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Russian food production BOOMING thanks to import substitutions, Western sanctions

Cheddar, Brie, Prosciutto, Blue Cheese, Bagels and Ciabatta are now all made in Russia

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A relatively recent phrase is now part of the lexicon of everyday life among Russians, it is “import substitution”, or if it were marketed in the USA, it would probably be packaged as “Made in Russia”.

Sanctions and similar geopolitical micro-management policies instituted by Western countries, and directed against Russia have added urgency to efforts in transferring key components of agricultural, consumer and industrial business to domestic producers. At the end of the day, it is hoped (by local companies) that Russian ones will replace the majority of foreign goods traditionally imported.

The import substitution projects are considered here to be a temporary phenomenon, a temporary tool for adjusting to the current situation.

According to President Putin. “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. We should aim at producing products of such quality and price that it is competitive not just on our own, but on the world’s markets.”

He went on to say “In some cases we did it and are doing it to support domestic producers in difficult economic conditions, especially in situations when our partners violate and distort competition by imposing different sanctions, which are politically motivated, as they claim, but in fact are based on ambition’s to gain some advantage.”

Efforts to reduce imports began in 2014. By 2016, it was already possible to note the presence of impressive successes in many areas of the economy.

On New Year’s Day, January 1 2017 the purchase of Russian goods and services were legislated to have priority over those of foreign origin in accordance with Russian Government Decree No. 925 dated 16 September 2016. Sanctions were the stimulus, but common business sense was the driver. The new decree applies to all suppliers selling goods and services to state corporations, natural resource monopolies, as well as companies in which the Russian state has at least a 50% interest. All types of procurements are affected, as the Decree does not restrict its application to any specific goods or services.

The Decree has placed foreign goods and services suppliers at disadvantage when compared to Russian suppliers in several respects: Russian Local Suppliers will benefit from a 15% virtual discount from the prices specified in their ‘Made in Russia’ offers.

Goods are considered of Russian origin, if they are made or have been sufficiently processed in country according to customs regulations that are applicable in Russia. A supplier is Russian if it is a legal entity registered in Russia (which can be fully foreign-owned, except in cases of specifically regulated sectors, such as media) or a Russian citizen.

Introduction of these rules is to encourage foreign manufacturers to localize their production in Russia, take advantage of low ruble costs, enhance job creation, and provide needed competition between similar providers of goods and services both foreign and domestic.

Products labelled “Made in Russia” now (in 2018) appear frequently in all parts of the market.  This program of import substitution has taken on the force of a countrywide mobilization of domestic as well as non-Russian producers covering a very broad range of goods and services.

The program has one main goal – to reduce or completely stop the import of specific groups of goods, and instead establish Russian production of the same or similar products. For the past three years, this task is seen as one of the highest priorities for the government of the Russian Federation.

By 2015, approximately 20 programs were prioritized as needing assistance in non-governmentally controlled industry for the neediest sectors of private industry. To appreciate the scale of activity, as well as accountability for this challenge it is enough to see that the main players involved in supporting this effort are the Ministries of Transport, Energy, Industry & Trade, and Communications of the Russian Federation.

All have been deeply involved in this program, not to mention a raft of Russia’s analytical, research, banking and commercial associations. Fast forward to 2018, there are today just over 2,500 projects worth $38 billion in development with full completion targeted by latest 2020.

The import ban has of course affected the supply of many goods, but the boost in domestic production has taken up some of the slack. For many foodstuffs, the substitution effort has encouraged investment and development – today, according to the central bank many foodstuffs are more plentiful than they were before sanctions, and more affordable.

The areas prioritized today for Russian manufacturing are:

Machine-tool manufacture (as current imports are 90%)

Civil aviation manufacturing (as current imports are 80%)

Heavy engineering (as current imports are 70%)

Supplies of equipment for the oil and gas industry (as current imports are 60%)

Manufacture of power equipment (as current imports are 50%)

Agricultural machinery (as current imports range from 50-90% in various categories)

Many residents of Russia agree that sanctions were the long-awaited spark that has kick-started domestic producers. Almost immediately after the introduction of sanctions from the west, and reciprocal mirror responses from Russia, a number of experts have identified groups of products that can be easily replaced with domestic products on a countrywide scale without much effort.

These include Meats, Oils (several vegetable and animal varieties. At the beginning of import substitution, the share of imports was about 20%), Milk, including cheeses: by 2020, it is planned to completely “cheese independent”.

According to both international and local expertise, Russia is able to meet 90% of its food requirements, as well as providing some food support to its neighbors.

Financial support for the import substitution projects are implemented via:

  1. Government subsidies, and co-financing of research;
  2. Grants, with preference given to companies participating in government purchases.
  3. Increased lending to companies on preferential percentages and for long terms.

The proposals apply only to competitively demonstrated projects that have been approved by competent assessors. The selection is conducted among enterprises and holdings that are active in the following sectors: Agriculture; mechanical engineering; housing construction; manufacturing industry; chemical industry; power engineering; telecommunications; and transport.

The main requirement for obtaining financial support on favorable terms is the need to locate production in one of the regions of the Russian Federation.

The government has taken other measures to help support projects of import substitution. The government proposes: large targeted loans from the federal budget, financing of enterprises at the pre-production stage, special measures to stimulate import substitution through governmental or municipal procurement.

With the help of these steps, the Russian government can restrict the purchase of raw materials and finished products from foreign producers. The reflective of western embargoes also apply to the procurement of certain groups of essential goods. These include medicines, clothing, equipment manufactured by machine-building companies, technical equipment and components for the defense industry.

From the standpoint of foreign-owned companies, these measures have presented them a “fork in the road”. Either they just try to carry on, in which case eventually they will lose the Russia and associated markets, or they take the necessary steps to establish all or most of their manufacturing in Russia.

Apparently, since 2016 a great many European as well as US companies have managed to begin this process, either by setting up direct subsidiaries, or more often through imaginative origin masking methods to protect themselves against future amplified sanctions and/or other business restrictions from their own governments.

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Foreign Banks Are Embracing Russia’s Alternative To SWIFT, Moscow Says

Given its status as a major energy exporter, Russia has leverage that could help attract partners to its new SWIFT alternative.

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Via Zerohedge


On Friday, one day after Russia and China pledged to reduce their reliance on the dollar by increasing the amount of bilateral trade conducted in rubles and yuan (a goal toward which much progress has already been made over the past three years), Russia’s Central Bank provided the latest update on Moscow’s alternative to US-dominated international payments network SWIFT.

Moscow started working on the project back in 2014, when international sanctions over Russia’s annexation of Crimea inspired fears that the country’s largest banks would soon be cut off from SWIFT which, though it’s based in Belgium and claims to be politically neutral, is effectively controlled by the US Treasury.

Today, the Russian alternative, known as the System for Transfer of Financial Messages, has attracted a modest amount of support within the Russian business community, with 416 Russian companies having joined as of September, including the Russian Federal Treasury and large state corporations likeGazprom Neft and Rosneft.

And now, eight months after a senior Russian official advised that “our banks are ready to turn off SWIFT,” it appears the system has reached another milestone in its development: It’s ready to take on international partners in the quest to de-dollarize and end the US’s leverage over the international financial system. A Russian official advised that non-residents will begin joining the system “this year,” according to RT.

“Non-residents will start connecting to us this year. People are already turning to us,”said First Deputy Governor of the Central Bank of Russia Olga Skorobogatova. Earlier, the official said that by using the alternative payment system foreign firms would be able to do business with sanctioned Russian companies.

Turkey, China, India and others are among the countries that might be interested in a SWIFT alternative, as Russian President Vladimir Putin pointed out in a speech earlier this month, the US’s willingness to blithely sanction countries from Iran to Venezuela and beyond will eventually rebound on the US economy by undermining the dollar’s status as the world’s reserve currency.

To be sure, the Russians aren’t the only ones building a SWIFT alternative to help avoid US sanctions. Russia and China, along with the European Union are launching an interbank payments network known as the Special Purpose Vehicle to help companies pursue “legitimate business with Iran” in defiance of US sanctions.

Given its status as a major energy exporter, Russia has leverage that could help attract partners to its new SWIFT alternative. For one, much of Europe is dependent on Russian natural gas and oil.

And as Russian trade with other US rivals increases, Moscow’s payments network will look increasingly attractive,particularly if buyers of Russian crude have no other alternatives to pay for their goods.

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US leaving INF will put nuclear non-proliferation at risk & may lead to ‘complete chaos’

The US is pulling out of a nuclear missile pact with Russia. The Intermediate-Range Nuclear Forces Treaty requires both countries to eliminate their short and medium-range atomic missiles.

The Duran

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Via RT


If the US ditches the Intermediate-Range Nuclear Forces Treaty (INF), it could collapse the entire nuclear non-proliferation system, and bring nuclear war even closer, Russian officials warn.

By ending the INF, Washington risks creating a domino effect which could endanger other landmark deals like the Strategic Arms Reduction Treaty (START) and collapse the existing non-proliferation mechanism as we know it, senior lawmaker Konstantin Kosachev said on Sunday.

The current iteration of the START treaty, which limits the deployment of all types of nuclear weapons, is due to expire in 2021. Kosachev, who chairs the Parliament’s Upper House Foreign Affairs Committee, warned that such an outcome pits mankind against “complete chaos in terms of nuclear weapons.”

“Now the US Western allies face a choice: either embarking on the same path, possibly leading to new war, or siding with common sense, at least for the sake of their self-preservation instinct.”

His remarks came after US President Donald Trump announced his intentions to “terminate” the INF, citing alleged violations of the deal by Russia.

Moscow has repeatedly denied undermining the treaty, pointing out that Trump has failed to produce any evidence of violations. Moreover, Russian officials insist that the deployment of US-made Mk 41 ground-based universal launching systems in Europe actually violates the agreement since the launchers are capable of firing mid-range cruise missiles.

Leonid Slutsky, who leads the Foreign Affairs Committee in parliament’s lower chamber, argued that Trump’s words are akin to placing “a huge mine under the whole disarmament process on the planet.”

The INF Treaty was signed in 1987 by then-President Ronald Reagan and Soviet leader Mikhail Gorbachev. The deal effectively bans the parties from having and developing short- and mid-range missiles of all types. According to the provisions, the US was obliged to destroy Pershing I and II launcher systems and BGM-109G Gryphon ground-launched cruise missiles. Moscow, meanwhile, pledged to remove the SS-20 and several other types of missiles from its nuclear arsenal.

Pershing missiles stationed in the US Army arsenal. © Hulton Archive / Getty Images ©

By scrapping the historic accord, Washington is trying to fulfill its “dream of a unipolar world,” a source within the Russian Foreign Ministry said.

“This decision fits into the US policy of ditching the international agreements which impose equal obligations on it and its partners, and render the ‘exceptionalism’ concept vulnerable.”

Deputy Foreign Minister Sergey Ryabkov denounced Trump’s threats as “blackmail” and said that Washington wants to dismantle the INF because it views the deal as a “problem” on its course for “total domination” in the military sphere.

The issue of nuclear arms treaties is too vital for national and global security to rush into hastily-made “emotional” decisions, the official explained. Russia is expecting to hear more on the US’ plans from Trump’s top security adviser, John Bolton, who is set to hold talks in Moscow tomorrow.

President Trump has been open about unilaterally pulling the US out of various international agreements if he deems them to be damaging to national interests. Earlier this year, Washington withdrew from the Joint Comprehensive Plan of Action (JCPOA) on the Iranian nuclear program. All other signatories to the landmark agreement, including Russia, China, and the EU, decided to stick to the deal, while blasting Trump for leaving.

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Kiev ‘Patriarch’ prepares to seize Moscow properties in Ukraine

Although Constantinople besought the Kiev church to stop property seizures, they were ignored and used, or perhaps, complicit.

Seraphim Hanisch

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The attack on the Eastern Orthodox Church, brought about by the US State Department and its proxies in Constantinople and Ukraine, is continuing. On October 20, 2018, the illegitimate “Kyiv (Kiev) Patriarchate”, led by Filaret Denisenko who is calling himself “Patriarch Filaret”, had a synodal meeting in which it changed the commemoration title of the leader of the church to include the Kyiv Caves and Pochaev Lavras.

This is a problem because Metropolitan Onuphry of the Ukrainian Orthodox Church which is canonically accepted and acts as a very autonomous church under the Moscow Patriarchate has these places under his pastoral care.

This move takes place only one week after Patriarch Bartholomew I of Constantinople unilaterally (and illegally) lifted the excommunications, depositions (removal from priestly ranks as punishment) and anathemas against Filaret and Makary that were imposed on them by the hierarchy of the Moscow Patriarchate.

These two censures are very serious matters in the Orthodox Church. Excommunication means that the person or church so considered cannot receive Holy Communion or any of the other Mysteries (called Sacraments in the West) in a neighboring local Orthodox Church. Anathema is even more serious, for this happens when a cleric disregards his excommunication and deposition (removal from the priesthood), and acts as a priest or a bishop anyway.

Filaret Denisenko received all these censures in 1992, and Patriarch Bartholomew accepted this decision at the time, as stated in a letter he sent to Moscow shortly after the censures. However, three years later, Patriarch Bartholomew received a group of Ukrainian autocephalist bishops called the Ukrainian Orthodox Church in the USA, who had been in communion with Filaret’s group. While this move may have been motivated by the factor of Bartholomew’s almost total isolation within Istanbul, Turkey, it is nonetheless non-canonical.

This year’s moves have far exceeded previous ones, though, and now the possibility for a real clash that could cost lives is raised. With Filaret’s “church” – really an agglomeration of Ukrainian ultranationalists and Neo-Nazis in the mix, plus millions of no doubt innocent Ukrainian faithful who are deluded about the problems of their church, challenging an existing arrangement regarding Ukraine and Russia’s two most holy sites, the results are not likely to be good at all.

Here is the report about today’s developments, reprinted in part from OrthoChristian.com:

Meeting today in Kiev, the Synod of the schismatic “Kiev Patriarchate” (KP) has officially changed the title of its primate, “Patriarch” Philaret, to include the Kiev Caves and Pochaev Lavras under his jurisdiction.

The primate’s new official title, as given on the site of the KP, is “His Holiness and Beatitude (name), Archbishop and Metropolitan of Kiev—Mother of the cities of Rus’, and Galicia, Patriarch of All Rus’-Ukraine, Svyaschenno-Archimandrite of the Holy Dormition Kiev Caves and Pochaev Lavras.”

…Thus, the KP Synod is declaring that “Patriarch” Philaret has jurisdiction over the Kiev Caves and Pochaev Lavras, although they are canonically under the omophorion of His Beatitude Metropolitan Onuphry of Kiev and All Ukraine, the primate of the canonical Ukrainian Orthodox Church.

Philaret and his followers and nationalistic radicals have continually proclaimed that they will take the Lavras for themselves.

This claim to the ancient and venerable monasteries comes after the Holy Synod of the Ecumenical Patriarchate announced that it had removed the anathema placed upon Philaret by the Russian Orthodox Church and had restored him to his hierarchical office. Philaret was a metropolitan of the canonical Church, becoming patriarch in his schismatic organization.

Representatives of the Ecumenical Patriarchate have clarified that they consider Philaret to be the “former Metropolitan of Kiev,” but he and his organization continue to consider him an active patriarch, with jurisdiction in Ukraine.

Constantinople’s statement also appealed to all in Ukraine to “avoid appropriation of churches, monasteries, and other properties,” which the Synod of the KP ignored in today’s decision.

The KP primate’s abbreviated title will be, “His Holiness (name), Patriarch of Kiev and All Rus’-Ukraine,” and the acceptable form for relations with other Local Churches is “His Beatitude Archbishop (name), Metropolitan of Kiev and All Rus’-Ukraine.”

The Russian Orthodox Church broke eucharistic communion and all relations with the Ecumenical Patriarchate over this matter earlier this week. Of the fourteen local Orthodox Churches recognized the world over, twelve have expressed the viewpoint that Constantinople’s move was in violation of the canons of the Holy Orthodox Church. Only one local Church supported Constantinople wholeheartedly, and all jurisdictions except Constantinople have appealed for an interOrthodox Synod to address and solve the Ukrainian matter in a legitimate manner.

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