Putin: Import Substitution Is ‘Temporary Phenomenon’

Russia’s import substitution is a ‘temporary phenomenon, a temporary tool for adjusting the current situation’, President Vladimir Putin said on Wednesday, according to TASS.

“The idea of import substitution itself is not universal and is not what we should strive for in the long run, because import substitution should not undermine competition. This is an extremely important thing,” Putin said at a meeting with women entrepreneurs.

“We should understand, that all this import substitution is a temporary phenomenon. I want you to understand this. This is a temporary tool to adjust to the current situation,” he stressed.

Russia produces few high-value goods that can compete with imports. Thanks to oil inflating the value of the ruble it has always been cheaper and easier to import finished goods than go through the process of investing money into expensive production and development lines that produce goods that are, at the end of the day, inferior to the imports.

The goal of the Kremlin’s sanctions is to break that equation, but it has only been really successful in the agricultural sector – most famously with cheese production.

According to Vasily Koltashov, the head of the Centre for Economic Studies at the Institute of Globalisation and Social Movements, the import substitution policy is aimed at expanding the export range.

“Russia needs to import only what Russia needs. We should not import poultry from the USA as we did during Yeltsin’s times. We should import, for example, equipment that we cannot make ourselves,” Koltashov told Pravda.