Russia bans Western imports over Ukraine sanctions
Published 07/08/2014 | 12:09
Russia has banned most food imports from the West in retaliation for sanctions over Ukraine.
The sweeping move will cost Western farmers billions but could also lead to empty shelves in Russian cities.
Minister for Agriculture Simon Coveney said today that the the ban is "a real worry" but that the sanctions on agricultural products were not a "huge surprise".
Speaking on RTE Radio 1 before the full list of banned products was released, Mr Coveney sais that last year Ireland "exported about €4.5m worth of cheese to Russia".
The decision shows that President Vladimir Putin has no intention of bowing to Western pressure over Ukraine and will instead try to strike back at the West.
It also demonstrates that the Kremlin is ready to inflict damage on Russia while pursuing its course in Ukraine.
The US and EU have accused Russia, which annexed Ukraine's Crimean Peninsula in March, of fermenting tensions in eastern Ukraine by supplying arms and expertise to a pro-Moscow insurgency. They have imposed asset freezes and loan bans on a score of individuals and companies.
Prime Minister Dmitry Medvedev said at a televised Cabinet meeting that Russia's retaliatory ban covers all imports of meat, fish, milk and milk products, fruit and vegetables from the United States, the European Union, Australia, Canada and Norway. It will last for one year.
Mr Medvedev said Russia could go further and ban Western carriers from flying over Russia on flights to and from Asia - a move that would significantly swell costs and increase flight time.
He said there has been no decision on that yet and would not specify when and under what conditions the move could be taken.
Mr Medvedev made it clear that Russia hopes that the sanctions will make the West revise its policy and stop trying to pressure Russia with sanctions.
"Until the last moment, we hoped that our partners would understand that sanctions only lead to a deadlock, and no one needs them, but they didn't," he said.
"We hope our partners will put a pragmatic economic approach above bad policy considerations and they will start thinking, instead of trying to scare us."
If the West does not revise its course, Russia may follow up by introducing restrictions regarding imports of planes, navy vessels and cars, Mr Medvedev warned, but added that the government will realistically assess its own production potential.
Russia depends heavily on imported foodstuffs - most of it from the West - particularly in the largest and most prosperous cities such as Moscow.
In 2013 the EU's agricultural exports to Russia totalled €11.8bn, while the US Department of Agriculture says food and agricultural imports from the US amounted to $1.3bn.
Experts said that local producers will find it hard to fill the gap left by the ban, as the nation's agricultural sector has continued to suffer from poor efficiency and shortage of funds.
The damage to consumers inflicted by the ban will be felt particularly hard in big cities like Moscow, where imported food fills an estimated 60-70pc of the market.
EU Commission spokesman Frederic Vincent said it still has to assess the potential impact, and reserves "the right to take action as appropriate".
The Netherlands, one of the world's largest agricultural exporters, sends €1.5bn 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.
He called on the Dutch government and the EU to help farmers. Exports to Russia account for about a 10th of EU agricultural exports.
"We're thinking of either removing products from the market or temporarily storing them," he said.
The Russian government said it will move quickly to replace Western imports with food from Latin America, Turkey and former Soviet nations, but analysts predicted empty shelves, price hikes and inflation.
Mr 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 agriculture minister Nikolai Fyodorov said the sector would need additional subsidies equivalent to 3.8 billion US dollars (£2.2 billion) in the next few years to pump up production.
The government may find it hard to increase funding as it tries to shore up the currency and support banks and companies affected by Western sanctions, which included an EU ban on long-term borrowing for key Russian state banks.
Russian stock indexes fell by about 1.5% on the news, on top of a similar drop the previous day.
Mr Medvedev said Russia hopes the ban will stop the West from ramping up sanctions, which it has done several times this year as the crisis in Ukraine has deepened.
"We didn't want such developments, and I sincerely hope that our partners will put a pragmatic economic approach above bad policy considerations," he said.
He said Russia's ban could be lifted before the year is up if "our partners show a constructive approach".