You can, of course, be long and creatively ironic about the law signed by Vladimir Putin, which obliges winemakers of the French Champagne region, who want to sell their world-famous products in Russia, to call it “sparkling wine”, since the “champagne” brand in the territory of the Russian Federation is now allowed to be used only to Russian manufacturers. What a wonderful occasion for sarcasm: Russia should henceforth be considered not only the homeland of elephants, but also the homeland of champagne.
Champagne is an exclusive brand of French winemakers from the Champagne region
However, what at first glance looks like a bad anecdote is in fact another apotheosis, or, if you like, another bringing the import substitution policy to the point of absurdity, in other words, Russian protectionism. And at the same time, a new vivid example of demonstrative Russian disregard for international rules and agreements.
After all, the exclusive right of Champagne winemakers to the champagne brand, which implies not only a protected geographical indication, but also a clearly spelled out production technology created over the centuries, was enshrined in the Treaty of Versailles, concluded in 1919 following the results of the First World War!
> Economic Observer Andrey Gurkov
It goes without saying that this exclusive right of the French to one of their most celebrated national brands is respected and respected not only in democratic, but even in non-democratic countries. In the fall of 2020, China, despite its very specific attitude towards other people’s copyrights and technologies, signed an agreement with the European Union on the mutual protection of regional products, and of course, champagne was included in the list of one hundred European delicacies, the names of which are forbidden to be used by Chinese producers.
So Russia, which is now largely guided by its eastern neighbor and ally China, in this case went in the opposite direction, more reminiscent of the Juche path – the North Korean ideology of total import substitution for the purpose of self-isolation.
Business of Putin’s friends and associates benefits from protectionism
However, among Russians, protectionism is actually quite popular: the state, they say, must support domestic producers in every possible way. Moreover, when it comes to import substitution in the field of agricultural and food products. So the new law, designed to strengthen the competitive position of Russian sparkling wine producers in the domestic market by simple renaming, is unlikely to cause strong rejection from broad strata of Russian consumers.
Moreover, the majority of the population of the Russian Federation (and many in Germany) still cannot afford the genuine champagne brought from Champagne. In addition, the proud French company Moet Hennessy immediately caved in and resignedly agreed to the rather humiliating conditions of the Kremlin, so that at least this large manufacturer will not boycott the Russian market.
Therefore, it is very likely that the general Russian public will not attach much importance to what happened and will not pay special attention to the main beneficiaries of the new law. And this is Putin’s close friend Yuri Kovalchuk, who controls the Rossiya bank, which, through its subsidiary company Yuzhny Project, has owned the Novy Svet sparkling wine factory in the annexed Crimea since 2017. And this is Boris Titov, authorized by the President of the Russian Federation for the protection of the rights of entrepreneurs, who owns the Abrau-Dyurso sparkling wine plant in the Krasnodar Territory.
In addition, the President of the Russian Federation himself at the beginning of the year admitted that he was interested in winemaking and could do it. So it is possible that the production of what from now on, after his signature, will be officially called Russian champagne, will also be deployed in Gelendzhik in the vineyards around the “Palace for Putin”, shown from the air in all details in the documentary film of the same name by Alexei Navalny.
Disregard for the international division of labor and regional specialization
However, most of all Russians in the new law should be worried not so much by Moscow’s already habitual disregard for international legal norms and the equally habitual use of protectionism to support the business of friends of the president and those close to him – as the ever deeper penetration of the ideology of import substitution into all spheres of Russian life.
Ideology, which is based on the assumption that the international division of labor and the historically established economic specialization of regions and countries can be easily neglected, since a separate state is quite capable, and even in a short time, to establish the production of equally high-quality products in various spheres.
So the problem here is not at all in champagne – it is, as they say, a luxury item, it is quite possible to do without it. A completely different matter is the large-scale import substitution in the field of software, which is stubbornly imposed on the country: here it is quite possible that labor productivity can already decline. And the increasing import substitution in the field of drugs every year is fraught with serious damage to the health of the population, because Russia alone cannot create all the newest drugs that hundreds, if not thousands of laboratories and companies around the world are working on.
Vaccination in Russia: why are they not offered imported vaccinations against coronavirus?
The most relevant and vivid example of the extent to which the ideology of import substitution is already determining the life of today’s Russia is the current difficult situation with the vaccination of the population against coronavirus. The authorities are faced with the stubborn reluctance of many Russians to get vaccinated, and now they are trying to force people to protect themselves and those around them from a deadly virus with a carrot and a stick: here you have threats of dismissal and bonuses in the form of cars and apartments.
Yet another option is possible, but it seems that Moscow does not even think to consider it: the Russians could be offered a choice of imported vaccines. However, the country’s top authorities seem to reason something like this: What do you want, “Astra” to serve? Maybe also “Pfizer” with “Modern”? Inject with what you have! This is ours, Russian, which means – the best. And drink Russian champagne – only it is worthy to bear this glorious name. And everything else is just sparkling wines!
Posted by Andrey Gurkov, economic commentator German wave
The commentary expresses the personal opinion of the author. It may not coincide with the opinion of the Russian edition and German wave generally.
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