Beyond oil

Who said the Russian economy is entirely dependent on oil? Few know it, but the country is becoming the largest exporter of grain in the world. Russia, like all oil producing and exporting nations, is undeniably suffering the consequences of low oil prices. But the Russian economy is experiencing less pain than others. It costs less to produce oil in Russia than in a country like Venezuela. But a much more important fact is that, contrary to popular belief, Moscow is not all that deeply dependent on oil.

Russia is not Angola, for example, where oil exports make up 66% of the country’s GDP. Nor is it Libya, Iraq or Saudi Arabia, where oil sales constitute roughly half of the GDP. The oil sector comprises just 9% of Russian GDP, even less than Norway’s 11%. But according to data released by the Russian Ministry of Energy on March 9, oil and natural gas revenues accounted for 43% of Russia’s federal budget in 2015, and the entire energy sector constituted 63% of all exports. For some time now, Russia has been trying to free itself from an overdependence on its energy sector. And yet when the price of oil was more than $100 a barrel (and natural gas prices were also high), life was easy. For years, there has been talk of innovation in Russia and even some results, but they were barely visible under the stream of petrodollars.