Sanctions will boost and be a boon to Russian economy

[Ghost Dog]

With reference to the following influential blog article: - http://vineyardsaker.blogspot.com.es/2014/08/you-wanna-be-uncle-sams-bitch-pay-price.html

From main article (proofread & edited by GD):

... Russia used these sanctions to do something vital for the Russian economy. Let me explain: after the collapse of the USSR Russian agriculture was in disarray, and (Boris) Yeltsin only made matters worse. Russian farmers simply could not compete against advanced Western agro-industrial businesses which benefited from huge economies of scale, from expensive and high-tech chemical and biological research, which had a full chain of production (often through large holdings), and top quality marketing capabilities. The Russian agricultural sector badly, desperately, needed barriers and tariffs in order to be protected from the Western capitalist giants but, instead, Russia voluntarily abided by the terms of the WTO and then eventually became a member. Now Russia is using this total embargo to provide crucially needed time for Russian agriculture to invest and take a much larger share of the Russian market. Also, keep in mind that Russian products are GMO-free, and that they have far fewer preservatives, antibiotics, artficial coloring, taste enhancers, and pesticides. And since they are locally produced, they don't need to be brought in using the kind of refrigeration/preservation techniques which typically make products taste like cardboard. In other words, Russian agricultural products taste much better; but that is not enough to complete. This embargo now gives them a powerful boost to invest, develop and conquer market share...

From comments (proofread & edited by GD):

... This is bad news for suppliers in the EU and great news for suppliers in Argentina, Brazil and South Africa. Russia will be playing the Great Equalizer by selling oil and gas to the EU, China and India and redistributing the proceeds to developing countries that are able to produce food. The miles and miles of plastic covered green houses and the income they produce in Holland and Spain will simply relocate to the developing world where they can be operated more cheaply. Once cargo is loaded on board a ship the transport cost to anywhere in the world is incidental.

As US NATO sanctions take hold, redirection of markets for manufactured goods will follow. Russia will be seeking sources for manufactured goods like airliners and automobiles from Brazil and China to the detriment of suppliers in the US and EU.

Once the flow of commerce is established between Russia and the other BRICs nations it will be next to impossible for the EU to regain their lost markets.

As the world economy shifts to the newer emerging markets world trade will likewise shift from transactions in dollars to other world currencies. As the World watches what could happen to them if they do not follow what the US dictates, the US-led sanctions against Russia will encourage trade to move away from the dollar. The US will find itself out of the loop and the dollar will lose its status as world reserve currency and the US will lose its hegemony...

http://vineyardsaker.blogspot.com.es/2014/08/you-wanna-be-uncle-sams-bitch-pay-price.html


Let's hope Russians (and Chinese, Brazillians, ...) will be intelligent and enlightened enough to develop localised, socially responsible and environmentally respectful and sustainable agricultural systems, and to encourage the same in the rest of the world wherever this makes environmental and social sense, sensibly regulating and limiting intercontinental trade in agricultural produce that could more sustainably be produced and consumed more locally.

Note that a similar analysis applies in the area of industrial production.

GD

[Igel]

1. Part of it is incoherent.

In the sense that it doesn't cohere internally, not in the more common sense "it's babbling."

You're not going to get "local" produce without need for long-range refridgerated shipping ... if you get a lot of stuff produced in Brazil and China and then exported to European Russia.

Keep in mind that Poland is really fairly close. Even Ireland is closer than any other BRICS country (leaving out Russia itself, that is).

Much of Russian agriculture was remediated in the last 10 years. There was a lot of chaos after the fall of the USSR--most of it continuing the chaos that existed before the fall of the USSR, you really have to remember what the last 5 years were like before the USSR went bye-bye, and the previous 30 before that. (Khrushchev really did a number on agriculture--think "corn"--as did Stalin before him with the introduction of the glorious views of Lysenko ... Russia's own Lamarck.) Thing is, a lot of people really can't get their heads around the idea that the USSR was a seriously messed up place. Even granted that it was exquisitely anti-imperialist, had free high-quality health care, full respect for workers and women, and had an awesome freedom of the press and of religion. If the sarcasm in that sentence wasn't obvious by the 7th word, and laughingly ridiculous by word 12, there's a hole in your mind. I suspect the writer of the OP would be bobbling his head in whole-hearted agreement, possibly until the end of the sentence.

This was precisely the spin put on it by the Russian government without 24 hours after announcing the sanctions. One has to wonder--if keep most production of food and industry within your borders is a good thing, why did Russia even want to join the WTO?

And why were the tariff wars of the '20s considered a precursor and facilitator of the Depression?

Because some people take into account opportunity costs.