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Interview: Economist Says Food Ban 'Certainly Against Russian Economic Interests'

When Russian economist Sergei Guriyev left Moscow in April 2013, he said: "I left because I don't want to sit in jail. And I see that there is a sufficient risk that I end up in prison."
When Russian economist Sergei Guriyev left Moscow in April 2013, he said: "I left because I don't want to sit in jail. And I see that there is a sufficient risk that I end up in prison."

Sergei Guriyev, former dean of the prestigious New Economics School in Moscow, and now a professor at Instituts d'etudes Politiques (Sciences Po) in Paris, left Russia in 2013 amid a crackdown on liberal intellectuals critical of the Kremlin's authoritarianism.

He speaks to RFE/RL's Charles Recknagel about Russia's ban on Western food imports and the dangers protectionist policies pose for the country's economic growth.

RFE/RL: Russian Prime Minister Dmitry Medvedev has sought to put a positive spin on the food import ban by saying it will stimulate Russia's own domestic food industry. Do you agree with this logic, which raises the question of whether protectionism rather than free-market interaction with the West offers Russia the best conditions for economic growth?

Sergei Guriyev: I think indeed this food ban is good news for Russian producers but if, on balance, the Russian government and the Russian president thought that such moves are better for Russian economic and social development, then they would have done it before. And the very fact that they have not done that before and, moreover, that [Prime Minister] Dmitry Medvedev has led the charge and President [Vladimir] Putin agreed to that in 2012, to join the World Trade Organization, suggests that under normal circumstances the Russian government thought that integration into the global economy is better for Russian society and economy.

Protectionism in this very stark form, where the country simply bans imports of certain goods from other countries, creates opportunities for [domestic] producers and improves the welfare of the producers because they are protected from competition. But of course it hurts consumers because they have less choice and have to face higher prices, and economic theory directly predicts that prices will go up as a result of this decision and under reasonable assumptions economic theory predicts that the consumers lose more than producers gain, and in that sense the country as a whole loses.

These predictions were taken into account by the Russian government in the past and that is why the Russian government in the last 20 years integrated into the global economy and chose policies [different] from protectionism and autarky that were pursued by the Soviet government. And that has actually been one of the important factors behind growth of the Russian economy and growth in consumption, and therefore the raising of living standards, which, in turn, actually contributed to rising support for the Russian government among ordinary Russians, who enjoyed this prosperity and growth of consumption and living standards.

RFE/RL: Is the new emphasis on protectionism uniquely the result of the crisis over Ukraine, or has Moscow been planning to take the customs union with Belarus and Kazakhstan in this direction of self-sufficiency anyway? President Putin seemed to suggest this when he spoke of a future Eurasian Union that would rival the European Union?

Guriyev: I think in Mr. Putin's speeches over the past 15 years you can find, and even over the last two years, you can find statements of all possible approaches to the economy. You can find liberal, antiliberal, pro-Western, anti-Western statements. And, of course, when the customs union was created it was supposed to be a rival to the EU but it wasn't supposed to be a self-sufficient autarkic organization. It was supposed to be a powerful economic entity that would be one of the major players in the global economy. And now the situation, of course, has changed and the move to protectionism that we [are observing] now is certainly driven by the crisis around Ukraine.

And the crisis around Ukraine is also, per se, related to the customs union and the desire of Russia to bring Ukraine into the orbit of the customs union and become a member of the customs union, something that Ukraine resisted and eventually declined. So, I think that with all the problematic economic policies of the last couple of years, it would certainly be an exaggeration to say that Russia would do these autarkic and protectionist steps without the crisis over Ukraine. This decision is certainly political, certainly against Russian economic interests, and certainly is driven by the politics of the recent months.

RFE/RL: Let's speak for a moment specifically about Russia's domestic food sector. What is the condition of Russia's agricultural sector and why does Russia import 40 percent of its foodstuffs today?

Guriyev: The Russian agricultural sector has actually benefited from growth in Russia, from the reforms and integration into the global economy. Russia is now a major exporter of grain rather than an importer of grain as it was under the Soviet Union. This is a major return to agricultural markets where Russia was one of the major players before World War I and the socialist revolution. It was a difficult time in the 1990s but then agriculture grew to perform in a competitive environment in the 2000s.

Now, the fact that Russia imports a lot of foodstuffs is just a reflection of the fact that all economies import food from each other and Russia cannot produce coffee or wine in the way that other countries can do and Russia imports some food and Russia exports some other food, that's normal for a country which cannot produce everything on its own.

Vladimir Putin (second from right) looks at prices at a supermarket in Moscow. Guriyev says Russian consumers will suffer more than Russian producers will gain.
Vladimir Putin (second from right) looks at prices at a supermarket in Moscow. Guriyev says Russian consumers will suffer more than Russian producers will gain.

Also, Russian agriculture has benefitted from integration into the global economy, Russia has imported seeds, Russia has imported other inputs for agriculture from more advanced agricultural countries, that is also normal. And that is why autarky and isolation would actually hurt Russian agriculture in some ways.

And now, after this ban has been announced, the Russian government is discussing exemptions to the ban because Russian agricultural producers also rely on the global market. And some of them will actually be hurt by this ban because they won't be able to import seeds and other inputs they need for their production.

RFE/RL: Prime Minister Medvedev has said the government will provide resources to "add an extra boost to the development of areas of national agriculture that have previously been neglected and significantly relied on import." Is this promise credible?

Guriyev: The Russian government has made a lot of promises in recent months and years, and some of these promises have not been implemented. Right now it is hard to judge which promises will actually be fulfilled simply because Russia is facing hard budget constraints because of sanctions, but also because of the general economic slowdown Russia is experiencing.

RFE/RL: Russian Deputy Prime Minister Arkady Dvorkovich has said the customs union will benefit from the Russian sanctions. "Surely, our partners in the customs union might benefit in this situation as they will process part of the products that used to be directly exported to Russia," he said. Are Belarus and Kazakhstan, indeed, likely to be the biggest beneficiaries of Russia's import ban?

Guriyev: Oh yes, this is something that the Russian government has got exactly right. Somehow, when this ban was announced and when this decision was prepared and made, Russia decided not to, or forgot to, talk to Belarus and Kazakhstan. And now we have a paradoxical situation where Russia has a ban, Belarus and Kazakhstan don't, and yet there is no customs border between Belarus, Kazakhstan, and Russia. And in that sense, Belarus and Kazakhstan can simply import European food, process or even relabel this food as their own, and then sell it in Russia. And, of course, they will benefit.

And even if this relabeling, repackaging, or processing doesn't take place, Belarus and Kazakhstan simply stand to gain as alternative suppliers of food which are geographically very close to the Russian market. And, being shielded from European competition, they can now have better access to a large market of Russian consumers.