Thursday, Oct 30, 2014

Russia hits back on sanctions; bans food from West

Russian President Vladimir Putin. (Source: Reuters photo) Russian President Vladimir Putin. (Source: Reuters photo)
Press Trust of India | Moscow | Posted: August 7, 2014 7:01 pm

Russia on Thursday banned most food imports from the West in retaliation for sanctions over Ukraine, an unexpectedly sweeping move that will cost farmers in North America, Europe and Australia billions of dollars but will also likely lead to empty shelves in Russian cities.

The announcement shows that while President Vladimir Putin doesn’t appear ready to heed Russian nationalists’ calls to send troops into Ukraine, he is prepared to inflict significant damage on his own nation in an economic war with the West.

The US and the EU have accused Russia, which annexed Ukraine’s Crimean Peninsula in March, of supplying arms and expertise to a pro-Moscow insurgency in eastern Ukraine, and have sanctioned individuals and companies in Russia in retaliation.

Moscow denies supporting the rebels and accuses the West of blocking attempts at a political settlement by encouraging Kiev to use brutal force to crush the insurgency.

The ban, announced by a somber Prime Minister Dmitry Medvedev at a televised Cabinet meeting, covers all imports of meat, fish, fruit, vegetables, milk and milk products from the US, the European Union, Australia, Canada and Norway. It will last for one year.

“Until the last moment, we hoped that our foreign colleagues would understand that sanctions lead to a deadlock and no one needs them,” Medvedev said. “But they didn’t, and the situation now requires us to take retaliatory measures.”

That retaliation, however, could hurt Russia as much as the West. Russia depends heavily on imported foodstuffs, most of it from Europe, particularly in Moscow and other large, prosperous cities.

In 2013, the EU exported 11.8 billion euros (USD 15.8 billion) in agricultural goods to Russia, while the US sent USD 1.3 billion in food and agricultural goods.

The Netherlands, one of the world’s largest agricultural exporters, sends 1.5 billion euros’ worth of agricultural products to Russia annually and stands among the countries with the most to lose.

Albert Jan Maat, chairman of the Dutch Federation of Agriculture and Horticulture, warned that the Russian ban will cause prices to drop across Europe because of oversupply, and called on the Dutch government and the EU to help farmers.

Exports to Russia account for about a tenth of EU agricultural exports.

“We’re thinking of either removing products from the market or temporarily storing them,” he said.

Medvedev argued that the ban would give Russian farmers, who have struggled to compete with Western products, a good chance to increase their market share.

But experts said local producers will find it hard to fill the gap left by the ban, as the nation’s agricultural sector suffers from inefficiency and a shortage of funds.

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