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Russia bans Western food imports in sanctions retaliation

Russian customers buy cheese in Saint Petersburg on August 7, 2014.AFP PHOTO / OLGA MALTSEVA

MOSCOW/KIEV: Moscow banned imports of most food from the West Thursday in retaliation against sanctions over Ukraine, a stronger than expected measure that isolates Russian consumers from world trade to a degree unseen since Soviet days.

In eastern Ukraine, a Dutch recovery team called off its work at the site where a Malaysian airliner was shot down over rebel-held territory last month, saying escalating fighting had made the front line location too dangerous.

NATO’s secretary-general, visiting Kiev in a show of support for Ukraine, called on Russia to pull back from the brink of war against its neighbor. The Western military alliance says Moscow has massed troops on the border in preparation for a possible ground invasion.

Russian share prices fell after the announcement of Moscow’s one year ban on all meat, fish, dairy, fruit and vegetables from the United States, the 28 European Union countries, Canada, Australia and non-EU member Norway.

Russia has become by far the biggest consumer of EU fruit and vegetables, the second biggest buyer of American poultry and a major global consumer of fish, meat and dairy products.

President Vladimir Putin ordered his government to adopt the measures in retaliation against Western countries which imposed sanctions on Russia’s defense, oil and financial sectors over its support for rebels waging an uprising in east Ukraine.

Putin had promised to ensure that the measures would not hurt Russian consumers, which suggested he might exclude some popular products. But in the end, the bans announced by his prime minister, Dmitry Medvedev, mentioned no exceptions.

The announcement saw Russian bond yields rise to their highest levels in years and Moscow’s already reeling share prices extend a selloff.

Agriculture Minister Nikolai Fyodorov acknowledged that the measures would cause a short-term spike in inflation, but said he did not see a danger in the medium or long term. Russia would compensate with more imports from other suppliers such as Brazilian meat and New Zealand cheese.

The EU’s executive Commission said it reserved the right to take action to retaliate against the Russian ban.

Food represents a small fraction of Russia’s overall imports from the West. But the ban will have a disproportionate impact on farmers in specific sectors in producing countries, and on Russian consumers, who will face higher prices and shortages with inflation already rising and the rouble falling.

“The first casualties would be the domestic market. However it will have some implications for the farmers in the producing countries,” Abdolreza Abbassian, a senior economist with the United Nations Food and Agriculture Organization, said.

Russians have relished imported food since the fall of the Soviet Union, when year-round supplies of fresh fruit and vegetables arrived and ubiquitous cheap American frozen chicken quarters became known as “Bush’s legs” after the then-president.

The ban affects all meat, fish, poultry, fruit and vegetables from the listed countries, but does not include other food items – mostly commodities such as grains, seed oils, sugar, coffee, tea and cocoa. Russia spent $25.5 billion last year on imports in the affected categories, $9.2 billion of it from the countries hit by the ban.

It spent $39 billion overall on food, including $17.2 billion on all food items from the listed countries.

The nascent middle class in Moscow, which buys Italian cheese and American beef at supermarkets, will take a hit, but so will ordinary people who buy Polish apples and Greek cucumbers in street markets. Russia bought 28 percent of EU fruit exports and 21.5 percent of its vegetables in 2011. It bought 8 percent of U.S. chicken meat exports last year.

Moscow may also ban Western airlines from flying transit routes though its air space. This would raise European carriers’ fuel costs as their jets fly around Russia on the way to Asia, but would also deprive Moscow of hundreds of millions of dollars in overflight fees.

The rebels in Ukraine are led mainly by Russian citizens and armed with tanks, artillery and other heavy weapons that Kiev and its Western allies say can only have come from Russia.

They have declared independent “people’s republics” in two industrial provinces of eastern Ukraine which they call “New Russia” – a term Putin has applied to all of Ukraine’s south and east. Here most of the population speaks Russian as a native language, while identifying themselves as Ukrainians.

Sources told Reuters that the main rebel leader in the city of Donetsk, a Russian, may be replaced by one of the separatist commanders who is a local man. Rebels said this was being discussed but could not be confirmed.

NATO’s Secretary-General Anders Fogh Rasmussen visited Kiev in a show of support, although the Western alliance has made clear it will not fight to defend the country, which is not a member and not covered by its mutual defense treaty.

NATO says Russia has massed 20,000 troops at the border and may be planning to declare a humanitarian mission as an excuse to invade. Rasmussen said Moscow should “step back from the brink” and not “use peacekeeping as an excuse for warmaking.”

 
A version of this article appeared in the print edition of The Daily Star on August 08, 2014, on page 11.

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Summary

Moscow banned imports of most food from the West Thursday in retaliation against sanctions over Ukraine, a stronger than expected measure that isolates Russian consumers from world trade to a degree unseen since Soviet days.

Russian share prices fell after the announcement of Moscow's one year ban on all meat, fish, dairy, fruit and vegetables from the United States, the 28 European Union countries, Canada, Australia and non-EU member Norway.

Putin had promised to ensure that the measures would not hurt Russian consumers, which suggested he might exclude some popular products.

The EU's executive Commission said it reserved the right to take action to retaliate against the Russian ban.

Russia spent $25.5 billion last year on imports in the affected categories, $9.2 billion of it from the countries hit by the ban.

Russia bought 28 percent of EU fruit exports and 21.5 percent of its vegetables in 2011 .

The rebels in Ukraine are led mainly by Russian citizens and armed with tanks, artillery and other heavy weapons that Kiev and its Western allies say can only have come from Russia.


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