Agriculture makes up just 4 percent of Russian GDP, but that could change, as Russia announced last week the launch of a $2 billion investment fund with China to go toward agricultural projects. The two countries would cooperate on developing big swaths of arable land on each side of their borders. The partnership comes at a good time for Russia, which has been struggling since last year with sanctions from the U.S. and European Union.
Russia answered sanctions from the West by saying, “Ok. We’re not importing any food from Europe or the U.S.” Now, Russia’s hurtling toward a recession. William Cline, senior fellow with the Peterson Institute for International Economics says Russia’s under a great deal of pressure.
At the same time, China has more than 1.3 billion mouths to feed. It’s also under pressure to diversify its food and energy sources. Will Pomeranz, deputy director of the Wilson Center’s Kennan Institute, says Russia’s got food and plenty of oil and gas to sell. But to put this deal in perspective, “$2 billion is just not a lot of money,” he says.
Russia’s agricultural output is more than $100 billion; China’s is more like a trillion. So Pomeranz says at best, this investment is really small potatoes. Or a modest beginning to a stronger partnership down the road.