Russia Hits back at West with Huge Food Imports Ban

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Russia retaliated against tough new Western sanctions on Thursday, banning most food imports from the United States and the European Union and threatening to block flights over its airspace.

The 28-member European Union swiftly denounced the measures -- which also target Canada and Australia -- and said it was ready to take action in response.

The tit-for-tat moves further heighten tensions between Russia and the West over the conflict in Ukraine, where heavy shelling was reported in the rebel-held eastern city of Donetsk on Thursday.

At a government meeting Russian Prime Minister Dmitry Medvedev announced the embargo will affect "imports of beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy products from the European Union, the United States, Australia, Canada and Norway,"

The ban exempts only baby food and will last one year unless "our partners demonstrate a constructive approach" with regards to sanctioning Russia, he said.

"I hope that the economic pragmatism of our partners will win over lousy political motives," he said.

With Russia importing 35 percent of its food, consumers are likely to feel the impact unless other suppliers can quickly be found.

Analysts at London-based Capital Economics said Russia imported last year $9.5 billion (7.1 billion euros) worth of the goods on the list from the sanctioned countries, out of $25 billion spent on those goods.

The European Union will be worst hit as sales of those products accounted for $7 billion of the $16 billion in food it exported to Russia last year. However this is just 0.05 percent of the EU economy, they noted.

The European Commission said the measures were "clearly politically motivated".

"We reserve the right to take action as appropriate," it said in a statement.

In another potential strike against the West, Moscow is considering banning the use of Russian airspace for European airlines, the so-called overflight rights needed to take the shortest route to Asia.

U.S. airlines have not been allowed to use Siberian airspace for years and have been pushing the Russian government to review its policy.

The overflight measure is being mulled in response to EU sanctions effectively grounding Dobrolet, a low-cost subsidiary of Russia's flagship Aeroflot over its flights to Russia's annexed Crimean peninsula on US-made Boeing craft, which EU companies service and lease.

The ban could hurt not only European long-haul carriers but also Aeroflot, which receives the overflight fees.

Bank of America Merrill Lynch estimates that using longer routes bypassing Siberia could add around $30,000 (22,400 euro) per flight to fuel and operating costs.

Moscow has billed the sanctions, as well as import restrictions, as good news for Russian producers.

Medvedev said the government will work to "prevent price increases" and use the embargo to "clear the store shelves for our producers".

However, economists have warned that the embargo will hurt the poorest Russians, who spend a large percentage of their income on food.

"We could see a minimum of 20 to 30 percent rise in prices, especially for produce," said Igor Nikolayev, who heads Moscow-based FBK Strategic Analysis Institute.

"Substituting imports with Russian food is nothing but tall tales," he said, citing government policies of the last decade which have wiped out farmers with exorbitant taxes.

"To support farmers you need money, but there is no money," he said. Existing money has already been allotted to other needs and Russian state banks can no longer borrow long-term loans on Western financial markets, the economist added.

Analysts have warned that protectionist measures will send inflation soaring because of the higher price for food.

"The upshot of all this is that the biggest loser from the ban looks set to be Russia," said Neil Shearing and William Jackson at Capital Economics.

Independent analyst Maria Lipman said the food ban was a political necessity for Moscow, but not the worst response that could have been expected.

"Russia is sending a message saying that you hurt, and we hurt too, so perhaps we should start talking," she told AFP.

Comments 22
Missing greatpierro 07 August 2014, 12:34

are you a supporter of russia? It seems that dictators are particularly attractive to your senile mind.

Thumb FlameCatcher 07 August 2014, 13:22

FT, do you support all terrorist governments ? Russian, Iranian, Syrian ...

Happy about them shooting down an airplane or do you have an excuse for that too ? Maybe the shooter mistaked the airplane for a US bomber or was blinded by the sun ?

Putin should face the same fate as Assad, death by public slapping from his entire population ! The idiots that support them should be hanged !

There is no possible excuse for supporting dictators and no difference between them and the terrorists you complain about !

Thumb Maxx 07 August 2014, 12:35

...And bye-bye middle-class Russian folks' money.

Thumb ex-fpm 07 August 2014, 12:42

exactly, more damaging to the Russians than anything else.

Missing imperatrice 07 August 2014, 12:51

national stupidity at its best!

Missing imperatrice 07 August 2014, 12:54

FT do tell us what exactly do u look for in leaders? freedom of will, expression and thought don't seem to matter to u
democratic governance, the same
what ideals/leadership qualities do u value bc at the end of the day it will tell us about your own values

Thumb eagledawn 07 August 2014, 13:55

he has no values why ask

Default-user-icon AbuLiban (Guest) 07 August 2014, 18:25

FT PLEASE, with all due respect towards all your opinions, do not post on stories that do not concern you and you have no idea bout. Stick to Lebanese politics.

Default-user-icon FTyourajoke (Guest) 07 August 2014, 20:05

FT Quotes of the Day:
"You can Publish anything in Russia and China" OMG LMFAOOOOOOOOO
"Tim Tebow in the US lost his career because he used to pray before hitting the court"
"West is becoming a Communist cesspool"
YOU ARE SO BLIND MR FT<> PLEASE STICK TO LEBANESE POLITICS AND DO NOT INVOLVE YOURSELF IN THINGS YOU HAVE NO IDEA ABOUT.

Thumb Mystic 07 August 2014, 13:49

Bravo Russia

Thumb jabal10452 07 August 2014, 15:17

I think Russia just shot itself in the foot and Putin painted himself in a corner. An already slowing Russian economy is going to be hit by inflation due to food shortages. Putin is still riding on a wave of patriotism, but sooner or later he will have to show his people something tangible for all is bravado. Sooner or later the Russian citizen will wonder why is it getting more difficult to make ends meet, and why it is getting harder to travel abroad like so many have come to take for granted.
If Putin backs down on Ukraine, he will be seen as weak by his people. If he doesn't, and I think he won't, Russian will gallop back to Soviet times: isolated and decrepit.

Thumb jabal10452 07 August 2014, 15:42

Sure America's balance sheet is in a bad shape, with debt at 104% do GDP, Compared to Russia's which is around 13%. But the US economy is pulling out of recession, albeit at snail pace. This has a lot to do with America's diversified economy and aggressive monetary policy. Plus the Fed is independent, which helps a lot. America's debt was much hire at the end of WW2 was much higher, and it pulled out of it. Russia is better off now, but it's economy is based on one thing: oil / gas exports. It has it's eggs in one basket and has failed to invest its oil and gas windfalls into diversifying its portfolio like Norway has done, for instance. Russia's economy is not as robust as you think, FT.

Thumb jabal10452 07 August 2014, 15:52

Sorry about the jumbled up post. iPad...

Thumb jabal10452 07 August 2014, 16:47

It is, albeit slowly. Unemployment is down, consumer debt is down, business confidence is up and interest rate remain at a historical low with no apparent inflationary effects.

Thumb jabal10452 07 August 2014, 17:31

Crossing the line into blindness is exactly what happened in 2000. Remember Greenspan's famous warning about "irrational exuberance"? No one heeded that warning. Next thing you know the world had to deal with the dot com bust. Let's hope that markets learned their lessons.

Missing imperatrice 07 August 2014, 14:32

FT
I value liberalism, secularism, feminism, LGBT, open borders, global village and equality with PRIDE
you on the other hand, should move to IRAN, they value all your ideals:
family/ a family member can stone to death or kill other family members if they doubt their chastity (alla la yjarbak)
order/ of course, they have an army commanded by Gods representatives to maintain it
hierarchy/leadership, ohhhhh here they do wonders, the Representative of GOD himself says who gets to run for elections
tradition, on that we all enjoy tabboule
as for heritage, you should never side with as system that destroys it

watch out, feminist liberals can bite nowadays!
where do u live by the way?

Missing imperatrice 07 August 2014, 15:48

"vivre libre ou mourir"
yet you live in the grey zone in between

Default-user-icon nothing (Guest) 07 August 2014, 16:00

Oleg,
Before makes any "un rational" comments, think twice. Remember, that your own parents, grandparents have been benefiting from the system that you are so proudly washing with negative illusions. Russians owning half of the world in geography, financially bought the other part of the world. Who will loose , the EU peninsula, size of Crimea , LOL. Guess why suddenly most of Tourist companies in Russia claimed bankruptcy? to push people not to travel and spend BIG $$$$$$$ somewhere in the wild Europe.
Enjoy, read more books and think twice.

Thumb Kompromat 07 August 2014, 16:07

the_roar I did not talk about winners or losers I just reported what the Russians who stood in lines for their monthly handful of rice, sugar, flour or meat were told, many of them went home before they got anything because the stores ran out of stuff but that's not important I guess..

Please read it again slowly this time and you will find that my comment was just an observation nothing more. If you are one of the uneducated & the unwashed you talked about please find someone, preferably educated & washed, to read and explain the difference for you or else think before you blurt more BS

Thumb liberty 07 August 2014, 17:05

Before leaving for work, I read 3 articles on naharnet and flamethrower posted 50 comments on those articles.

Thumb ice-man 07 August 2014, 17:50

hello @leb_roar: any updates to your your refugee status? I hope all is well.... I care

Thumb ice-man 07 August 2014, 17:52

do you like Moscow, Southern?