An Analysis of Russian Wheat Grain Export as a Tool in Its Contemporary Foreign Policy The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Citation Gabelli, Marc. 2019. An Analysis of Russian Wheat Grain Export as a Tool in Its Contemporary Foreign Policy. Master's thesis, Harvard Extension School. Citable link https://nrs.harvard.edu/URN-3:HUL.INSTREPOS:37365400 Terms of Use This article was downloaded from Harvard University’s DASH repository, and is made available under the terms and conditions applicable to Other Posted Material, as set forth at http:// nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of- use#LAA An Analysis of Russian Wheat Grain Export as a Tool in its Contemporary Foreign Policy Marc Gabelli A Thesis in the Field of Government for the Degree of Master of Liberal Arts in Extension Studies Harvard University March 2019 Implications for Copyright 2018 Marc Gabelli Abstract There is growing evidence that Russian wheat exports are positioned as a strategic tool of influence to foster State interests geopolitically. This research studies the Russian wheat industry under the leadership of Russia’s President Vladimir Putin through the lens of the state’s three-factor domestic policy emphasizing food self-sufficiency, national security, and export growth. Russia evolved to become the largest single wheat grain exporter globally capable of significant market power. Russia’s wheat currently meets over eighty percent of the importing consumption needs of the Middle East and North Africa at prices typically thirty percent below world market price. This research outlines Russia’s supply chain for wheat export, including an analysis of the state grain trading company United Grain Corporation (UGC). Examples of Russia’s explicit use of wheat grain export in its foreign policy are detailed, including an examination of a series of wheat market interventions directed by the State. The analysis of Russian wheat policies in a geopolitical context is a neglected area of research and should be considered as an inherent component of the multidimensional challenges facing the United States and its relations with petrochemical exporting nations. iii Frontispiece Source: M.M. Soloviev http://sovietart.me (Kingwell 2016, 59) Figure 1. Poster “To work hard is to be with bread” From a 1948 propaganda poster portraying the importance of wheat and bread in the Soviet union. iv Acknowledgments Sir Winston Churchill said, “Russia is an enigma wrapped in a riddle.” I experienced the depth of this quote after my first trip to the Soviet Union in the early days of 1989 as part of a political science class to Moscow, Tashkent and Samarkand with Boston College Professor Don Carlisle. Professor Carlisle taught Russian politics with a passion. He believed we should incorporate our learning about Russia through being with the Russian people. For this I am forever grateful. Professor Carlisle’s class trip spanned three weeks beginning January 2, 1989. He organized for us to meet with politicians, economists, and businessmen. Our group brought forth government chaperones and private sector characters. The shadiest helped secure balcony seats at the Bolshoi for the Orthodox Christmas Eve performance of Swan Lake. We paid approximately $10 a ticket. Despite the inflated price, it was not a black tie setting. We were seated among several strong men who regularly screamed “Bravko” at the dancers with the passion of a New England Patriots fan during a close game and three minutes to go. They had open casks of potato vodka. I saw another two ballets the following evenings. We attended an open Mass at a beautiful central Moscow cathedral. It was its first celebration in years. Mikhail Gorbachev was developing his base. I was immediately hooked on this very fascinating land called Russia. Professor Carlisle had us then traverse the country to Uzbekistan, where in Tashkent we encountered Soviet soldiers returning from the front line in Afghanistan. They admired our American winter boots. Later in the main common hotel, we crashed v a Russian military wedding and were welcomed as we danced. Our shoes were offered as gifts. We met many people, from many lands, and many enemies of the United States. We all drank cognac, bad champagne, and vodka. Michael Jackson played on the cassette. Our assigned KGB agents marveled at the young Americans, monitored and enjoyed. Later in Samarkand, we swept the streets with straw brooms and prayed at an open mosque with “babushkas”. We played soccer with kids in residential streets over open sewers. I overpaid and purchased a large anvil in an open market for the equivalent of two dollars. I later gifted it to one of the boys with whom we played soccer. Finally, Professor Carlisle brought us a few hours out of the city center to the cold, Samarkand countryside. We were welcomed by the locals. We had grilled meat, ate delicious breads baked in the Tandir oven, and drank tea. We visited their homes. We saw wheat storage drums and walked a windy and barren cotton field. It was soon the spring planting season in which everyone participated. The villagers were welcoming and happy to have our small group of strangers. This short trip over winter break in 1989 left an indelible impression on me as a college student. I did not understand at the time, but in my experiencing the Soviet people, its workings, and its agricultural complex first hand, I understood it to be a complicated but wonderful society. Many things have changed since this college trip. The world population has grown by 2.4 billion people. The gross world product has increased from $ 27 trillion to $78 trillion dollars today1. Food self-sufficiency for many fast population growing 1 CIA World fact book 2018 vi nations has declined, with the Middle East and North Africa (“MENA”) declining from 75% to roughly 50%; these countries must import roughly half of their food needs for basic consumption. Wheat is the MENA regions main food staple, and Russian wheat is their preferred supplier due to price. The relationship between petrochemical producer government stability and food policy is critical in this equation. Russia is the largest provider of wheat to the MENA region. The idea of this work surfaced after many years and observations of the evolution of the Russian State. I am grateful to my many mentors along this journey. I am grateful for my father’s mentoring. He has instilled the practice of focusing on the details, ask and ask again, and GAAPIC (gather, array, analyze, project, interpret, and then communicate) when conducting research. Then in the fall of 2012, I had the fortune of taking Professor Colton’s class G 1356 on the Russian State. Its curriculum was detailed and encompassing. The Arab spring was well underway and the wheat price was holding all-time highs of roughly $330 per ton, almost double the price from three years prior. I am “connecting the dots”. A final thanks to Dr. Stephen Wegren who gracefully shared his views along the way. As a reader, investor, student, and citizen of this great planet we share, Russia’s return to becoming the breadbasket of the world will bring significant consequences we must learn to appreciate. I thank you Professor Colton for re-awaking my interest in this most fascinating land. vii Table of Contents Frontispiece ........................................................................................................................ iv Acknowledgments................................................................................................................v List of Tables .................................................................................................................... xii List of Figures .................................................................................................................. xvi Chapter I. Introduction ......................................................................................................19 Wheat as a Policy Tool ..........................................................................................24 Wheat’s Significance to Russia in a Global Context .............................................28 Wheat Export as Power ..........................................................................................36 Wheat Considerations for the Middle East ............................................................45 State Action in Wheat ............................................................................................48 Russian State Interventions in the Domestic Wheat Market .................................53 Statistical Review of Interventions and Wheat Correlations .................................62 The Theory Supporting Russia’s Ability to Affect Prices .....................................65 Explicit State Actions in International Relations ...................................................70 Wheat Policy as an Inducement .............................................................................70 Food Policy as Punishment ...................................................................................72 The Enigma and Riddle .........................................................................................75 Chapter II Global Wheat ...................................................................................................79 Export of Wheat and the Self-Sufficiency Ratio ...................................................86 Import