The wheat ban shows Russians are not capitalists yet
You can take Russia out of the Soviet Union but its ban on wheat exports shows that you can’t take the Soviets out of Russia. They may look like capitalists when it suits, but Moscow quickly reverts to the planned economy.
Record temperatures have caused a drought that is reducing the yield on the country’s cereal harvests. Normally Russia is a big exporter (though more to countries such as Egypt than to Britain), but faced with a shortage that could leave Russian tables without bread, prime minister Vladimir Putin has banned wheat exports until the end of 2010.
Nationalists in many countries would see such a protectionist move as sensible. Some Briton argued that because the UK has its own sources of oil we need not have worried when world prices went to $150 a barrel. But in a world whose economy depends on free trade, national boundaries should be invisible.
And Russia’s five-month ban on wheat exports – which could be extended into 2011 if Putin still needs to court popularity - contrasts with the way that the country’s oligarchs have apparently embraced capitalism since Communism was overthrown. Russian companies are happy to list on the London Stock Exchange and investors buy businesses in the West for their profits, but a country which still remembers the great grain shortage of 1972 has now very quickly put the state interest ahead of free trade.
Indeed, Putin has put the Russian peoples’ ability to buy bread above the country’s ability to exploit a commodity price that has more than doubled in a month and which could have greatly boosted its foreign currency earnings.
As it happens, world stocks of grain are high and the rest of the world should not suffer greatly from Russia’s ban. But the West might want to note how readily Russia protects its key resources.
Moscow has previously cut off gas supplies in its political disputes with the Ukraine; BP has had a tussle with its Russian partner over oil ownership. If a Russian company such as Gazprom tried to take over a UK supplier like Centrica or even BP, should the bid be waived through as though Kraft was buying a chocolate company, or should we play politics too?
August 10th, 2010 at 11:14 am
How shocking that Russia has moved to protect it’s poorer citizens from food shortages instead of exploiting an opportunity for a few rich people to make some more cash.