Moscow banned certain food imports from the West on Thursday in retaliation for recently imposed U.S. and EU sanctions on Russia. The move escalates the Kremlin’s row with the West over the Russian government’s arming of Ukrainian separatists.
According to a speech given by Prime Minister Medvedev, President Vladimir Putin signed a decree stopping the import “of beef, pork, fruit, vegetables, poultry, fish, cheese, milk and dairy products” from the EU, U.S., Australia, Canada, and Norway for one year.
Dmitry Medvedev and Vladimir Putin in 2008. (Photo: Russavia)
The Kremlin’s announcement will cost Western farmers billions of dollars, but probably won’t hurt the overall economies of Europe or America. A statement released by the American Farm Bureau Federation, an industry group, said that the decision was a “political move” by Putin and the “biggest losers in this will be [the] Russian consumers, who will pay more for their food.” Over the past few years, Russia has been the second-largest importer of agricultural goods among emerging markets; greater self sufficiency could prove costly.
In addition to the sanctions, the Kremlin is considering blocking airlines, including British Airways, Air France, and Lufthansa, from flying across Siberian airspace to reach destinations in Asia. Meanwhile, Russian lawmakers are also contemplating a ban on accounting firms based in the U.S. from doing business in Russia. Some of the targeted firms include Ernst & Young, Deloitte, KPMG, McKinsey, the Boston Consulting Group, and PricewaterhouseCoopers.
Putin’s decision comes a week after President Obama and EU leaders imposed a new round of sanctions on July 29. Moscow’s support for Ukraine’s pro-Russian separatists, highlighted by its suspected role in the shooting down of Malaysian Airlines Flight 17, prompted the latest sanctions.
European and American level-two sanctions will target certain firms and limit the sale of advanced technologies. Russian state-controlled banks have been excluded from transactions in world markets, and the West will stop supplying specialized machinery used for hydrocarbon extraction. The European Union imposed an arms embargo, blocking trade with Russia’s weapons sector. Ultimately, the new sanctions will hurt foreign investment and make it harder for Russian lenders to raise capital in world markets.