Moscow banned imports of most food from the West yesterday 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 frontline 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 neighbour. 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 US, the 28 EU 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 US 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 defence, oil and financial sectors over its support for rebels waging an insurrection 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 sell-off.
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.
Move isolates Russian consumers from world trade to a degree unseen since Soviet days
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 became available.
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.