. And all other [economic] forums face similar problems: a lack of substance and a focus on narrow subjects. So, what is happening with the Petersburg Forum is not unique.
It’s hard to say what the reason is for this. Maybe the format has worn out its welcome. As in art, there is a fashion, a trend, and then times, traditions, and tastes change, and the format goes away. Maybe it is due to the fact that the world economy has been slowing down. When the forums were interesting, the economy was growing; intense economic processes were underway, and reforms were being undertaken in the countries of the former USSR and Eastern Europe. But now there is stagnation everywhere, even in the IT field, about which I know a thing or two. What can I say? Moore’s law has been disproven! The number of transistors on a single chip no longer doubles every eighteen months. So, this is a universal problem. I don’t know whether this trend is reversible or permanent, but for the time being it’s like this. Do you remember the Central Committee plenums in Soviet times? The “resolutions” that were “submitted for consideration” and instantly “approved”? The long tedious speeches about nothing? It’s all coming to look a lot like that.
Source: Tatyana Rybakova, “‘Do you remember the Central Committee plenums in Soviet times? It’s all coming to look a lot like that’: Sergei Khestanov on the St. Petersburg Economic Forum and the future of the economy,” Republic, 19 June 2022. Translated by the Russian Reader
The withdrawal of the American company Corteva Agriscience (Pioneer) from the Russian market may trigger problems in the country’s agriculture. Experts are already warning about a shortage of seeds for certain crops.
Marina Petrova, deputy chair of the Moscow Chamber of Commerce and Industry’s committee for entrepreneurship development in the agro-industrial complex and CEO of Petrova 5 Consulting, told Delovoi Peterburg that while the level of self-sufficiency with domestic grain seeds exceeds 75%, import dependence remains high for sunflower, at about 70%, and for corn, at more than 50%. Leftover seeds held by suppliers and Russian-produced varieties and hybrids are an alternative source.
“Domestic seeds often have poorer traits than foreign varieties. But Russia has a scientific base and decent domestic wheat, oat, rice and buckwheat seed products,” says Petrova. In her opinion, domestic selection and seed production is in need of structural transformation and state support. Over the past decade, the share of foreign seeds has increased significantly in Russia. This is primarily due to their higher yields. The largest players also offered package solutions involving seeds, agrochemicals, and management via digital platforms. Third-party designs may thus often be incompatible with existing ones.
Corteva Agriscience is a well-known producer of alfalfa, rapeseed, corn, cotton, rice, sorghum, soy, sunflower and wheat seeds, as well as plant protection products (including herbicides, fungicides and insecticides). According to the Leningrad Regional Committee for the Agro-Industry Complex and Fisheries, the region does not depend on Corteva Agriscience’s seeds. The committee’s press service clarified, however, that rapeseed, which is cultivated in the region, is actually grown from imported seeds. But corn and wheat seeds are domestically produced, while wheat seed is produced in the Leningrad Region itself.
Prinevskoye Breeding Farm CJSC (which grows rapeseed, among other things) reported that they had managed to purchase all the seeds they needed for the 2022 sowing campaign. “If there is no possibility of sourcing foreign rapeseed hybrids, we have a domestic analogue, Oredezh 6, which at the moment we can use to cover the needs not only of our farm, but also of the region,“ says Alexander Peretyatko, deputy general director for commercial affairs at Prinevskoye.
According to experts at the Agrophysical Research Institute, Russia has the potential to replace imported corn and rapeseed. This can also be said about wheat, which Crimea supplies in fairly large volumes. At the same time, seeds for protected soil (tomatoes, cucumbers, greens) are limited on the market. The chief researcher at the Institute’s Laboratory for Plant Biophysics, Professor Mikhail Arkhipov, recalls that back in 2016, a decree was issued ordering the production of original and elite agricultural plant seeds in the areas of domestic crop production that were highly dependent on foreign-made seeds. According to Arkhipov, the decree has still not been properly implemented.
“75% of the agricultural holdings that produce grain are owned by foreign companies. Foreign seed companies also continue to be actively involved in the Russian market. However, domestic seed growers can also solve the issue of supplying grain-growing areas with domestic wheat seeds. We have the necessary agricultural resources to produce our own seeds,” the expert notes.
In late 2021, President Vladimir Putin said that within a decade the country would be able to provide farmers at least 75% of the seeds they required. Arkhipov believes that this is a real prospect in the seed market for most agricultural crops. Petrova points out that many seed-growing enterprises need to improve their physical facilities and increase their technologization. Another problem that hinders the industry’s development is a shortage of personnel.
Source: Darya Dmitrieva, “Fresh ground: farmers prepare for shortage of imported seeds,” Delovoi Peterburg, 11 May 2022. Translated by the Russian Reader, who grew up on a farm in the Upper Midwest.
Corteva to Withdraw from Russia
Corteva has made the decision to withdraw from Russia and, having already paused new sales, is initiating a plan to stop production and business activities.
Our priorities remain the safety of our employees and global food security. Since the onset of this tragic war, we have taken all possible action to support and protect our Ukrainian colleagues and their families, our customers, and the communities in which we operate, including through direct and indirect aid to address the immediate humanitarian needs.
We have also put in place direct action to help assure as normal as possible 2022 growing season in Ukraine.
Given the war’s impact on global food security, the Company will donate seeds to Ukraine, Africa, and the Middle East region for the 2023 growing season, to lessen the impact on global food production.
Corteva joins with many others around the world in advocating for peace.
“Our everything: a huge selection of goods from Russia! Even more goods from Russia – look! [1.] Zarina hoodie, 1,689 rubles [approx. 21 euros]. [2.] Vasilisa Botanika bedding set, 1,571 rubles. [3.] Tech Team Comfort urban scooter, 3,990 rubles.” Source: Ozon email advertising circular, 2 May 2022. Ozon is a major Russian online retailer and is sometimes referred to as “the Amazon of Russia.” When I still lived in Russia, I regularly ordered books from them. In the first weeks of the war, they were pushing the imported western goods they still had in stock. ||| TRR
An art installation about import substitution has appeared in the center of St. Petersburg today. While some are recalculating advertising budgets and monitoring news about global brands resuming operations in Russia, others are replacing [them].
Source: Sostav.ru: Advertising and Marketing in Russia, Facebook, 27 April 2022, via Five Corners community page. Translated by the Russian Reader
Skimping on bags and paper, problems with electric cars, and the rise in price of coffee beans
Skimping on little things. Retailers and catering are reducing the use of certain types of packaging, containers, and consumables. Some things you have to give up against your will.
Tired of waiting for guests. The travel industry wants to get a tax exemption from Petersburg city hall, an extension of cashback, and a new version of Booking.com.
Russians charge slowly but drive fast. Sanctions have blocked the way to Russia for foreign electric cars, but import substitution is already being readied.
Pecking like a bird. Petersburg coffee roasters have faced logistical problems. Green coffee beans have risen in price by 15-50%, which has already affected retail prices.
They keep well. In the current situation, warehouses remain the most stable segment of the commercial real estate market, experts argue.
Have a good day!
Source: Delovoi Peterburg, daily email newsletter to subscribers, 7 April 2022. Photo by Sergei Yermokhin for Delovoi Petersburg. Translated by the Russian Reader
Queen’s hits as played by a symphony orchestra
Show must go on? [sic in English] We agree! Great news for everyone who has dreamed of going to a concert by the legendary Queen. On April 21, the group’s international hits will be performed at Tinkoff Arena by the IP Orchestra under the direction of the brilliant Igor Ponomarenko.
Queen is one of the greatest bands in history: their cultural legacy has changed the world of music forever.
The supremely rich acoustic palette of a symphony orchestra, new arrangements of classic Queen compositions, the wild drive of the musicians on stage, and the charming voice of the soloists — all this is part of the patented “Queen Show. Show Must go on” [sic in English].
The IP Orchestra has long established itself as a brand not only in Russia, but also in the countries of the near and far abroad. The band has toured on five continents, performed at the world’s best venues, and has thousands of admiring viewers and loyal listeners.
To attend this event, you will need a QR code showing that you have been fully vaccinated or have had the disease, or a certificate showing that you have had a full course of a vaccine, or a document confirming that you have been granted a medical exemption from vaccination along with a negative PCR test for participants and guests over eighteen years of age.
Source: Bileter.ru. Translated by the Russian Reader
Unfortunately, for reasons beyond our control, all parts of J. K. Rowling’s famous saga about the boy wizard will be unavailable on LitRes in three days. Only now can you buy them in time with a 25% discount! It is important that every book remains in your personal library forever.
To activate the discount, follow this link or enter ACCIO on the promo code page. The offer is valid until April 8.
Source: LitRes email newsletter for customers, 6 April 2022. Image, above, captured on this page on their website. Translated by the Russian Reader
As Kommersant has learned, Russian schools have received new recommendations on teaching special lessons in the light of the “special military operation” in Ukraine. In this case, teachers must organize classes for students in grades 5-9 and 10-11 on the topic of “anti-Russian sanctions and their impact on the domestic economy.” In the training manual, this “impact” is depicted rather positively: schoolchildren are told about the growth of the share of Russian-made products in several sectors, and then they are asked to assess which countries would suffer great economic losses from sanctions. Economists interviewed by Kommersant point out the mistakes made by the manual’s authors and warn that Russian schoolchildren will soon see the effect of sanctions themselves.
Materials for the “sanctions” lesson were handed over to Kommersant by a teacher in the Moscow Region. We found reports on such lessons on the websites of a number of schools in the Moscow, Oryol and Samara regions. As stated in the manual, teachers should “show Russia’s capacities for overcoming the negative consequences of the sanctions pressure brought by western countries on our society’s economy [and] give [pupils] an idea of the main vector of anti-sanctions policy in the Russian Federation.” The classes are to be held as part of social studies courses.
At the beginning of the lesson, teachers must quote President Vladimir Putin that “unprecedented external pressure has been exerted on Russia.” They must then ask schoolchildren whether they know “what the priority measures of our state’s anti-sanctions policy are.”
Only then should teachers tell their pupils what sanctions are: “Restrictions designed to ‘punish’ a country for its actions.” At this point, they must also clarify what “actions” are meant: “the special military operation being conducted by Russia in Ukraine, occasioned by the need to protect the population of Donbas.” Examples of sanctions include the freezing of assets of state corporations and banks, as well as a portion of Russia’s gold and foreign exchange reserves. Another example is the departure of foreign companies.
Teachers should then tell pupils that Prime Minister Mikhail Mishustin “has identified protecting the domestic market and keeping the able-bodied population employed as the most important focus of the anti-sanctions policy.” And students have to answer the question “Why exactly are these areas a priority?”
The manual also contains a link to a video about the benefits of import substitution.
The video explains that, in the 1990s and early 2000s, imported products prevailed over domestic ones. “Active advertising of foreign goods” and “the idea of the superiority of imported products and the inability of Russian manufacturers to bring similar products online” were pushed. But by 2022, the situation had changed dramatically, says the voice-over: the share of Russian-made products had grown in food production machinery (from 12% to 45%), agricultural machinery (from 24% to 55%), and machine tool construction (from 18% to 38%). It is also suggested that teachers show pupils statistics from the Ministry of Industry and Trade during the lesson. The statistics purportedly show that the share of Russian goods across the entire civilian range of commodities has increased many times in the field of mechanical engineering since 2014.
“Together with pupils, the teachers conclude that economic policy in recent years has been aimed at increasing protections for domestic producers and ensuring their sustainability in the face of external crises,” the lesson script says. At this point, students in grades 5-9 are asked to list the set of measures taken to support the Russian economy and citizens in “conditions of increased pressure from sanctions,” while high school students have to describe their intended effect.
At the end of the lesson, students must fill out a feedback form. They have to answer the following questions: “Are the sanctions against Russia fair?”, “Will the sanctions lead to a strengthening of the Russian economy?”, and “Who will suffer great economic losses?”
There are three possible answers to the last question: Russia, the NATO countries, or all countries of the world.
The Education Ministry confirmed to Kommersant that it had sent methodological recommendations to schools. They were developed by the Institute of Education Development Strategies, which is subordinated to the Ministry. The Ministry noted that “leading third-party experts” from different industries had been involved in developing the lesson scenario. “The lesson materials offer schoolchildren the chance to familiarize themselves with the measures taken by the president and the government to counteract sanctions by unfriendly countries,” the Ministry told Kommersant. “The lesson materials specially emphasize the characteristics of the import substitution policy that has been implemented in Russia in recent years. The lesson assumes the active involvement of students when working with documents and interactive materials containing important information about the Russian economy’s achievements in various sectors and its readiness to resist sanctions,” they said.
Teachers from schools in Crimea and Sevastopol confirmed to Kommersant that they would have to give such lessons. And yet, they refused to give a personal assessment of the lessons, explaining that they were afraid of violating the laws on disrespect for the authorities and discrediting the armed forces. The Irkutsk Regional Ministry of Education said that lessons on import substitution had already been conducted (as extracurricular classes) for 85,000 students in 154 schools. “Children have generally shown an interest and reacted positively to the information,” they noted.
Kommersant asked economists to comment on the manual. Natalya Zubarevich, a specialist in regional socio-economic development, refused to look at it. “Why should I read this manual? It’s already clear as it is that we will lose the most advanced technology industries,“ she told Kommersant. “There is no need to hurry. Even if this manual is read aloud to children, life will show them how things really stand. In the summer, or certainly in the autumn, the children will come home and see for themselves that their families have no money, and that there is no way to buy certain goods.”
The manual’s specialized language is too complicated for both schoolchildren and teachers, says Vladimir Salnikov, an expert at the Center for Macroeconomic Analysis and Short-Term Forecasting.
“Many points [in the manual] are quite correct at the qualitative level, but you can argue with individual figures,” says Salnikov. “For example, according to our estimates, the share of imports in certain industries is slightly higher [than indicated in the lesson materials]. Mr. Salnikov considers it an incorrect decision to present mechanical engineering as a good example of import substitution. “Things were going much better in the Russian food industry and in a number of segments of the chemical industry. And things have been quite good in some parts of light industry,” the expert says, “but the progress has been worse in mechanical engineering.”
The presentation states that “the share of Russian-made goods in the automotive industry” increased from 7% in 2014 to 86.3% in 2020. Kommersant‘s sources in the automotive industry confess that they do not understand where these figures came from: “Probably, the figures for 2020 include Russia’s entire production of cars, regardless of localization. But in this case, it is wrong to call the goods absolutely domestic. It’s also unclear why the manual’s authors cite the figure of 7% for 2014. In fact, at that time, Russian production’s share in the car market was about 75%. It’s a shame that schoolchildren will receive distorted information,” they said. Our sources also reminded us that the only automotive plants currently operating in Russia are those belonging to GAZ, UAZ, KamAZ, Mazda Sollers, and the Chinese brand Haval. The rest have been idled due to sanctions.
In early March, the Education Ministry recommended that schools hold a special history lesson (see Kommersant, 2 March 2022). Its goal was to “shape” an adequate stance among high school students on the issue of the special peacekeeping operation by the armed forces. Later, classes devoted to fake news were held in schools, in which students were urged not to believe the reports of the Ukrainian authorities about the number of Russian soldiers who had been killed (see Kommersant, 11 March 2022). Finally, during the “Brotherhood of Slavic Peoples” lesson, schoolchildren were told about the kindred cultures of Russia, Belarus, and Ukraine, “who should remain a single people today and not succumb to the provocations of those trying to divide them.”
Source: Anna Vasilyeva, Maria Starikova, Olga Nikitina; Vlad Nikiforov (Irkutsk); and Alexander Dremlyugin (Simferopol), Kommersant, 5 April 2022. Translated by the Russian Reader