Fri, December 09, 2022

Difficult Task of Replacing Critical Imports for Russia

Difficult Task of Replacing Critical Imports for Russia

Analysts believe Moscow’s vigorous import substitution strategy, which began in 2014, has had mixed effects. Russia sent in bulldozers to crush plump packs of camembert and peaches.

In August 2015, a year after Russia’s annexation of Crimea prompted, targeted Western sanctions against several firms and members of the Russian political and military elite. President Vladimir Putin retaliated by prohibiting large-scale food purchases from countries that had sanctioned Moscow. The over-the-top usage of bulldozers should emphasize that Russia did not need imported goods; the gesture was to show that it no longer relies on Western food, technology, and other items.

Russian Import Substitution Program

However, analysts say that eight years after Moscow initiated an ambitious import substitution program to protect its economy against potential sanctions; the results have been mixed, if not a complete failure. Furthermore, Russia’s inadequate planning might expose the country’s economy in precisely the manner it had sought to avoid; Moscow is facing potentially debilitating sanctions from the US, Europe, and their allies over the invasion of Ukraine. AvtoVAZ, Russia’s largest manufacturer and a Renault subsidiary, had to halt operations due to a lack of parts; vehicles and vehicle components are the country’s most important imports. SvetoCopy, one of Russia’s most popular office paper brands, has ceased production at its mills with Sylvamo, its Memphis-based owner; they blamed supply constraints and then business values five days later.

In their hardships, they are not alone. According to a paper issued by Russia’s central bank in 2021, 65 percent of the country’s businesses rely on imports for their production; highlighting its reliance on global supply networks. According to the Moscow-based Gaidar Institute for Economic Policy surveys, more than 60% of Russian manufacturers say they can’t find domestic counterparts for items they import.

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