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The consequences of the Russian embargo: who benefits and who doesn’t #russia #usa #eu #sanctions #belgium

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Just over a year ago, Russia responded to the sanctions imposed by the US, the EU and a series of other countries and international organizations – which opposed to the annexation of Crimea by the Russian Federation  – commanding an embargo on Western food imports. The embargo, which already prohibited the supplies of some agricultural products from the EU, Australia, Canada, Norway and the US since last August  has recently been extended to Albania, Montenegro, Iceland Liechtenstein and Ukraine.

Data confirms that the program of  domestic product substitution launched by Moscow works well only in the agricultural field and for all basic foodstuffs – Russian farm companies’ net benefits account for 91,3 billion roubles (1,27 billion Euros) in 2015, compared to 32,3 billion roubles (442 million Euros) in 2014. On the other hand, other local productions have declined and Russian production system has shown incapable of completely replace the whole foodstuffs import banned by the government, causing a deficit in raw materials.

In the meanwhile, while statistics says Russia has entered into recession – forecasts suggest a decrease in real GDP in the order of 3% – 3.5% for 2015 and zero growth in 2016 – authorities fight smuggling by destroying products illegally entering the country: 552 tons of banned products were destroyed during the first semester of 2015, usually burnt, report say. Nonetheless, European products still flows from the uncontrolled Byelorussian border, which is part of the customs union with Russia but didn’t  take measures against the EU; along with that, privates can still order US and EU products for personal use.

Dmitri Peskov, Putin’s spokesman , justifies government’s action:  being the provenience of the products unknown, they could represent a risk for consumer’s health; but within and beyond Russian borders, indignation grows – 250000 people have already signed a petition against the destruction of products.

Thus, who benefits –and who doesn’t- from the Russian embargo?

Moscow planned to boost imports from South America and Asia; yet, some countries have benefited from the Russian food embargo, such as Pakistan, Belarus, Serbia, and Chile, while Brazil, which was expected to become the main beneficiary of the Russian food sanctions, has not lived up to these expectations and supplies even went down in the first five months of 2015 to 164,000 tons from 167,700 tons in January-May 2014. China have cut down food supplies to Russia, too, although last year Chinese businesses were planning to replace European fruits and vegetables on the Russian market. New Zeeland followed the same path, reducing its food exports to Russia by 69 percent.

Given its proximity and that it is the largest exporter of agricultural produce to Russia, European entrepreneurs and entreprise have recently seen their commercial relations with Russia  decrease sharply: the Belgian exchange volume declined of 32,4% , while a 26,5% in export and 47,4% in import decrease were estimated in the first half of 2015. In spite of this, Anatoli Gorchkov, the new Russian commercial representative in Belgium and Luxembourg recently stressed the importance of bilateral relations, to boost cooperation in sectors such as transports, micro and nano- technologies and biotechnologies.

Valentina CALCAGNO

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