By Paul Goble
Since beginning its program of import substitution after Western sanctions were imposed in 2014, the Russian government has been focused on food, information technology, machine building and other goods that the West has blocked Russia from importing, Valentin Katasonov says.
But the Strategic Culture Foundation economist and commentator says that Moscow should be focusing on one area it has so far neglected and promote import substitution by developing the extraction of natural resources, restricting exports and changing manufacturing procedures to reduce reliance on them (svpressa.ru/economy/article/333405/).
Most Russians even now think their enormous country has all the natural resources it needs, Katasonov says. In Soviet times, that was almost true; but with the loss of access to mines in the former Soviet republics, it definitely is not now. Unfortunately, the old view continues and many ignore the risk of sanctions in this area.
That has left Russia dependent on imports of these minerals. Over the last three years, Russia has imported more than a third of those it listed in 1996 as strategically important, and 100 percent of such minerals as manganese, chromium, titanum and lithium. The import share of many others remains high as well.
According to the economist, “the probability that limitations and bans on the delivery of these critically important resources is rising sharply.” That means Moscow must take action and do so without delay, shifting resources to develop mines away from developing oil and gas, limiting exports of other critical minerals, and changing production of goods that rely on them.
Just before the launch of “the special operation in Ukraine,” Dmitry Medvedev, deputy head of the Russian Security Council, signaled that Moscow is thinking about this issue, but it is clear that far more needs to be done and quickly if Russia is not to face serious bottlenecks in a sector it didn’t think it would, Katasonov says.