Sanctions against Russia in general and the Urals in particular
Russian President Vladimir Putin has launched the process of Russia’s abandonment of the oil and gas needle. To compensate for the revenues from the sale of petroleum products lost due to US and EU sanctions, the price ceiling, in the coming years, the timber industry and deep processing of wood will be able to start. In addition, this will improve the technological state of the industry and improve the lives of Russians, experts comment on the results of a meeting on the development of the industry, which Putin held in the Arkhangelsk region on February 10.
President Putin held a meeting on the development of the timber industry while in the White Sea region. Before starting a conversation, he got acquainted with the work of the Ustyansky timber industry complex, on the products of which he even left a review with his own hand: “Everything is amazing in a businesslike way.” “I don’t regret coming here. I have visited enterprises of this kind before both in our country and abroad – I must say that I enjoyed getting acquainted with the work of this enterprise, ”commented the president.
He recalled that back in 2020, the country’s leadership made a number of decisions to develop the timber industry. This also applies to deep processing of wood, and control over the use of wood throughout the entire technological chain, starting from the moment of felling. It was about improving forest management and forest supervision, as well as about “stimulating domestic demand.”
And here it is important “to manage forest resources prudently,” Putin added. “Russia accounts for one fifth of the world’s timber reserves. This is a huge natural advantage of our country both in terms of ecology and industrial development. Timber reserves in Russia amount to 82 billion cubic meters, in Brazil – 126 billion, in the USA – 47, in Canada – 30 and in China – 14 with a little. The actual volumes of harvesting in our country are significantly lower than the allowable cutting area, and the contribution of the forest complex to Russia’s GDP is relatively small – 0.99 percent,” the President noted.
The existing approaches to the work of the timber industry allow us to say that the industry has “reserves, good potential for long-term growth,” Putin is convinced. However, the sanctions have affected timber processing, and “in general, the global market situation has deteriorated.” This led to a decrease in production volumes. “We need to support our woodworking enterprises and specialists in this field, companies that have already invested and continue to invest in deep wood processing. We need to help businesses build efficient logistics flows in order to establish ties with new, predictable customers and partners,” Putin stressed.
At the same time, the president demanded that the “strategic vector” be maintained – an increase in “domestic demand and own processing capacities and the production of high-quality products with high added value.” We are talking about wooden houses, the production of furniture, paper, biofuels and other products. “The key issue is the availability of modern technologies and equipment for timber processing. There is still a high dependence on foreign partners here. The task is not easy, but, of course, this dependence must be overcome,” the head of state noted.
Following the meeting, Putin instructed the government and Russian Railways to help timber industry enterprises build new supply chains. To expand the market for wooden housing construction, the president instructed to apply the same mechanisms as for apartment buildings – financing based on escrow accounts that guarantee the safety of buyers’ money. In addition, Putin proposed to allocate at least 15 billion rubles in the form of budget infrastructure loans over the next two years to upgrade boiler houses in municipalities in order to use special pellets as fuel.
In 2022, Russian wood processors were unable to export about 37.5% of their products due to sanctions, Nikolai Petrunin, Deputy Director of the St. Petersburg Forestry Research Institute, noted in a presentation. According to the expert, in the current geopolitical situation, deliveries from Russia are frozen, and in Russia “it is forbidden to sell logging and woodworking machines and equipment, spare parts and components for them, chemical components for the production of pulp and paper.”
“The introduction of sectoral sanctions has a negative impact on the investment component of the timber industry. Especially for the implementation of priority investment projects in the field of forest development,” the expert notes.
Of all the investment projects that are being implemented today in the Russian timber industry, 76 or 47% are aimed at creating and modernizing woodworking facilities. 32 projects – to expand the scope of wooden housing construction, 18 – for the production of plywood, Petrunin cites data. All these are the areas that President Putin spoke about at the meeting.
The deeper wood processing in Russia, the richer the country will be, Boris Komotsky, a member of the State Duma Committee for the Development of the Far East and the Arctic, explained to URA.RU. “The more taxes will remain in Russia. If you drive only raw materials, you will get a tiny part of the riches of nature.
It is wrong to receive raw materials and send them to those who have the best technological development, it is also necessary to develop technologies in Russia. These are new jobs, this is more complex work, which “costs” more. So far, we are paying for the fact that at one time we got hooked on a raw material needle, ”Komotsky explained.
A similar position is held by the leading economist of the Center for Political Technologies Nikita Maslennikov. According to him, processed products (furniture, log cabins, house kits, etc.) are more expensive. “This is a different price for export products, this is a different added value. For Russia, this is relevant if we want to get away from oil and gas dependence, as, in general, from sales of round timber. Timber processing is one of the main candidates to do this, as it has a high potential: it is something that will be in stable demand in the next 20-30 years in the main center of gravity of the world economy – in the Asia-Pacific region. The President showed that the topic was taken seriously, and we are starting to implement these plans step by step,” Maslennikov summed up.