14 Aug /14

До свидания Piroggi? – Agricultural trade in the time of sanctions

new outlets for Russian exportsAs a result of the continuing conflict in eastern Ukraine, 2014 is quickly becoming “the year of the sanction.” Regardless of how the overall situation will actually play out over the next months and, perhaps, years, political and economic sanctions have become the preferred tool of EU politicians to curtail Russian influence on the conflict. In turn, Russia has reacted to EU and U.S. sanctions by imposing their own import restrictions on EU goods and products. While the political effectiveness of sanctions always depend on the severity and duration of the impositions as well as the determination to enforce them, the actual dependency of the sanctioned country on the goods in question is vitally important in determining the outcome of the strategy. While long and harsh sanctions on Iran, most notably the restrictions on oil exports and financial trade, certainly yielded results and ultimately brought the Iranian government to the negotiating table, it remains doubtful if the sanctions against Russia, in its current form, will have any impact on Putin’s policies. Not only because the interdependence between Russia and, at least, European countries is far greater than US-Iranian economic ties ever were, but also because there is already an eager group of countries willing and able to offer new outlets for Russian exports as well as providing the goods formerly imported from the E.U.

An interesting and noteworthy byproduct of the system of economic sanctions resulting from the crisis in Ukraine is the formation of new economic alliances that might unsettle the international trade systems for years to come. In 2013, the United States and the European Union exported a combined $17.1 billion worth of agricultural products to Russia ($1.3 and $15.8 billion, respectively). Russia’s import stop on agricultural products from the EU put a sudden halt to the deliveries. EU politicians were hoping that empty supermarket shelves would bring Russians to put pressure on their government, but so far that is not the case – quite the opposite. Designer T-shirts bearing the portrait of Vladimir Putin are currently the vogue among Moscow’s rich and famous and a sure sign of the unbroken public support for the controversial president. To make matters worse for EU foreign policy makers, last week Egyptian president Abdel Fattah al-Sisi landed in Moscow for a surprise visit to the Kremlin during which he assured Russians that Egyptian companies would deliver some of the products formerly imported from suppliers in Spain, Italy, Greece, and Portugal. In addition to Egypt, other countries, notably the South American nations of Brazil, Argentina, Ecuador and Paraguay, have closed ranks with traditional Soviet-era allies such as Belorussia and Kazakhstan to supply agricultural products to Russia and form new trading alliances.

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