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HOW WILL RUSSIA'S ELECTIONS AFFECT SLOVAK-RUSSIAN RELATIONS?

Economically, little will change

When Russians went to the polls to vote for their president on June 16, incumbent Boris Yeltsin finished first, ahead of Communist candidate Gennady Zyuganov, but without enough votes to win outright. The second round of elections are being held on July 3. Two leading experts examine the economic and political ramifications of that election for Slovak -Russian relations below. Regardless of who wins the second round of presidential elections in Russia, whether it be Yeltsin or Zyuganov, economic relations between Russia and Slovakia will not be affected.


"Slovak exporters of consumer goods have only a slim chance of selling their goods on the Russian market without a "leg-up" from government."

Vladimír Taranov




When Russians went to the polls to vote for their president on June 16, incumbent Boris Yeltsin finished first, ahead of Communist candidate Gennady Zyuganov, but without enough votes to win outright. The second round of elections are being held on July 3. Two leading experts examine the economic and political ramifications of that election for Slovak -Russian relations below.

Regardless of who wins the second round of presidential elections in Russia, whether it be Yeltsin or Zyuganov, economic relations between Russia and Slovakia will not be affected.

The countries' economic interests are mutually linked. Slovakia is the main transit country for supplies of Russian oil and gas to western Europe. Speculation that in the event of a Zyuganov victory Russia will curtail or halt export of energy sources to Slovakia is groundless. Export of gas and oil is the main way in which Russia gets its hard currency, and so any future Russian government will endeavour to increase energy supplies to the countries of eastern Europe and to the West.

The turnover of goods between Slovakia and Russia in 1995 was $1,774 million, which is 20 percent more than in the previous year. Russian exports to Slovakia were valued at $1,445 million, while imports registered $329 million, resulting in a trade balance of $1.1 billion in Russia's favor.

Russian exports were dominated by oil (5 million tons) and natural gas (5.5 billion cubic meters). These fossil fuels constituted 100 percent of Slovak import of energy sources. Other exports from Russia include black coal, iron ore, synthetic caoutchouc, leather, wood, mineral fertilisers, newsprint, textiles and metals.

Russian imports from Slovakia have no strategic importance for Russia. Goods included bulldozers, excavators, diesel engines, medicines, automobiles, chemicals and foodstuffs. Last year exports of medicine and chocolate waned, while those of beer, wine, jewellery and glass ceased altogether.

To tackle the imbalance in trade between Slovakia and Russia the Slovak government produced plans at the beginning of the year to support export to Russia and the other countries of the Commonwealth of Independent States. The measures are intended to provide aid for small and medium-sized Slovak firms exporting eastwards, but in practice not a single Slovak company has yet received any export subsidies.

In April 1996 a group of businesspeople from Moscow visited Bratislava. After surveying the prices of goods in the city they came to the conclusion that foodstuffs, footwear and textiles are more expensive here than in the West.

The Russian market is saturated with Western products. After the dismantling of the state monopoly on trade, practically every commercial outlet has ended up in private hands. Russian businesses generally purchase their goods in the West, where they can get various kinds of discount and where governments provide subsidies for their exporters. The United States, Germany, France and Italy all provide Russia with loans for the purchase of food and textile products, the aim being to penetrate and retain a stable position on the market. The U.S. government, for instance, sets aside huge sums of money for the export of chicken (so-called "Bush drumsticks"). Slovak exporters of consumer goods have only a slim chance of selling their goods on the Russian market without a "leg-up" from government.

Despite the lack of support from the Slovak government, some firms, such as Matador Púchov and Chirana of Piešťany, are using their own initiative. They have established a chain of joint ventures and are making a profit in the face of inadequate legislation, corruption and organized crime.

A win for either Yeltsin or Zyuganov would have no effect on Russian-Slovak relations. State planning and the regulation of production are in the past, and both countries are expanding their market economies. The Russian market is promising and, despite its problems, represents an opportunity for Slovak producers to sell their wares.

Vladimír Taranov is the Bratislava correspondent for the Russian magazine Business World.

Translated into English by Paul Kaye.

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