State Council Presidium: Russian Exports Development

Expanded meeting of the State Council Presidium on export development.

As you see, a big meeting on a very important topic. Most of what we get to read is Putin’s opening address which provides us with stats and suggestions. The great bulk of the discussion isn’t for us. I looked for other sources having an expanded transcript but found none. Fortunately, the seating arrangement and photo shoot grouped together two of the younger Team Putin members that IMO bear watching as potential Putin successors in 2030:

Deputy Chief of Staff of the Presidential Executive Office Maxim Oreshkin, left, and Minister of Industry and Trade Anton Alikhanov.

The meeting was preceded by a seminar held the previous day in preparation for this discussion, which is described in a brief synopsis in Russian at the provided link. One of the prime Info War talking points for many years has focused on Russia only being capable of exporting energy and natural resources, not value-added products—nothing that could be associated with a Brand Russia: The Gas Sation with Nukes adage being the most widely used. Consumerism is a behavior wholly foreign to Russians, although they were subjected to Western products during the Soviet Age, and IMO is a blessing. Last year began the drive to create national brands and an international Brand Russia that IMO was very curious to watch, my report on that is here. All of that’s expanding as you’ll read beginning now:

Vladimir Putin: Good afternoon, dear colleagues!

Today, as part of a meeting of the Presidium of the State Council, we will discuss a very important topic together with the heads of the constituent entities of the Russian Federation, heads of the Government, ministries and departments – important for our regions, cities, and entire sectors of the economy. We are talking about further steps to increase the country's export potential.

Russia, as you know – is an active participant in international trade. Despite the objective difficulties that Russian business is currently facing, we are developing external business relations, expanding their geography, and strengthening cooperation with predictable, reliable partners who, like Russia, understand their national interests and value mutually beneficial trade, production, and cooperation ties.

I would like to add that world trade and the global economy as a whole are now actively changing. We often talk about this, and everyone knows and understands it very well. A new system of relations is being built, where the leading roles are played by the states of the so-called Global South, dynamically growing countries, and participants in promising integration associations, such as BRICS.

Already, the BRICS countries ' contribution to the global economy exceeds the share of the so-called G7 and continues to grow. The trend is growing, but it is not changing. For the sake of interest, for reference (I myself look at these figures with interest, to be honest), the " big Seven "in 1992, what was it like? 45.5 percent of global GDP. And in 2022 – already 30.5 percent. It was 45.5, and it became 30. The forecast for 2028 is 27.9 [percent].

What about the BRICS countries? BRICS (excluding new members of this organization) - in 1992, the share in world GDP was 16.7 percent, and in 2022 – 31.4 percent. And the forecast for 2028 is 33.8 [percent]. And the trend is there, it remains, it will not go anywhere. This is an objective process that is not related to the current situation even in conflicts, including in the direction known to all of us. And BRICS with new members-of course, the situation is different there. There is a forecast for 2028 – 38 percent of global GDP.

This means that real markets of the future are being formed, which are based on strong, strategic partnerships, the principles of combining economic potentials and mutually enhancing growth.

It is important not only to understand these trends, but also to take advantage of the export opportunities that open up for our businesses and enterprises. We need to support them at all levels.

As you know, a six-year national export support project is coming to an end this year. During this time, tools have been created, including in the constituent entities of the Russian Federation, which help domestic companies to supply products abroad, allowed them to pass the pandemic stage, and in the last two years – to redirect commodity flows to promising, growing markets.

During our meetings with representatives of the business community and entrepreneurs, we have repeatedly made proposals to extend the national export support project, and we have agreed that this will be done.

The updated national project "International Cooperation and Export" will be launched next year. Its decisions, measures and mechanisms should be based on the results achieved in the export sector, the priorities of economic development that our country faces, and, of course, the objective global trends that I have just mentioned.

I would like to mention something in this regard.

In order to ensure reliable and long-term development of foreign economic relations, it is necessary to increase the efficiency of financial and informational support for exports, actively create logistics and transport infrastructure, as well as platforms for industrial cooperation.

At the same time, it is fundamentally important to encourage Russian companies to enter the markets of high-value-added goods, to increase the so-called non-primary non-energy exports, including the supply of machine-building goods, food products, and so on.

I would like to note that from 2001 to 2023, the volume of Russia's non-primary non-energy exports increased more than fourfold. This is a good result, four times, not some percentages, but four times-from 36 to 148 billion dollars. This, of course, is far from the limit for us, it is still not really so much.

But in the first seven months of this year, non-primary non-energy exports continued to grow and grew by another five percent-to 89.8 billion [dollars].

In some areas, such as food supplies, Russia has already become one of the world's leading exporters. This result is, of course, primarily the merit of specialists, labor collectives of enterprises, as well as development institutions, heads of regions and federal authorities that support them.

In the Message to the Federal Assembly [Leap Day Speech], and then in the Decree on National Development Goals, a benchmark was set, namely, to increase non-primary non-energy exports by at least two-thirds by 2030 compared to 2023. This is an ambitious goal, especially considering the challenges that our companies have faced recently.

The first one concerns making calculations. Of course, we are all well aware of this. Some Western elites have taken absolutely hostile actions against Russian financial institutions and payment systems. It has become more difficult both to get payment for export deliveries and to pay for imported goods.

To a certain extent, we managed to solve this problem. Last year, the share of payments for Russian exports in so-called toxic Western currencies halved. At the same time, the share of settlements in rubles in foreign trade operations is approaching forty percent. From 2021 to 2023, the ruble's share in export payments almost tripled to 39 percent. The share of payments in rubles for imports increased by another two percent, to 30 percent overall.

We continue to work in this area, and together with our foreign colleagues, we plan to use national currencies more widely, conduct settlements through clearing payment systems, platforms, and so on.

It is obvious that solving these tasks takes time, as our leading trading partners are tightly integrated into the current global financial system.

All over the world, we are currently working on creating a so – called supranational payment infrastructure – I want to emphasize this, many countries and regions of the world are doing this very closely-with the ability to use digital currencies of central banks and digital financial assets. Such a system will operate smoothly and independently of third countries. I want to emphasize this: we are not the only ones who are doing this in connection with certain events. It's all over the world, it's a general trend in all regions-both in the Middle East and in Asia, everyone is thinking about it, everyone is thinking and coming up with different options.

The second thing I would like to draw your attention to. In recent years, our exporters' expenses for transshipment of products have increased, ship freight, insurance and so on have become more expensive. Obviously, this has a direct impact on the price, and hence on the competitiveness of domestic products abroad.

It is necessary, of course, to deal with logistical barriers to Russian exports, to ensure transport connectivity, as they say, from the first to the last kilometer, and above all with the promising markets of the Global South, Africa, and Latin America-–in fact, our markets for our products have traditionally been there, they were there in the first place.

For this purpose, new routes and international transport corridors are being developed, such as "North-South", corridors in the Azov-Black Sea and Eastern directions, as well as the Northern Sea Route.

At the same time, I would like to emphasize once again that the introduction of transport infrastructure facilities should be synchronized with the development of logistics services – warehouses, cargo handling terminals, etc., and the construction time should correspond to plans to increase supplies to friendly countries and enter new, growing markets.

And in this regard, the third thing I would like to draw your attention to. We are actively working within the framework of the Eurasian Economic Community and expanding free trade zones with foreign partners.

At the same time, many countries of the world today set a high level of tariff protection. Despite some progress, our companies in these countries still have problems finding buyers, organizing business negotiations, and obtaining marketing information.

Also, not all partners have established mechanisms for protecting the rights and investments of Russian investors abroad.

All these are important areas of work for the Government, the Russian Export Center, our trade missions abroad and, of course, the regions.

Further. We must admit that ready-made, including high-tech Russian products, are known in the world, as a rule, in narrow segments. At the same time, our enterprises are ready to produce a large line of high-quality, competitive, eco-friendly products.

It is also important to promote it responsibly and professionally, so that as many potential buyers as possible know about it. You need to act in person and remotely-both, as they say, on the ground, and through digital channels and trading platforms.

The Russian Export Center has a special program "Made in Russia", which helps to create a positive image of Russia and domestic brands. We need to scale up this practice and expand its reach. I ask the Government and the REC to prepare a joint action plan in this regard.

At the same time, I would like to add that Russian goods, primarily industrial goods with high added value, should not only be recognizable, but also accessible to foreign buyers.

And finally, the fifth. Exporters, especially small and medium – sized companies, often say that they do not have a unified picture of Government and regional support measures, and their foreign economic strategies are often not synchronized with the federal strategy and the federal agenda.

Of course, individual regions of the Russian Federation consistently and comprehensively develop non-primary exports, including small businesses. For this purpose, regional support centers for exporters have been established, and teams of specialized specialists are working.

Inter-regional cooperation builds partnerships with friendly countries, and this, of course, contributes to strengthening Russia's technological sovereignty, sets a higher pace of economic development of the constituent entities of the Federation, and therefore the entire country.

Of course, we must and will continue to support the efforts of the constituent entities of the Russian Federation in the export sphere. At the same time, I would like to emphasize that it is necessary to systematically develop exports throughout Russia, including non-primary exports, and to link regional and federal initiatives in this area.

And of course, I ask the Government and the Russian Export Center to help our colleagues in the constituent entities of the Russian Federation, formulate appropriate recommendations in a timely manner and send them the necessary recommendations.

Dear colleagues!

Supporting exporters and increasing the supply of Russian products to foreign markets is a common task for business, federal and regional authorities, our development institutions and representatives abroad.

At the same time, I would like to emphasize that the main goal is, oddly enough, not just to increase tons, cubic meters of supplies or even the amount of export revenue. The main goal is to ensure that exports and competition of Russian companies on world markets serve as a catalyst for the renewal of our industry, agriculture, services, and many other industries, stimulate the growth of efficiency of domestic enterprises, and allow us to create modern, well – paid jobs-here in Russia. This is the ultimate goal.

And of course, joint work with foreign partners on foreign trade infrastructure, reliable supply channels, and deep technological cooperation helps to establish stronger ties between states and citizens.

In the course of our discussion today, I suggest that we proceed from these fundamental considerations.

Alexey Gennadievich [Dyumin], has just told me that the discussions were quite active yesterday, which is very good. The proposals of the heads of the constituent entities of the Russian Federation that were made at the seminar, of course, deserve attention. We will definitely consider a number of them today.

At the same time, I ask my colleagues from the Presidential Administration to summarize all these proposals and ideas and, taking into account our discussion today, send them to the Government for detailed study.

Let's get started. (To A. Tsybulsky.) Please, please, Alexander Vitalievich.

Alexander Tsybulsky: Dear Vladimir Vladimirovich, Dear colleagues!

Our commission on international cooperation and export within the State Council has been established, has started working, its composition has already been formed and the first meeting has been held. There is a lot of interest, there are many problems, but we are starting to solve them systematically, and I think that we will succeed in this.

Today, regions really play a key role in the development of exports, and export activities for many are budget-forming and have a direct impact on socio-economic development. For the regional economy, exports generate tax revenues in the amount of 4 trillion rubles, which is almost 24 percent of the total tax revenues of the regions.

Regions are in constant, so-called short communication with their exporters, especially now, when they often completely review their business strategies, act quickly, look for new consumers of their products abroad, and rebuild logistics to new markets.

To ensure the effectiveness of this work, we have considered all the problems together in detail, make the necessary decisions, act, we can say, pointwise, in the interests of each specific regional exporter, and later some of these decisions become systemic. Therefore, the new commission is just the platform where regions can share best practices and jointly discuss problems, propose solutions and agree, which is very important, on interregional cooperation. In terms of export, this direction is very necessary.

Exports play an important role in the Russian economy: It provides, directly or indirectly, about 31 percent of the country's budget revenues, more than 12 million jobs, and almost a quarter of gross domestic product. Historically, the majority of non-primary non-energy exports fall to friendly countries, including India, Iran, Azerbaijan, Kazakhstan, Belarus, and China. Despite the difficulties in world relations, the trade turnover with them continues to grow.

The conditions for conducting foreign trade have changed, with sanctions acting as a catalyst. But it is quite obvious that it was only a matter of time, as you have said in great detail, Mr President, that the stagnation of European markets in the coming decades would in any case inevitably lead to the need to reorient export flows. Therefore, the current situation today should be perceived rather as an opportunity to become the first on the road and further determine the rules of the game in these international markets.

This work is also due to the fact that our exporters have shown the ability to quickly adapt to changing conditions. Starting in 2022, they are actively reconfiguring their business models and logistics routes, exploring new sales markets, and building partnerships with countries focused on long-term, mutually beneficial and respectful cooperation.

According to the results of 2023, the share of industrial exports with friendly countries increased by 15 percent compared to 2022 and reached almost 80 percent. But we must admit that the total volume of industrial non-primary non-energy exports has not yet reached the level of 2021, and today our task is to reach this level and, starting from this point, go at an accelerated pace to fulfill your instructions to increase non-primary non-energy exports by two-thirds by 2030 in relation to 2023.

Today, we identify a number of problems or challenges along this path. And the most acute of them are probably logistics and payment processing, which you mentioned.

I'll start with logistics.

Logistics constraints in reorienting export flows to new markets of friendly countries now require building new routes and fine-tuning the necessary logistics and commodity distribution infrastructure, "breaking" bottlenecks and providing end-to-end logistics services to target markets.

Most of our export cargo originates in the central part of the country (Siberia, the Urals), and the entry points to international routes are located in the south and east. Therefore, in addition to the decisions already taken to expand the Eastern Polygon of Russian Railways and increase the density of highways in the eastern part of Russia, it is also necessary to coordinate intraregional infrastructure with projects of promising international transport corridors, primarily the North – South and the Northern Sea Route.

And here, as you have already said, Mr Putin, we need to work on ensuring transport connectivity, which is very important, from the first to the last kilometer that export cargo travels. [My Emphasis]

So, progress is good considering conditions, but much more is possible. Continuing the national project will help. It appears that business expansion per se isn’t a problem; rather, infrastructure that enables the quickening of trade transit is in high demand as noted in discussions of Far East development. Helping the regions to help themselves is another point where collaboration to improve infrastructure remains the number one point of emphasis, particularly east of the Urals. One thing I didn’t read was the need to appropriate more monies. The main need appears to be planning and working to implement solutions. As the constellation of Russian trade partners grow along with their economies, the volume of Russian exports will also increase. So, another point that wasn’t mentioned was the need to do what can be done to increase the goods other nations want along with their ability to pay. Yes, some of that is bound up in the problems within the financial portion of international trade that the world’s trying to solve. Putin’s words on that topic makes it seem that some form of solution will be announced next month at the BRICS Summit in Kazan.

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