The year 1997 preserved East European share in Spain's foreign trade close to its previous level.
Trade with CIS countries, on the contrary, graphically expanded since the preceding year, especially for Kazakhstan, 2.7-fold, and Ukraine, by 26%. At the same time, the Spanish-Uzbekistani turnover shrank 3.5-fold in terms of exports and imports alike as Uzbek raw cotton supplies plummeted. Russia and other CIS countries altogether account for a token 1% in Spain's foreign trade.
Russia's share in the Spanish foreign trade turnover saw no noticeable change to stay at 0.9%, though there was a rise in value terms. The turnover amounted to an annual USUS billion in 1996 and 1997. It is reasonable to proceed in its analyses from Spanish customs statistics, which take into account all Russian supplies to Spain via third countries.
The year 1995 sent the bilateral turnover 40% up against 1994.
Russian commodity exports to Spain spectacularly exceed the reverse, which was of tremendous importance for the Russian foreign trade balance in 1995. The following years, however, cut this benefit.
The pattern of Russian exports leaves ample room for progress, dominated as it is by raw materials, while machinery and industrial equipment exports shrank from 10.2% in 1994 to 5.9% in 1995 and 0.7% in 1997.
Crude oil and its derivatives account for 56% of Russian exports to Spain. Among other basic exports are iron, steel, non-ferrous metals, chemicals--fertilisers included, sunflower seed, timber, fish and other seafood, and uranium enrichment services.
Imports from Spain were dominated throughout recent years by machinery and industrial equipment, foodstuffs, building materials, pottery, furniture, footwear and plastics. Imports of machinery and otherequipment, meat and meat products, furniture and building materials increased against 1996.
Joint ventures are gaining a firm footing. The number of joint ventures with Spanish capital registered in Russia currently amounts to 275, as against over 300 Spanish-based with Russian capital participation. However, an overwhelming majority are small companies intended for trade mediation and/or real property acquisitions.
Comprising the legal and contractual basis of Russo-Spanish trade and economic contacts for today are an intergovernmental agreement on economic and industrial cooperation, and a protocol on the financing terms of trade and economic cooperation. Both were signed on 12 April 1994, during President Boris Yeltsin's visit to Spain.
Russo-Spanish economic cooperation received an impetus with a session, April 1997, of the Russo-Spanish intergovernmental commission for economic and industrialcooperation.
In conformity with session resolutions, the Parties started drafting intergovernmental documents, in particular, a programme of economic, industrial, research and technological cooperation for up to 2000; a double income and property taxation agreement; an agreement to promote and mutually protect investments; an agreement on maritime navigation, and several agreements for particular economic fields.
The two countries highlighted the most practicable cooperated projects. These include prospects for a joint venture to manufacture railway trucks with automated gage shifts, cooperated construction of small Siberian petrochemical plants, extended construction of Russian-based waste procession factories, and cooperated R&D from the use of Russian high technologies by interested Spanish organisations to teamwork for a Grand Canary telescope.
The Parties pointed out a necessity for additional measures to streamline bilateral trade financing by government agencies and commercial banking alike. For an initial step, the Compania Espanola de Seguros de Credito y Caucion extended, in 1997, its list of Russian financial investment companies and banks whose guarantees suffice to launch short-and medium-term crediting transactions, and raise its credit limit to USUS million for Spanish-based corporate exporters to Russia.
The commission also debated prospects to expand investment and inter-regional cooperation, and reciprocal trade liberalisation, which implied the abolition of Spanish anti-dumping procedures in respect of particular Russian-manufactured commodities, and promotion of Spanish companies on the Russian market as they undergo taxation and other fiscal and taxation procedures and have their commodities certified.
Bilateral cooperation results in an increasing Spanish interest in the Russian market. Aware of its prospects, the Spanish business world is anticipating an increase of exports, mainly for machinery and industrial equipment, and of investment. There are, however, certain factors dampening those hope: transport problems, no chance to secure government financial support for cooperation, the many drawbacks of the effective Russian legislation regulating foreign vusiness operations in Russia, criminal penetration of commercial transactions and, last but not least, insufficient information coverage.
Whatever problems may persist in the Russian economy, and despite the imperfection of the Russian legislation on foreign investment, a number of major Spanish companies are maintaining and even extending their investment in Russia. Thus, in 1997 alone, the Chupa-Chups started a confectionery in St. Petersburg; the Kelme is finishing construction of an industrial combine in Bashkortostan's Meleuz; and the Agrolimen launched the construction of a food concentrate factory in Bor, Nizhny Novgorod Region.
The Orel Regional Administration signed a contract, in October 1997, with the Babcock Wilcox Espanola to build a sugar refinery in the region on a turnkey arrangement. In December 1997, the Russian trade representation in Spain mediated BWE negotiations with the Russian SBS Agro Bank to discuss the prospects to involve the latter in the project at its initial stage.
The Tudor company is considering opportunities to build an accumulator battery factory in Samara, which would put out an annual million items. The Campofrio meatpackers, the Dragados civil engineering company, and the Ima Iberica, specialising in the urban infrastructure, intend to increase investment activities in Russia. The Banco Bilbao Vizcaya, Banco Central Hispano and Santander--Spain's largest banks and financial groups--are, to an extent, interested in financing investment projects.
Agro-industrial cooperation. Russia's Ministry of Agriculture and Food Industry is cooperating with Spain on the agro-industrial complex in compliance with a memorandum on research and technological cooperation and an intergovernmental agreement on veterinary cooperation.
In October 1996, the ministry hosted a third session of the Russo-Spanish coordination group, which agreed upon the lines of cooperation for 1997-98, and reinforced its joint ad hoc team.
With state of the art technologies they possess, Spanish companies are manufacturing complete equipment sets for the following agro-industrial branches: Spanish knowhow allows to obtain 130 kilograms of sugar out of a ton of beet; the same factories produce yeast, alcohol and granulated dry mixed fodder out of molasses; an extensive choice of small meatpacking factories with a daily output of one to ten tons of a wide range of meat products, including portable units processing one to three tons of meat a day; potato, vegetable, fruit, meat, fish and dairy refrigerator depots with automated operating conditions control, which reduce storage losses to 2-3%.
In addition, Spanish companies have an enviable experience of milk production and processing, with a cooperative network whose annual output amounts to 200 to 300 thousand tons of milk, of cheese, confectionery and juice production, canning fruit and vegetables, etc.--a vast range of foodstuffs, babyfood included.
Spanish companies are active on Russian industrial construction and updating. These efforts include brickworks, small meatpacking factories and other agro-industrial projects.
The Campomos joint venture was established in Moscow in 1996 with an active participation of the Campofrio, one of Spain's largest corporate meatpackers. The Federal Food Corporation and the Mercaza signed a cooperation agreement in 1996 to set up wholesale markets in Moscow and St. Petersburg. Similar understandings were made with the Altai territorial and Volgograd regional administrations.
The year 1991 ushered in close agro-industrial contacts between well-known Spanish companies and many of their Russian counterparts--suffice it to mention a joint venture distributing foodstuffs on the Russian market, with the participation of Codorniu; a slaughter-house and meatpacking factory built in Stary Oskol by Epeusis Co.; and meatpacking and dairy factories built by the Fiboza company in Saratov, Krasnodar, Cheboksary, Tyumen, Novy Urengoi, Irkutsk and Mezhdurechensk, plus meatpacking factories in Moscow and Ochakov.
As the investment part of the Spanish loan was distributed, Russia's Ministry of Agriculture and Food Industry was active lobbying agro-industrial projects to enter a list of users, which involved US million and was approved by the federal government commission for currency and the economy on 15 July 1992.
With an account for practical opportunities of Spanish companies and the available blueprints on particular projects, the list included updating and equipment of babyfood factories, entitled to a priority status. St. Petersburg, Yekaterinburg, Krasnoyarsk, Novosibirsk, Stavropol, Ulyanovsk and Moscow will receive industrial equipment to be purchased in Spain to US million for liquid and paste baby milk mixtures. A meat cannery is to appear in Bashkortostan's Neftekamsk; fruit and vegetable canneries in Michurinsk (Tambov Region), Kamyshin (Volgograd Region), and the Michurin state farm (Penza Region); and a fish cannery in Kaliningrad. Six cottage cheese production lines will also be purchased for operating ventures.
The federal farm produce export/import agency, Selkhozpromexport passed to the Spanish companies APB Baker Iberica, Tuhenhagen Iberica, Fiboza, SPI, Sovispan, Procanor, Tamcosa and others technical standards of the above equipment approved by the ministry for precontractual studies. As an available understanding had it, the industrial associations FIAB and SERCOBE received a verified list of babyfood-manufacturing projects recommended to use the investment part of the Spanish loan. An understanding on the point was reached as the joint coordination group was having session in Madrid.
As a follow-up of the resolution of the third bilateral coordination group session held in November 1997, experts of the accounting board of the Ministry of Agriculture and Food Industry and its regional agencies attended a Spanish-based seminar on accounting procedures accepted in the European Union. In particular, they got acquainted with account handling, bookkeeping and a vast choice of software for private and large cooperated farms.
Forecasts up to 2001. As full member of the European Union, Spain is duty-bound to base its relations with third countries outside the EU on its charter and principles.
As one of the most dynamically developing EU countries, Spain won for itself an asymmetrical pattern of joining the union. It received the greatest possible sums out of European structural funds, established a necessary infrastructure to manage its foreign economic complex, and arranged the development of new methods to coordinate administrative interests at the many levels.
Spain has an unique experience of transition from a dictatorship and economic autarchy to democracy and an open market economy. It possesses an experience of attracting foreign investment, of restructuring sophisticated economic branches, and adjustment of the legislation and managerial patterns through a consensus of social and political forces within the limits of dynamic development and evolutionary progress.
Spain has an undoubted political and economic impact on Mediterranean and Latin American countries, which allows it to spur on multilateral cooperation and trade for Russia to have closer economic ties with those parts of the world.
The Spanish market can offer increasing demand for such industrial products as are long-known in West European and other industrial countries, provided their quality steadily improves to become more competitive, e.g., electric engines, cameras, watches, binoculars, optic devices, bearings, power plant equipment, and certain textiles. There are prospects to enhance car exports to be promoted by a revival of the general supplier arrangement.
If Russia thoroughly updates its engineering and complies with the above demands, its machine and industrial equipment exports to Spain, which amounted to US million in 1997 and 5 million, 1998, may grow threefold within three years. Russia can hardly hope to put an end to a raw material-dominated pattern of its exports to Spain within the next few years. Bearing out this point are forecasts of mounting Spanish market bids and Russian offers of timber and wooden articles, iron, steel, non-ferrous metals, chemicals (fertilisers, ammonia, polyethylene and methanole), power-generating and coking coal, uranium concentrate and uranium enrichment services.
Russian exports to Spain are expected to grow by 150% by 2002, from US billion in 1997 and 1998 to 1.4 in 1999 and 1.8 in 2001.
The next three years are expected to increase imports by 130-135% by 2002, from US billion in 1997 and 98 to 0.9 in 1999 and 1.1, 2001.
According to forecasts, the largest Russian bids will be coming for Spanish-manufactured equipment for meat, dairy, light, tanning industries and oil refining, brick and other building material production, telecommunication and navigation gauges, and many raw materials and foodstuffs traditionally imported by Russia from Spain.
Russian exports will exceed imports within the next three years, with a trend for increasing the scissors. Spanish commodities are less competitive than their counterparts from other EU countries--largely due to higher manufacturing and transportation costs. Spain ranks 18th in terms of world market competitiveness among the 29 OECD countries, and outruns Italy, Portugal, Greece and Turkey.
Forecasts of Russo-Spanish trade take into consideration chances for crude oil price rises, and Spain's final transition to the Euro in 2001. The initial stage of its introduction in transactions is likely to bring somewhat down Spanish trade with Russia and other East European countries.