Conclusions – CEE–Russian trade: politics or

‘business as usual’?

When speaking about Russia, politics is a number one issue, often preceding economic considerations. Indeed, in the time of search-ing for new CEE foreign policy orientations dursearch-ing the transition period of the 1990’s, Russia seemed to have lost its attractiveness as a business partner as well. CEE countries and their leaders fo-cused on the euro-integration process, sometimes ignoring still rich opportunities in the East. Since Russia was also looking for Western partners, both political and economic CEE–Russian links weakened to a dramatic extent at the very beginning of the

nificant. Most probably this export product group also belongs to those branches where TNCs’ performance is substantial.

Table 7

Share of machinery and transport vehicles in CEE exports to Russia, 2003, 2010

(per cent)

Source: Russian Federal Customs Service (Ta-mozennaya Statistica Vnyesnyey Torgovly RF, 2003 and 2010).

1990’s. However, whether the decline in economic contacts hap-pened by political intention or it was just the consequence of business attention turning away (and towards the developed economies), is still a debated issue. Nevertheless, as the example of the politically distant Poland shows, business commitment en-abled to formulate strong and mutually beneficial trade links with Russia even in this period. This has been even more so since then and is more valid for commodity trade. We argue that the devel-opment of political relations and the trends in economic links with Russia do not necessarily follow the same path. The Polish example of the 1990’s shows that in an area of frosty, but not ex-tremely worsened, political relations business can flourish be-tween the two partners.⁷ On the other hand, improving political relations will not automatically lead to outstanding successes on the Russian market. As the Hungarian trade experience of the 2000’s indicates, the positive results, mostly seen by Hungarian politicians as direct consequences of political rapprochement, were not really remarkable in an international comparison. Im-pressive export performance between 2003 and 2008 was rather due to general good conditions of the Russian market than to po-litical intentions. Nevertheless, the turn of several CEE countries towards pragmatism with Russia, instead of the former ideological approaches, also has its advantages in business. It can support their success in big Russian state purchases or other large-scale business where the state has its influence, but general business goes on in accordance with strict economic considerations. How-ever, political factors and political will may matter when provid-ing state guarantees or other kind of state support to companies doing business in Russia.

As a second major conclusion of this analysis we may state that CEE exports are usually more vulnerable to Russian market devel-opments; Russian crises have had a deeper negative impact on their performances than on their Western competitors’ ones. As a general trend CEE export decline periods are deeper and longer on the Russian market than Russian average trade fall. It is

7 Naturally, a dramatically worsened political relationship with Russia would have an immediate and drastic impact on economic relations, including trade.

This was the case between Russia and Georgia during the second half of the 2000’s when Russia introduced embargo on the import of Georgian wine and mineral water as a response to Georgian foreign policy, which Russia consid-ered to be anti-Russian. Afterwards Georgian exports to Russia decreased dra-matically.

cause CEE companies often do not have enough capital to survive during a crisis and in hard circumstances, especially without the necessary guarantees from the state, while Western firms grab all opportunities to strengthen their position. Nevertheless, these dif-ferentiations between CEE and Western opportunities have been diminishing for the past years. The impact of the third examined crisis of the Russian economy in the years 2008–2009 seem to be not so long-lasting in the CEE region than the previous ones. As an explanation we can state that CEE exports to Russia are already very much similar to Russia’s other imports given the fact the TNCs are the most significant partners of Russian companies in both cases. The push of TNCs in CEE exports to Russia has been a side effect of CEE EU-memberships both in the V4 countires and in the Romanian and Bulgarian cases. We may conclude that TNCs’ strategies are now major forces in determining CEE export performances in Russia instead of both the state of bilateral politi-cal relationships or national economic policy goals.

Russia is an important and big market generating keen compe-tition among exporters. Due to historical reasons and geographi-cal location Russia had been a most important economic partner for the CEE countries for decades. But for the past twenty years they seem to be superseded by their Western and Chinese com-petitors. The Russian market has other peculiarities as well: as the examples of the last two economic crises in Russia show, crises are extremely deep but end earlier and more ‘easily’ than ex-pected. This is another reason for making efforts to maintain one’s market positions in the country.

Russian economic crises have another feature: they are usually in close connection with low world market energy prices. This has a special consequence on CEE–Russian trade since CEE countries’

major problem in their trade with Russia remains the same: they face huge trade deficits. Not surprisingly, these deficits usually decrease during Russian crises, since Russian economic problems usually coincide with or are amplified by low oil (and gas) prices.

In post-crisis periods the normal way to decrease these deficits in CEE countries is by increasing exports.

* * * * *

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