Sat Aug 9, 2014, 06:53 AM
Ghost Dog (15,336 posts)
Sanctions will boost and be a boon to Russian economy [View all]
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...
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.
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