Many readers of this forum will be aware that Russia is enacting bans on specific food categories from the US and European Union. In a way, it's a surprise that Russia has taken so long to retaliate against Western sanctions, which have obviously infuriated Russia's leadership. But in another way, it's not so surprising: taken together, the states sanctioning Russia have GDP about twenty times (yes, 20) that of Russia, so the effect of countersanctions cannot be symmetric.
For perspective, Russia's economy is slightly bigger than that of Italy, and just about equal to that of the US state of California.
These sanctions will cause the most pain for: Russia's poor, a massive population. Economically, Russia is a "banana republic" in which the great mass of petroleum wealth is taken up by a few dozen people (including Putin himself), and a few million city dwellers have seen improving standards of living. But tens of millions still live in or near poverty (bear in mind that Russia's "poverty line" is very low by western standards).
I think of a news item from recent years, in which an elderly Russian woman died in the hands of police (apparently heart failure triggered by the stress of her arrest) after she "shoplifted" a chocolate bar. Her pension could not cover such an expense (reportedly, the police felt terrible about the incident).
Even "middle class" Russians will suffer: on average, Russians spend 32% of their income to buy food (in the US, this is the recommended maximum for HOUSING). Their food prices are equal to those in the USA, but their average incomes are much much lower. One reason food prices are so high, is that Russia imports quite a lot of its food (I have read figures as high as 40 percent!).
Of course, food prices will rise, creating hardship for ordinary Russians. But we can be sure that Putin and his fellow oligarchs will enjoy all the delicacies they love.
If Russia want to be a humanitarian government, then vacate Crimea and stop mandating what trade Ukraine can have with Europe. It must respect self determination of Ukraine as a neighbor and not it's abusive big brother.
Putin made war on Ukraine, because it declined to join his Eurasian Economic Union, a sort of customs union and free-trade zone. Remember, this was the trigger for Putin's grievous damage to the structures of international law, murder and vandalism against Ukraine, the brutal war in the east, and the slaughter of 298 blameless air travelers.
Now Putin's mad sanctions against his own people, are creating interesting stresses within ... his Eurasian Economic Union. You see, Belarus and Kazakhstan (Russia's partners in the EEU) have no reason to make sanctions against the West, because the West has not sanctioned them -- only Russia. Belarus and Kazakhstan are not the criminals against international law.
So, Belarus and Kazakhstan are not restricting food imports from the West, though Kazakhstan's president reportedly had to phone Putin to ask whether Kazakhstan was included -- such is the dignity and independence of a state, once it has accepted Putin's iron boot-heel.
But, the EEU forms a single customs border: trade between the states is not subject to customs duties or inspections. So by law, there is nothing to prevent a partner state from buying food from the EU, and then selling it on to Russia. Already, Russians are making jokes about importing seafood from land-locked Belarus.
Belarus President Lukashenko has announced that Belarus will not make such re-export. Russia's neighbors understand well that they can be punished for any acts distasteful to Putin.
So, there is the conundrum: Belarus and Kazakhstan can act as transit conduits for Western food, partly relieving the pressure on the Russian people (and making a wad of money), or they can "toe the line" and let their neighbors suffer while themselves enjoying imported foods -- and an increased demand for their own agricultural output (a Belarus official referred to Russia's sanctions as "our Klondike").
How this will play out, depends on relations between three of the most corrupt governments with territory on the continent of Europe. Will Lukashenko keep his word, or is he just saying "the right thing?"
Putin's attempt in being a humanitarian is nothing more than a guise, just as Hamas. All of this death, destruction and placing the world back 50 years emotionally is his fault and legacy resulting from his ego. These animals have destroyed innocents and blocked a crash site from those that investigate. It is as basic as seeing a fire and understanding the men that come in heavy jackets and hard hats with a bill covering their neck are there to put out the fire. What does a rational person think now as the trucks rumble down the roads lined each side with trees,,,, not help... at best a delaying tactic.... No, I have seen these roads in decades past, filmed in black and white,,,,,,,,, strafe the invaders from the east and bring legitimate help from the west. Don't let up on the traitors...........
Ive heard the joke about seafood from Belarus. Of course seafood is a luxury of the upper middle and elite class in Russia. The self imposed sanctions on agricultural products from the west are already having an impact on the store shelves. Putin had to impose price controls on meat already and its barely been a week. Russia imports over 30% of meat, dairy and grains from the west and some smaller grocery outlets are already experiencing empty shelves as shortages of beef and chicken were still rather common already outside Moscow and St Petersburg some parts of the year.
Regarding the dioxin remark, Back in late May the terrorists tried to distribute Roshen candy to residents(Poroshenko's brand) Turns out some of the candy had been tainted in an attempt to create a false flag event.
RodanTsunami wrote: 'The trucks from Moscow are a "Trojan Horse" filled with Spetsnaz'
I don’t know how Russia’s economy today would compare with their economy back in 1999,,,, but when my Irina arrived here, our very first stop before returning home, was to the grocery store.
When we walked into the produce section,,, she was actually spinning around, like Alice in Wonderland. She had me take photos of her in front of the produce, to send home to her parents. The produce section of my favorite store, is about the size of an entire Russian store. We take many things for granted here in the west.
She was also amazed about our camping trailers,,,,,,,,, “and you pull them behind your car???” She took pictures of them as well,,, and sent them home. I had the impression,,, that our hunting trailer was larger than the average Russian flat.
“Russia’s trade bloc with Belarus and Kazakhstan is showing cracks in the aftermath of limits that President Vladimir Putin imposed on imports of U.S. and European agricultural goods in retaliation for sanctions over Ukraine.………………..”
mall European Farmers Bear Brunt of Russia's Sanctions
LONDON — European dairy firms halted production of cheese and butter destined for Russia and Norwegian salmon prices fell as a wide array of small fresh food producers felt the first impact from Moscow's tit-for-tat ban on their goods.
Russia stopped imports of most food from the West on Thursday in retaliation for U.S. and EU sanctions imposed over Russia's actions in Ukraine. Roughly 10 percent of EU agricultural exports go to Russia, worth around 11 billion euros ($14.7 billion) per year, according to European Commission figures.
While Western multinationals are counting on their local manufacturing plants to help them weather the ban, small farmers are not so lucky.
They said trucks bound for Russia were turning around mid-route, 8,000 tons of peaches were stranded in northern Greece and fears were spreading about the impact on products ranging from Spanish ham to Scottish mackerel.
Norwegian salmon prices are expected to fall 10 percent in the next week as a result of Russia's food sanctions, traders and analysts said Friday, forcing farmers to scramble for new markets at a time when prices are already under pressure.
"It's important that the producers cut their output next week," said one exporter, who declined to be named. "When this ban was announced yesterday, it was complete chaos."
Scotland's fishing industry also expected to be hit given Russia's importance as an export market for mackerel. The industry's main body said it was "extremely concerned."
Arla Foods, which says it is Europe's largest dairy cooperative, said Friday that it had stopped production of all goods for the Russian market on Thursday night. The market accounts for 1 billion Danish krone ($180 million) a year, or 1.3 percent of Arla's global annual revenue.
A company spokesman said it was trying to ship output elsewhere or switch to other products destined for other markets. "The immediate challenge is the market shut-down," said a spokesman. "But there will be after-effects as well."
Milk prices are likely to come under pressure as companies scramble for new buyers.
In Ireland, a major dairy producer, about 70 million euros ($94 million) of the country's 230 million euros ($308 million) of food and drink exports to Russia were affected, its food board said.
"It's the knock-on effect on cheese markets throughout Europe that's worrying farmers. You take out the biggest export market and that cheese has to go somewhere," said Sean O'Leary, a dairy farmer in the south of Ireland and Chairman of the Irish Farmers Association's dairy committee.
"The timing of it is just bad. Milk prices are already falling. Farmers are expanding before EU quotas are ended next year and Russia would have been identified as a growth market," he said.
Finland's dairy cooperative Valio said it was planning talks with labor unions concerning 800 jobs. The company produces about 85 percent of the Finnish exports hit by Russia's sanctions, Valio said on Friday. "The manufacture of all products for the Russian market was halted on Thursday," it said, with cheese, butter and milk the most popular items.
The company also said it was looking at how to cut its operations in Russia, where it employs just under 500 staff.
Finnish food exports to Russia totaled 400 million euros ($536 million) last year. Just under 300 million ($402 million) of those fall under the Russian ban, which represents 0.5 percent of total Finnish exports, data from the Customs office showed.
Greek Peaches, Spanish Ham
Greece exported about 160,000 tons of fruit to Russia last year worth 180 million euros ($241 million), according to Greece's fruit exports association, Incofruit-Hellas.
Christos Yiannakakis, head of an association representing about 5,000 producers in Imathia, a peach-producing region in northern Greece, said they were reluctant to ship to Russia in case they were forced to turn back. As a result, around 8,000 tons of peaches are held up in refrigerators in the area.
"Russia is our main market," Yiannakakis said, adding that about 50 to 60 percent of the region's peach exports go to Russia.
The producers have already suffered this year from the crisis in Ukraine, its second-biggest market, as well as a global oversupply of peaches and a slight drop in demand. "[The embargo] will throw our region's agricultural community into great turmoil," he said. "It's a disaster."
In Spain, where the economy is finally emerging from a long recession, producers of fruit, vegetables and meats — including fine Spanish ham — said they were very worried.
"Any kind of ban on products tends to create excess production and thus an extreme drop in prices. This affects producers big and small, not just exporters," said Miguel Padilla, head of agriculture and livestock association COAG.
The association is based in the southern region of Murcia, a major producer of fruit and vegetables which annually exports about 33 million euros ($44 million) directly to Russia, which is a big buyer of peaches, lettuces and cauliflower from Spain.
A large part of some 90 million euros ($121 million) of Murcia exports to Poland, Germany and Netherlands also ends up in Russia, said Padilla, who grows watermelon and broccoli.
"Exporters have told us that some trucks in the EU are turning around right now because their orders have been cancelled," he said.
The country's main fish and meat producers, Pescanova and Campofrio, will avoid the impact. Russia is not among the main export markets for Pescanova, a source with knowledge of the company's business said, and Campofrio sold its Russian unit in 2008.
But the tensions with Russia could have
Goodbye, Roquefort cheese, feta, prosciutto and jamon. So long, German raspberry jam, U.S.-made Planters nut mixes, Norwegian salmon and Faroese shrimp. In his efforts to hit back at the West, President Vladimir Putin is depriving Russians of the delicacies to which they have grown accustomed since the Soviet Union collapsed.
EU officials seek to limit impact of Russia's food import ban
European Union regulators on Monday began analyzing product-by-product the impact of a Russian ban on EU food imports announced in retaliation for Western sanctions over Moscow's actions in Ukraine.
On Putin's orders, the Russian government Thursday banned the import of certain kinds of European, U.S., Canadian and Australian food for a year in response to those countries' Ukraine-related sanctions against Russia. Unlike Western leaders, Putin is not concerned about minimizing the effect of sanctions on his own country's businesses. The measures will hurt Russian retailers and importers as much as Western exporters. To ordinary Russians, the measures show how serious Putin is about returning to Soviet times, when all grocery stores were called simply "Food" and sold almost exclusively local produce when they had anything to sell.
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The embargo appears focused on products that Russia can source internally or from friendlier countries. It includes all kinds of dairy, fruits and vegetables, meat and seafood. Parmesan cheese is banned, but Italian olive oil isn't. German sausage is out, but German beer can still be imported. French foie gras is out, but Sauternes is in. Irish cheddar will be gone from the few Russian stores that sell it, but Irish whiskey still will be served in Moscow bars.
Russia imports more than $30 billion worth of food a year from countries outside the former Soviet Union. In all, Europe's biggest economies plus Poland, Norway, the U.S., Canada and Australia stand to lose some $6 billion in the next year from the Russian food sanctions.
Putin is no different than any other dictator. He doesn't care about the people and never has.He is power hungry and only care for himself.He is denying the people food from the west but yet he will be sitting in his lavish home while eating those foods that the people can't have.
Putin appears to care little about the effect of the sanctions. His focus is, as ever, domestic. He is showing his voters in the most tangible way possible that Russia doesn't need the West to survive. The Kremlin's propaganda is already playing up this message. "I can survive perfectly well in a world without Polish apples, Dutch tomatoes, Latvian sprats, American cola, Australian beef and English tea," Yegor Kholmogorov wrote on Izvestia.ru before it became clear that tea and cola would not be sanctioned. "Especially if this results in a substituting expansion of Russian agribusiness and food industry."
Blanketed by the state TV channels, most Russians will swallow the patriotic line, as they have bought Putin's takes on Ukrainian events and the annexation of Crimea. To the few propaganda-resistant citizens, the food embargo is another step toward the Soviet era of self-reliance. They've been stocking up on the last French cheese they're going to see for at least a year and chuckling at the latest Putin joke: "The president decided to show he's a Western leader, too, and imposed sanctions on Russia."
The Russian Federation has a national pension system, as do many European countries, and the USA (in the form of Social Security).
Each year, a portion of the national Pension Fund's money is invested in private pension funds. But this year, that money was taken to cover some of the enormous costs of stealing the Crimean peninsula from Ukraine.
Apparently, Putin wants to hide the dent his adventurism is causing in the state budget. The costs to the government of Crimea are on-going, as are additional losses due to Western sanctions. So, Putin decided to steal these private-fund payments for 2015 as well, totaling about $25 billion.
Sergei Belyakov, Putin's Deputy Economics Minister, disagreed with this diversion of pension funds. It's not hard to see why: not only is this damaging to the national pension itself, but the money that would have been invested in private pension funds serves as capitalization for Russia's businesses.
On social media, Belyakov posted: "I am ashamed of the decision to prolong the moratorium on investing pension contributions in private funds. I beg everyone's forgiveness for the stupid things we do and for going back on our word."
You see? The West lies, the Russian government is not an army of robots marching in lock-step! Protest and dissension are permitted! People don't live in fear of Putin!
Oh... Belyakov was fired from his post a week ago.
I call on the European Union, and America to immediately mobilize humanitarian aide to Ukraine. These people need assistance and to be given the ability to tell Russia to shove their trucks of goods up their ass. Would we send a battered wife back to the abusive husband?
hey gstyer, are you a Russian propagandist or what? Did you get these articles from Russia today or Ria Novisti?
Those articles speak about a 1% to as much as 11% hit on western markets, depending on the country. only $6 billion in gross revenues
is what we are talking about (or roughly what Americans spend on food in a single day). These products can be diverted to western markets, especially Canada and the US which have been dealing with high food prices because of shortages in domestic output(the USDA paid 15 billion to farmers NOT to produce in 2012).
Fish, pork and beef prices have nearly tripled since 2008 in the US especially with the Obama administration buying up pork and beef to inflate prices and discourage consumption to abide by Moochelle's "healthy eating" initiative.
so basically what EU producers will experience is a long needed market correction. Lets be frank here Mr Russian sympathizer, Salmon and Mackerel prices have
been at historical highs even when adjusted for inflation and year over year adjusted dollars. within a few weeks the market will absorb this surplus
because that what capitalism does. It would be awesome to see cheese return to 18 cents/oz like it was in 2008 instead of the 38 to 50 cents per ounce it is now.
These Euro agri producers have been living the good life in the past few years. guess none of them will get to replace the 3 year old Ferrari sitting in the garage this year.
SOUTH STREAM PIPELINE MAY BE DELAYED SEVERAL YEARS
Most of the Russian natural gas supplied to Europe passes through Ukraine. Historically, this supply has been unreliable, because conflict over pricing between Russia and Ukraine has resulted in closing of the valves by Russia, threats to close the valves by Ukraine, and claims that Ukraine was "siphoning off" gas that was supposed to pass through.
The backdrop of these conflicts has been Russian power politics: lower prices to reward obedience by Ukraine, and higher prices to punish independence.
A net effect of this, has been to make Russia itself look unreliable to its customers. To reduce this burden, Russia constructed a Nord Stream pipeline running in part through the Baltic Sea, and is now working on the South Stream pipeline running in part through the Black Sea. With both of these pipelines in place, Russia can bully and extort Ukraine at will, without inconvenience to its other customers. South Stream is scheduled to come online next year.
According to Bloomberg, some industry analysts have concluded that taking into account the EU's deep unhappiness with Russia, and various non-political regulatory problems that had already cropped up, completion of the South Stream is expected to be delayed by several years. [Note: not all of the analysts quoted in the article agreed with this assessment.]
The article suggests that the EU could use completion of the pipeline as leverage, to pressure Russia into selling gas to Ukraine at a reasonable price. Because the route of the South Stream passes through several European states, it cannot be completed without government permissions.
Time magazine has a good piece on how ordinary Russian citizens are starting to feel the effects of Putin's policy; until now, it has mainly been TV images and kitchen table discussions.
I usually despise videos that come with online news stories, but the video in the Time article is worthwhile.
An interesting piece of new data (to me, at least) is that less than one Russian in eight is willing to make any personal sacrifice in favor of the Ukraine adventure. Cruelly humiliating weaker countries is fine ... on somebody else's dime.
Putin's food import restrictions may be recorded as one of the great mistakes of political history. Most people care a lot about what they eat, and as I mentioned in a previous comment, average Russians have to spend a hell of a lot of their income to put food on the table.
Not only are ordinary Russians facing the immediate loss of favorite pleasures (the rich will continue to enjoy every delicacy they wish, of course); Putin's food ban will aggravate Russia's already high inflation rate, pushing it to about 9% (on top of a nearly 20% loss of the ruble's exchange rates when Russia invaded Crimea -- the ruble has not recovered at all). This inflationary pressure is a natural consequence of enforced scarcity. A moderate amount of inflation (usually 2 to 3 percent) is good for the overall health of national economies, but 9% is a nuisance, especially for old-age pensioners.
Those retirees are probably some of Putin's strongest supporters: they are more inclined to feel nostalgia for Soviet greatness, to buy in to the bullshit about the historic glory of Crimea, and in general to reject everything about modern times, which have often been quite hard for them. Pensioners are also suffering the most from this ban, because buying food was already a terrific burden for so many of them. Now, some of their favorite treats are unobtainable; all food prices are rising; and the purchasing power of their meager pensions is sinking fast.
It seems that Russia's supposed "master chess player" may have reached the stage in his career, where every unholstering of his gun is immediately followed by the loss of a toe.
This is the most astonishing thing I have yet read about economic impact. It comes from Chris Weafer, a founding partner of Macro Advisory (Moscow-based investment consulting firm).
"The market is shut. Not a single Russian entity has been able to borrow anything in dollars, euro or yen since early July."
Note that Mr. Weafer didn't say that foreign currency borrowing was tight, or that it has decreased sharply. He claimed that is has GONE TO ZERO.
Also, note that he said "since early July" -- BEFORE the sanctions that were announced one day prior to the missile-killing of flight MH17, and BEFORE the even stronger sanctions that followed that mass slaughter of innocents.
I'm guessing that the liquidity crisis to which Mr. Weafer refers is not only a matter of the direct impact sanctions, but also a loss of world confidence in the stability of Russia's economy.
This is such a strong statement, I would like to see it corroborated elsewhere, but haven't found confirmation yet.
If you are wondering whether Mr. Weafer (with his obviously non-Russian name) might be making some anti-Russian propaganda, take a look at macro-advisory.com, his firm's website. Their uniform slant seems to be, "invest in Russia! everything here is great! what looks like bad news has a silver lining!" So it would be surprising, if he tried to make things look worse than they really are.
This is an AP story (note, two pages) from 30 July, when the EU and US had just announced the broader sanctions (the regime in effect at this writing).
The essence of this analysis, is that the short term effect of the sanctions will not be very strong, but that they will "stifle development in the Russian economy and sap its financial sector."
"The biggest immediate impact is likely to come from the financial sanctions. U.S. officials said roughly 30 percent of Russia's banking sector assets would now be constrained by sanctions ... banks are already having trouble raising money. 'That would mean their ability to lend to other banks, smaller banks, is going to be more restricted also.' ... The measures against Russian banks, which exempt short-term borrowing, are meant to inflict just enough pain without causing them to collapse. 'The aim is not to destroy these banks," said a senior EU official, briefing reporters on condition of anonymity prior to the sanctions' official announcement. 'We do not want them to get into a liquidity crisis.'"
It seems to me that the intensity of sanctions has been carefully "calibrated", both to minimize the cost to Europe's economies, and to cause pain in Russia without bringing about devastation. The idea is to influence Russia's actions, not to wreck the country.
A convoy of Russian trucks carrying aid for eastern Ukraine has been opened up to journalists at the border.
The Ukrainian government had insisted that inspectors checked the trucks' cargo, amid fears that they could be carrying military supplies for the rebels - an accusation Russia has rejected.
The BBC's Steve Rosenberg noted that many of the trucks were "almost empty".
THIS FROM FORBES' PAUL RODERICK GREGORY:
What was supposed to be a PR bonanza is ending up as another black eye for Vladimir Putin, the heralded chess master of world politics. Did he really expect the world community to force Ukraine to allow in Russia’s gift of humanitarian assistance, no questions asked? Did he really think that Ukraine would allow his convoy to proceed into a war zone as cameras recorded the celebratory reception by starving and suffering civilians? Did Putin really not understand that national leaders look askance at attempts to cross national borders without permission? That is the International Politics 101 lecture that Putin failed to attend.