Soviet trade with the rest of the world, especially with the non-socialist countries, was traditionally seen as small in relation to the size of its economy. Unfortunately, Soviet statistics on this cannot be regarded as adequate, as they compare external valuta rubles to domestic or intra-CMEA prices, whilst the prices inside and outside the ex-USSR were not comparable, nor were the quality of the commodities they could purchase. Foreign trade figures in Vneshniaia torgovlia used to be presented in so-called ‘foreign-trade’ rubles, representing the prices in foreign currencies actually received or paid by the USSR, converted to rubles by means of an officially set exchange rate. These prices in valuta rubles were then converted into domestic rubles using ‘differentiated convertibility coefficients’ (DCCs, often known by their Russian acronym — DVKs), of which there were approximately two thousand, ^ with ratios to foreign trade rubles of anything from 0.2 to 10.0.^ Domestic prices of imports therefore joined prices of locally produced goods in being entirely unreflective of world prices.
^ Franklyn D. Holtzman, ‘Moving Toward Ruble Convertibility’, Comparative Economic Studies,
vol. 33, no. 3,1991, p. 37.
^ Vladimir G. Trend, ‘Soviet Dependence on Foreign Trade’ in External Economic Relations o f CMEA Countries: Their Significance and Impact in a Global Perspective, NATO Colloquium 1983,
Brussels, 1983, pp. 35-52; Alan Smith (1993, op. cit., p. 133) reports that DVKs (which were used directly by enterprises dealing in foreign trade after 1987, not merely used by the central authorities to present a ready-converted price for imports or exports, the so-called preisausgleich system, which continued to operate in parallel to DVKs after 1987) had a ratio of foreign exchange rubles to domestic rubles of 0.1 to 15.9.
The Effect of Russian Economic Refoims on Foreign Trade, and on Prospects of -t
Closer Russia EU Economic Relations
The discrepancies between domestic and world prices are blatantly obvious if we look at trade figures for 1991, presented by the relatively reliable economists of Elt'sin’s government. Total exports from the former USSR were valued at $70.2bn; of which $31.8bn went to Western countries, therefore having comparable quality.^ If these dollars would have been exchanged for rubles at the non-cash Moscow International Currency Exchange in mid-January, at the going rate of Rbl80 to the dollar,"* the value of exports to the West would have been Rb5,724bn, in other words over three times the total value of ex-USSR GDP (if the latter is taken to be Rbl,800bn, as given in the EIU report)! This shows how unrepresentative Soviet prices were, and how the ruble was still overvalued in
1991.
Thus using Soviet figures to establish the importance of foreign trade in relation to GDP is of extremely limited use. Although an IMF study of Soviet foreign trade in 1988 concluded the economy was relatively closed, as exports were only 6.8% of GDP, the two figures being measured up to each other are probably not comparable. Exports were measured in foreign trade prices, but it was not specified how GDP was calculated.^ It is highly unlikely, however, that it was calculated by using volumes of production of every product group and multiplying by average world prices, the only method which would have given a reasonable approximation (although still very inaccurate, due to the important discrepancies in quality). It is most likely that GDP was converted from an estimation in rubles, and was consequently very misleading. By 1993, however, Russian figures were more representative of the value of exports and imports in relation to domestic production, although still retaining a high degree of inaccuracy.^ Rosgoskomstat (the Russian State Committee for Statistics) and the
^ JJte Economist Intelligence Unit Country Report on the CIS, no. 1, 1992, p. 65.
Kommersant”, no. 3, 13-20 Januaiy 1992, p. 6.
^ IMF, IBRD, OECD, EBRD, .4 Study o f the Soviet Economy, Paris, OECD, 1991, vol. 2, p. 68. 6 Even the 1993 Russian figures are very tentative, for many reasons. The main factor contributing to this distortion is that an important degree of foreign trade is not officially recorded, as importers or exporters manage to either smuggle their goods or bribe customs officials to turn a blind eye, in order to avoid tariffs and taxes; such underreporting also affects GDP figures, however, and it is impossible to tell which figure is most underestimated. Converting a ruble figure into hard currency still represents an important loss of accuracy, both because the ruble was undervalued in 1993, and
Russian Central Bank’s (RGB) figures put Russian merchandise exports (outside the FSU) at $43.711bn, and imports at $32.959bn; these represent, respectively, 25.3% and 19.1% of GDP.^ Such figures suggest a much greater dependence upon foreign trade than the EU countries.
What does seem clear is that the share of foreign trade with the EU has increased in importance throughout the early 1990s. The FSU’s total exports of merchandise to the Community amounted to $19.7bn in 1990 (excluding Eastern Germany), increasing by 9.6% to $21.6bn in 1991 (although this figure included the Eastern territories), by 1.9% to $22bn in 1992,8 by 2.3% to $22.5bn in 1993,^ and by a massive 36.9% to $30.8bn in 1994. FSU imports fi*om the EU also increased over this period, from $16.9bn to $23.4bn, in other words by 38.9%.io These increases compare very favourably to decreases in real GDP in 1991 of 11.6%, in 1992 of 18.2%,“ in 1993 of 12.0%, and estimated in 1994 at 15.0%. 12
Not only does this growth in trade with the Twelve contrast sharply with the
because using an average exchange rate for a period which saw a 199% appreciation of the dollar (in relation to the ruble) would only be a close approximation if the foreign trade was very evenly spread throughout the year, whilst in fact it appears that over 36% of exports were traded in the last quarter of 1993 (figures from the Market Research Centre under the Russian Government, in Segodnia, 13 April 1994, and from Ekonomicheskaia gazeta, no. 16, April 1994). Finally, although Russian prices in 1993 were much closer to world prices than they had been for seventy years, there were still large variations; in September, for example, the commodity exchange price of crude oil in Russia was 28% of ‘world’ price, petrol 58%, aluminium 65%, and wheat 54%, although sugar was overvalued at 152% (from Martin McCauley, ‘The Russian Economy —January/September 1993’, Russia and the Successor States Briefing Service, vol. 2, no. 3, June 1994).
^ If the latter is taken to be Rbl62,300bn, and is converted at the average exchange rate for 1993 of Rb941:$l. Export and import figures taken from ‘Bankovskii biulleten'’, Ekonomicheskaia gazeta,
no. 16, April 1994; GDP figure from EIU, Country Report — Russia, 2nd quarter 1994, p. 4; average exchange rate calculated by getting the average of two weekly readings from the MICE for every week of 1993. My estimate of tiie average exchange rate is slightly lower than that of the EIU (Rb985:$l), the latter probably being overestimated by having used every reading from the MICE, which would give a disproportionate weighting to the higher dollar rate of the second half of the year, as MICE started dealing daily fi'om June 1993.
^ OECD, Short-Term Economic Indicators: Transition Economies, Paris, 1994, p. 25,
9 ‘Russia and European Union Reach Historic Agreement to Deepen Trade and Political Ties’, European Commission Document IP/94/565, 22 June 1994, p. 5; the figure for FSU exports to the EU in 1993 is 18.5bnECU, converted here at a mid-1994 rate; the same figure for Russia exclusively is 14.8bnECU.
10 Towards Greater Economic Integration — The European Union’s Financial Assistance and