The EU has already approved the fourth package of anti-Russian sanctions, and the US is confident that it has completely crushed the Russian economy. However, Moscow’s retaliatory measures are still rather modest. In the list of goods banned or restricted for export, there are only two positions that are painful for the West – mineral fertilizers and wood products. The authorities did not dare to ban the export of grain to unfriendly states – the country needs a currency. But on the other hand, friendly ones suffered: the allies in the EAEU will not receive Russian wheat, barley and corn in the coming months.
Almost immediately following the start of the military special operation in Ukraine and the sanctions that followed it, the Kremlin announced that retaliatory measures would definitely follow, and their set would depend on the analysis. “The principle of reciprocity, of course, will work,” Dmitry Peskov said on February 25, noting that Russian sanctions can be both symmetrical and asymmetric – concrete steps should be presented by the government. However, more than two weeks have passed since then, and tough counter-sanctions, which, as many expected, would make the leaders of unfriendly countries, if not shudder, then at least moderate their ardor, have not yet followed. On the contrary, the United States claims that, together with its allies, it has already completely destroyed the Russian economy.
The problem is that Moscow was left little room for maneuver. Everything that might be banned and restricted for export from the Russian Federation, Western countries have already banned themselves. And the introduction of restrictions on the remaining groups of goods – oil, gas, some metals, grains – will rebound on the domestic market as well. While the EU countries unwaveringly churned out one package of sanctions following another, Moscow was developing an action plan to increase the stability of the Russian economy. In other words: they went on the defensive, and did not prepare for a counteroffensive. According to Mikhail Mishustin, the plan was approved on March 15, its main goal is to support the Russian economy and citizens during this difficult period.
As for counter-sanctions directly, the authorities have so far ventured two out of a possible set of restrictions – they have banned the export of certain wood products and suspended the shipment of mineral fertilizers. The first measure is of local significance: the closest neighbors, Finland and Poland, where these products were processed, will be the first to suffer from it. And further down the chain are other European countries, in particular, where there was a high level of consumption of pelleted wood used for home heating. For example, in Britain, prices for such fuel have already jumped by 25-30%. Suspension of the export of mineral fertilizers, which was decided at a meeting with Vladimir Putin, entails broader consequences. According to the head of the Ministry of Industry and Trade, Denis Manturov, delays in shipment “might affect the national security of a number of countries and cause food shortages for hundreds of millions of people in the medium term.”
However, every medal has a downside. The export of wood products was a significant source of income for the northern regions of the country; at the expense of it, some part of the population was fed. It will most likely be very difficult to quickly find alternative markets, as well as alternative businesses that entrepreneurs might reorient themselves to under the current conditions. As for fertilizers, shipment disruptions (both real and artificially created for political purposes) are by and large not in Russia’s interests either. Yes, food prices in Europe will rise, burghers will get angry, and Western politicians will get nervous. But the Russian Federation is not a monopolist in this market (Russian companies account for regarding 25% of the world production of potash fertilizers, 10% of nitrogen fertilizers and 20% of complex fertilizers), which means that suppliers from other countries, in particular the United States, China, and India, will do everything possible and impossible in order to occupy the resulting niche. And it will be extremely difficult, if not impossible, to win back the lost positions.
The fact that the government is well aware of the risks is evidenced by the decision to ban the export of grain, which, apparently, was taken in several stages. First, information appeared that the ban would affect the EAEU countries and would be valid until August 31. Then they began to say that the export would be banned to all countries, but until June 30. As a result, at midnight on March 14-15, Mikhail Mishustin signed a resolution imposing a ban on the export of grain to the EAEU countries until June 30. Recall that the EAEU is the closest economic (and political) allies of Russia – Belarus, Kazakhstan, Kyrgyzstan and Armenia. In theory, restrictive measures should be applied to them as a last resort, but the logic of officials, apparently, is different. (However, as experts say, this season, all friendly countries have already purchased the volumes of grain they need for their own consumption on preferential terms, and the ban is being introduced to prevent resale, for example, from Kyrgyzstan to the West. And the new purchasing season will just begin in July – and then the decrees will be canceled.) As for other countries, grain exports outside the EAEU were previously limited by tariff quotas and duties, but the authorities cannot allow it to completely refuse supplies – the country needs currency more than ever. However, even such a “calming” decision of the Cabinet of Ministers makes both the EAEU countries nervous (and what if the ban is not lifted following June 30?), and Russian agricultural producers, who now do not know what to expect next and how to carry out the sowing campaign.
The authorities cannot ban, as hotheads suggest, the export of non-ferrous metals. Only the shortage of palladium and rolled titanium will be painful for the West. Whereas the restriction on the export of aluminum, nickel, copper, etc. will hit the Russian economy more, which simply will not be able to digest the volumes produced in the domestic market.
Newspaper headline:
Russia is preparing a retaliatory strike?
