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. Last Updated: 07/27/2016

Russia First: Apt Politics, Bad Strategy

The chicken wars appear to be squawking to an end, thankfully before they had really begun. But if Prime Minister Viktor Chernomyrdin and U.S. Vice President Al Gore have managed to prevent a blood-letting over America's $500 million chicken sales in Russia, further protectionist battles are certain to come.


The reasons for this are partly political. Over the past few weeks, the Russian leadership has announced plans for a total ban on U.S. chicken, a 20 percent rise in import tariffs across the board and new restrictions on foreign banks. The timing for this barrage of proposals, coming as it does in the midst of a presidential election campaign, is significant.


But whether, or in what form, these plans will be implemented is another question altogether. It is almost certain that the government itself does not know. The trouble is that these Russia-first pronouncements are being made in the most forceful manner in order to gain the maximum political benefit, but by the same token they are sending Russia's trading and business partners into shock.


Whoever wins the election, some of this turn toward protectionism is likely to rub off. While protectionism is generally accepted by industrialized nations to be an evil, it is also acknowledged to be an occasionally necessary evil by countries all over the world -- including the United States.


Russia may well need to take some forms of protectionist measures in order to protect its agricultural industry, but as part of an overall program to revitalize production and rationalize distribution. What is required first, however, is a strategy. At the moment there is no point in depriving Russian consumers of cheap U.S. chicken, because the Russian poultry industry simply is unable to get enough chicken to market to prevent shortages from developing.


The same may be true for the textile, automobile and other industries, which are likely to need some help over the next decade or so. But the key word here is strategy, for without that Russia will only succeed in raising prices at home and isolating itself from the world market by making the kinds of provocative statements that so nearly started a chicken war with the United States.


Russia will need to fight hard for its trade interests abroad. There is little doubt, for example, that European anti-dumping laws have already been used in some areas to protect unfairly against low-cost Russian goods. But Moscow will need to choose its fights much more carefully, according to a clearly formulated strategy that will both allow it to stay in the international market and simultaneously to foster its domestic industries.


Unfortunately, in the midst of an electoral campaign, such considered strategies are hard to come by.