Russia

From the fifteenth to the eighteenth centuries, its geographical isolation and the length of its trade routes to the Baltic Sea hampered Russia. In the fifteenth century Great Novgorod (in northwest Russia) was the site at which Russian goods were traded with Scandinavian and Hanseatic merchants that came from their common trading post at Sankt Peterhof, until its conquest by Moscow in 1478. Moscow became the hub of the trade in "black gold," Russian and Siberian furs. By the end of the century, Russia had established itself as a state.

SIXTEENTH TO EIGHTEENTH CENTURIES

In the sixteenth century Moscow captured eastern Russia as far as the Urals (Kazan on the eastern Volga; Astrakhan on the Caspian Sea); this increased the amount of furs. In the north, Russia was troubled by wars and the reorganization of its national borders, gaining control of the Baltic port of Narva only between 1555 and 1583, until Sweden recovered it in 1700. The Russians became involved in trade with the North Sea and supplied British and Dutch shipyards with wood, masts, bitumen, linen, and hemp. In the sixteenth and seventeenth centuries contact with trading cities such as Riga, Revel (now Tallinn), and Danzig (Gdansk) increased, while Russia enjoyed a trade surplus with the West (cereals and hemp, in exchange for gold and silver). Sales of fur in China, purchases of cotton fabrics, and the reexport of luxury Asian goods (silks and spices) from China, Persia, or Central Asia as a result of trading routes to Tashkent or Samarkand, also enriched the treasury. Russia became involved in trade to the south via the Volga, the Don (Rostov-na-Donu), and the Black Sea, with numerous trade fairs (wax, wood, bitumen, wheat, caviar, wrought iron, and weapons were exported; cloth, salt, wine, spices, dried fruit, sugar, silver plate, and pearls were imported). As these regions were gradually subdued, river caravans increased trade with the Black Sea, the "Ottoman" sea, and the Ottoman Empire. A merchant community developed with important families, such as the Stroganovs, in the seventeenth century.

Strengthened by the formation of a proper nation-state by Peter the Great (who was tsar in 1721), free access to the North Sea (thanks to the conquest of Nerva and the creation of Saint Petersburg on the Neva in 1703), and the abolition of monopolies in 1775, Russian trade expanded still more during the eighteenth century. This was closely connected with the establishment of early textile- and metal-working industries. Still more important were cereals and furs, particularly as a trade in sea otter skins developed. Russia controlled Siberia, then Alaska, from 1791. With its advance into the Ukraine (beginning in the last third of the seventeenth century) and especially the Crimea, Russia gained direct access to the Sea of Azov (1739) and the Black Sea. The growth of the port of Odessa, established in 1794, exemplifies this integration into the "world economy."

THE NINETEENTH CENTURY

Two spheres of trade developed in the nineteenth century: iron from the Urals and textiles from Moscow. Internal trade networks by freight and river developed prior to the establishment of a radial railway network from Moscow, across towards Poland and the Baltic. The cereal-producing regions of the south of Russia and the Ukraine were opened. Trade also developed with Central Asia (cotton and silks) and China (tea). The Far East became a political and economic goal, with a permanently ice-free port at Vladivostok opening in 1860. The Trans-Siberian Railroad (going as far as Irkutsk in 1896 and to Vladivostok in 1906), followed by the TransManchurian, made it easier for Russian traders to make inroads into northeast China and for Manchuria to come into the sphere of influence of Russian industry. These lines enabled a substantial quantity of Western European goods to go to the Far East (fifteen days by train as opposed to six weeks by boat); the Russo-Chinese Bank (1895) and later the Russian-Asian Bank (1910) played key parts in this.

Russia's trade relationships with Western Europe became closer with exports of furs and raw materials for shipbuilding, and with the growth in the exports of Ukrainian linen and cereals (via Riga and, particularly during the years 1840 to1860, via Odessa). The export of cereal crops (half the total production of wheat and a third of the barley) trebled in value during the 1840s; in terms of volume it multiplied seven-fold between 1866 and 1900, constituting half of Russian exports. With industrialization, Russia exported iron from Krivoy Rog and, from 1860 to 1890, imported equipment to improve its rail network. The emergence of mining and iron and steel industries in the Donetz Basin, the ship industry on the Neva, and the textile industry (including in Russian Poland, around Lodz) created a large internal market for raw materials and manufactured goods. Southern and Central Asia, which was taken over during the years 1860 to 1880, provided extensive supplies of cotton (Turke-stan), hence the importance of the Trans-Aral and Trans-Caspian railway lines.

Beginning in the 1880s, industrialization was encouraged through protectionism. Laws were passed in 1881, 1885, 1887, and above all in 1891 based upon a wish to replace imports, which still outstripped exports in the 1870s. By 1900 three-quarters of demand was met by domestic industrial production, as opposed to twofifths in the 1870s. Imports and exports quadrupled in value between 1860 and 1900, and there was a trade surplus between 1880 and 1900. Trade with Germany, Belgium, France, and the United Kingdom increased, with extensive shipping across the Baltic and the North Seas. The powerful Muscovite merchants were joined by traders from the southwestern regions and a half-Russian, half-foreign banking community (notably German, but also French and Swiss). A modern banking economy appeared under the auspices of the state bank, which was founded in 1860, and thanks to the ruble, which became a convertible currency from 1897 to 1899. The Russian-Asian Bank, the leading Russian bank between 1910 and 1918, which was controlled by the Société Générale (of Paris), was in competition with several banks that were under German/Russian control (particularly the International Bank of Saint Petersburg), as well as with Moscow banks. Western businesses were active in Russia, and sometimes the Russian state or main cities raised finance in Western European markets by debenture loans; foreign capital represented 45 percent of industrial investment in 1900 (as opposed to 17% in 1880). At times, Russia raised capital in Western European markets by debenture loans.

THE RUSSIAN AND U.S.S.R. AND WORLD TRADE (1914–1940)

During World War I Russian external trade was hampered by the hostile Allied blockade to the west and the long-distance nature of transport to the east, but the Black Sea remained open. The civil war that followed the revolution and the supply of the "White" forces by the West produced an increasing decline in trade. The new economic policy (NEP) reestablished links with the West, with machinery and technology imported from Belgium, Germany, and the United States (including Ford cars). Russo-German links developed during the 1920s; in 1930 Germany represented a quarter of Russia's foreign trade. The plan to repay debt to the West using exports was not a success in spite of the multilateral conferences at Cannes and Genoa in 1922. Collectivization and the importance attached to technological and industrial independence halted the flow of trade from East to West; foreign trade declined by two-thirds between 1931 and 1934. Domestically, the market economy disappeared within a few years (1928–1931) and was replaced by trade between state-controlled, centralized rural and industrial enterprises (relying upon sector-based planning). Foreign trade was state-controlled, but banks were established in London and Paris to cater for the trade that was needed (e.g., export of Caucasian oil to France). Trading links with Kuomintang China were maintained during the 1920s, but the renewed influence in Manchuria was lost in 1931.

THE U.S.S.R. AND WORLD TRADE (1940–1989)

Although the U.S.S.R. benefited from the supply of Allied equipment during World War II, it became isolated with the onset of the Cold War. The growth in production should have made it self-sufficient. Internal trade became more substantial as a result of the establishment of a series of key river routes (Don, Dniepr, Volga, Kama) before the war, the "five seas' system" (from the Baltic and the White Sea to the Aral Sea, the Caspian Sea and the Black Sea), and the construction of railway lines in Soviet Asia.

The big change was the creation of a trading area throughout the countries of Central and Eastern Europe controlled by the U.S.S.R. Founded in 1949, Comecon (Council for Mutual Economic Assistance) became a zone for free trade and mutual pooling of energy resources and raw materials in 1956. The U.S.S.R. provided gas and oil ("the Friendship Pipeline"), while distinct specializations were organized under the auspices of Comecon. This socialist zone was extended to include China, and a large amount of supplies were provided in the 1950s, but the two countries split at the beginning of the 1960s. The U.S.S.R. built up special trading links with neighboring Third World countries (e.g., Iran) and socialist ones (e.g., India) with the sale of installations; Cuba via the purchase of sugar; as well as Vietnam and a number of African and Near East countries. This was in order to weaken the "zone of imperialist domination."

During the 1970s the bulk of foreign trade was with the countries of the socialist bloc (55% with Comecon, with which it enjoyed a huge trade surplus, and 12% with developing countries). This independent thrust can be seen in the expansion of the Soviet merchant fleet, which grew from 2.5 million metric tons in 1955 to 25 million metric tons in 1985, the fifth largest in the world.

Trade with the West developed slowly within the framework of purchasing centers, and it was specialized according to economic sector and supervised by the Soviet bank of foreign trade and the inconvertibility of the ruble (from 1928). In the West, the Coordinating Committee (COCOM), an external trade committee under the NATO umbrella, managed trade of technology. From the start of the 1960s, when the theory of the "incompatibility of the capitalist and socialist systems" was being expounded, the Soviet Union needed to fill the gaps in its production processes by importing technical equipment to speedily make good their technical deficiency. This exchange of goods with the major Western European countries was regulated via bilateral trade agreements. The U.S.S.R. obtained entire plants (agrochemical, petro-chemical, automotive), industrial equipment (including an enormous order from France in 1970 for the Kamaz truck factory), the Fiat car factory at Togliattigrad, and technological guarantees. It bought agricultural produce in order to deal with the growth of its population and the weaknesses of its own agricultural system. These imports became more significant during the 1970s. The United States was also involved in this trade (a cereal agreement for 8 million tons was signed in 1975). The pressure on their cereal crops was the reason for the April 1981 suspension of the trade boycott decreed by U.S. president Ronald Reagan in January 1980; the world political situation explains why there was never a most-favored-nation agreement between the two countries.

Medium-term Soviet debt (five to ten years) increased markedly during the years 1970 to 1980, but contracts for debt compensation allowed them to provide raw materials (platinum, gold, nonferrous metals) or industrial goods. The U.S.S.R. relied upon its hydrocarbon production and went as far as exploiting deposits from the banks of the Caspian Sea and especially from western and central Siberia. At the start of the 1980s oil pipelines ran across Central Europe to West Germany, Italy, and France; in 1986 an agreement paved the way for an enormous network connected to northern central Siberia deposits. The Soviet economy expanded markedly; its foreign trade doubled during the 1960s and quadrupled in the 1970s. However, although the U.S.S.R. was the fifth-largest world exporter in 1982, it was not involved in the GATT agreements because of the failure to ease restrictions on bilateral and contingent trade. In 1985 exports involved only 9 percent of production, and only 12 percent of those were to Western countries. West Germany, Italy, France, and the United Kingdom were its leading Western partners.

TRADE AND THE NEW RUSSIA SINCE THE 1990S

Russian foreign trade suffered three major upheavals: the independence of the non-Russian former states of the U.S.S.R., which, despite an economic cooperation agreement (the CIS, or Community of Independent States), paved the way for reduced common trade; the changed approach of the former Comecon countries, which turned almost entirely towards Western Europe; and the decentralization of control of commercial activity between various industries. The last represented a move towards the creation of genuine domestic and foreign "markets." Nonetheless, energy exports remain indispensable for Russia. The uncertainty caused by deficiencies in business law, the risks of the ruble, and not being a member of the World Trade Organization (because of insufficient private-enterprise reforms) have held up direct foreign investment and the import of capital goods.

SEE ALSO Agriculture; Arms, Armaments; Balance of Payments; Baltic States; Banking; Black Sea; Bunge and Born; Canals; Cargoes, Freight; Cargoes, Passenger; China; Comecon; Cuba; GATT, WTO; Germany;Great Depression of the 1930s; Imperialism; Import Substitution; Industrialization;International Trade Agreements; Iran; Iron and Steel; Japan; Korea;Manchuria;Mining;Nationalization;Petroleum;Regional Trade Agreements;Shipbuilding;Shipping, Inland Waterways, Europe;Shipping, Merchant;Socialism and Communism;Stalin, Joseph;United States;Vietnam;Wheat and Other Cereal Grains;Wool.

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Hubert Bonin