Shatha Khalil *
The Russian Federation has important features that make it one of the major economies and enable it to take a prominent place among the most advanced countries on the world map, with the three main requirements for comprehensive development: capital, resources and human qualifications. And so the Russian economy is the sixth largest economy in the world according to the equitable purchasing power. Since 2008, Moscow has been named the “capital of world millionaires”.
Russian Foreign Trade:
The data of the site “ITC” shows that the exports of Russia reached 359 billion dollars last year against imports of 228 billion dollars. The exchange rate of the ruble has fluctuated and declined since 2014 significantly against the dollar from around 33 rubles per dollar to more than (80) rubles at the beginning of the year 2016 , before starting to recover and stabilize at the level (56-57) rubles per dollar in the year 2017.
The Russian currency, however, fell back after tightening US sanctions on Russia in April 2017 , before the second wave followed Washington’s announcement of new sanctions on the last August 22 that the dollar to stabilize at 66.63 rubles .
In the reform plans, economic development and the face of economic sanctions, Deputy Prime Minister “Vitaly Mutko ” said it has been approved budget, for (2019-2021) under the federal budget law for the next three years.
The budget draft targets the deficit during the coming year at 1.8% of the country’s GDP, in 2020 at 1.1% and in 2021 at 0.9%.
Russian Prime Minister Dmitry Medvedev said that the next six years would not be easy for the Russian economy, calling on the government to take into account the situation in the financial and raw markets, especially the risks of the spread of trade wars and sanctions.
Medvedev stressed that Russia will develop economic policy to ensure economic growth and ensure a steady increase in the standard of living of citizens.
Russia has begun to move to national currencies in its trade dealings with the Middle East, Southeast Asia, Latin America and Africa. Russian Trade and Industry Minister Denis Mantorov stressed that the adoption of national currencies in trade was not a response to US sanctions against Russia, but it is within measures taken for the Russian economic plan to go in this path since years which allowed the accumulation of experiences on this level , especially with regard to transactions between commercial banks and central banks , pointing out that the Russian auto sector began to carry out deals in the national currencies with Turkey , while trade transactions between Russia and the European Union in euro
Earlier, Russ Auburn Export Co., which manages about 85 percent of Russian arms exports, announced it had abandoned the US dollar in arms and military equipment deals and confirmed it had carried out its first military deals in currencies other than the dollar.
Russian First Deputy Prime Minister and Finance Minister Anton Silwanov confirmed that his country would reduce its dealings with the US dollar and increase its dependence on the currencies of other countries in trade exchanges.
The Kremlin stressed that Russia prefers bilateral trade transactions with all countries in their national currencies rather than the dollar, and has long studied the matter at the highest level.
The comments came after Turkish President Recep Tayyip Erdogan confirmed that Turkey was preparing to conduct commercial transactions in national currencies with China, Russia and Ukraine.
The Turkish lira has fallen more than 40 percent against the dollar since the beginning of the year on the back ground of political differences with the United States, but it has risen again by more than 5 percent following measures launched by the Turkish central bank to provide banks with liquidity and financial stability. The currencies of a number of markets along with the European currency, declines against the background of the decline of the Turkish lira, for the benefit of currencies that are safe havens such as the dollar and the Japanese yen.
Asked about Erdogan’s proposal, Kremlin spokesman Dmitry Peskov said Russia was calling for such an arrangement with all countries and that the issue had been raised on more than one occasion during the bilateral talks between Turkey and Russia.
Putin has already put forward the use of national currencies in international trade exchanges, criticizing the US use of the dollar as a political tool.
China announced its launch last March, trading crude oil contracts denominated in the Chinese currency” Yuan ” on the Shanghai International Energy Exchange, and observers believe that this step will increase the pressure on the US dollar in oil markets.
The Russian economy relies on energy revenues for economic growth. Russia has abundant natural resources, including oil, natural gas and precious metals, which contribute with a large share of Russian exports, a high-income mixed economy where the state has strategic sectors in the economy, market reforms in the 1990s it privatized much of Russia’s industry and agriculture, except for exceptions in energy and defense sectors.
Russia has significant mineral and energy resources, which have only been partially exploited, and the export of oil, natural gas and minerals is a major source of hard currency.
Russian arms economy:
Russia has a large and sophisticated weapon industry capable of designing and manufacturing high-tech military equipment. For example, the Russian S-57 fighter tests the weapons of the sixth generation where the Russian-made S-57 fighter of fifth generation tested some of the systems and weapons to be used in the fighters of the Sixth Generation .
Some techniques are being tested, primarily navigation systems and weapons to be used in the unmanned sixth-generation aircraft.
The advantage of this aircraft, according to Rogozin, its ability to carry out combat tasks without human participation and its reliance on artificial intelligence and the six-generation aircraft will feature wireless photonic radar, its ability to achieve ultrasonic speed, and the use of new physical-force weapons such as laser weapons and acoustic weapons “Flying in near space.
Russia relies on energy revenues for economic growth, and its economy can be classified as “high-income mixed” as the state has strategic sectors. Although market reforms in the 1990s led to the privatization of most of Russia’s industry and agriculture, the state has maintained ownership of the energy and defense sectors, while tourism is a significant sector in terms of financial revenues.
Russian industry covers many types of products: iron, metals, agricultural machinery, weapons, precision machinery and textiles. In order for Russian industry to remain competitive with foreign industries, it must be restructured. Agriculture (cereals, potatoes …), livestock, fishing, forestry are the most important sectors in Russian economy – Tourism is a significant sector in terms of its financial revenues.
In conclusion, the Russian government is trying to reduce the dependence of the economy on the US dollar by stimulating trade in national currencies and ending the dependence of the Russian economy entirely on the US dollar based on proposals from Andrew Kostin, president of VTB, the second largest bank in Russia, and that the document should be approved by Prime Minister Dmitry Medvedev.
Russian Finance Minister Anton Silwanov also confirmed that Russia would continue to reduce its holdings of US securities in response to recent US sanctions against Moscow and that the US dollar had become an unreliable instrument in international trade.
Silwanove said ” we reduced our investments to a large extent in American assets ,in fact, the dollar, which is the international currency, has become a risky tool in the international payments issue,” he added “Using national currencies in foreign transactions instead of the dollar is better for our economy. Mr Silawanov ruled out that the Moscow government should have any plans to close US companies in Russia at the moment in response to US sanctions saying “We are not currently
planning any restrictions and closures on these companies.
Economic Studies Unit
Rawabet Center for Research and Strategic Studies