Publication: Monitor Volume: 4 Issue: 15

At a meeting of the Russian government on January 15, chaired by First Deputy Prime Minister Anatoly Chubais, the work of the Ministry of Foreign Economic Relations was described as disorganized and "amateurish." The head of the government staff, Vladimir Babichev, blasted trade minister Mikhail Fradkov for failing to coordinate the work of the 70 inter-department commissions that are supposed to promote various international trade projects. Chubais described the projects as "tourism at the state’s expense." The ministry was accused of having failed to inform other government agencies about the progress of the Paris and London club debt negotiations, and about talks over Russia’s entry into the World Trade Organization. The ministry was also blamed for failing to promote sales of Russian machinery exports (equipment accounts for only 10 percent of Russian exports), and for losing some large power station contracts in India and China. (Kommersant-daily, January 16)

Fradkov was able to divert some of this wrath. He pointed out that trade delegations to India and China had last year been headed by Chubais and First Deputy Prime Minister Boris Nemtsov, who should therefore share some of the responsibility for the lost contracts. He also accused the Finance Ministry of blocking some projects (with Cuba for example) pending resolution of outstanding Soviet-era debts to Russia. A plan was drafted 18 months ago to radically downsize the foreign trade ministry and to close many of its consular offices. For the time being, however, Fradkov seems to have fended off his critics and saved the ministry from any radical cuts.

Data released last week bear out that Russia’s export boom has leveled off. In the period January to November 1997, exports were down 1 percent, to $76 billion. Exports are still heavily dependent on fuel and energy, which account for 48 percent of export earnings, and also on metals, which account for another 17 percent. The physical volume of exports increased by 2.3 percent, but the average price fell 2.7 percent, reflecting weaker demand on world commodities markets. Russia’s export capacity is reaching its physical limits in some commodities — the country exports 72 percent of its mineral fertilizers, 43 per cent of its oil output, and 36 percent of its natural gas. The CIS takes 19 percent of Russian exports and provides 27 percent of Russian imports (down from 32 percent last year). (Biznes v Rossii, No. 1. 12, January 12; Finansovye izvestiya, January 13)

On the import side, the picture was more positive. Imports rose 9.5 percent to $46 billion, and the increase was mainly due to capital equipment purchases. The share of imports in retail sales declined from 53 per cent in 1996 to 49 per cent in 1997. Individual shuttle traders are thought to have exported goods worth $1 billion and imported $12.3 billion, down 5 percent on 1996 because of tighter border controls

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