Russia Knocks Out EU
Pyotr ISKENDEROV | 14.08.2014 | WORLD

Russia Knocks Out EU

The European Commission has formed a group to assess the losses inflicted by Russian food embargo. The overall damage could be 12 billion euros. The EU has only 400 million euros earmarked for compensation.The experts of the Food and Agriculture Organizationof the United Nations (FAO) believe the European Union, the United States, Canada and Norway will have to urgently find new markets for products exported to Russia until now.  Concepción Calpe, a senior economist at the Food and Agriculture Organization of the United Nations (FAO), estimates that the countries under the sanctions will have to look for new markets in China, Latin America and the Caribbean. The fruits and vegetables storage and conservation will be a real problem. Brussels obediently followed the US policy on Ukraine and received a sensitive retaliatory blow against its agricultural sector as a result.

 Poland and the Baltic States, the countries that did their best to lead the US-led anti-Russia campaign,   are the hardest hit. Warsaw is to lose 800 euros a year or 0, 5% of its GDP. Estonia sacrificed 0, 3% of GDP to support the implementation of Washington’s geopolitical plots. Lithuanian farmers are to lose 927 million euros. In case of Latvia the loss is estimated to be 55 million euros. Laymdota Strauyuma, the Prime Minister of Lithuania, points out that the damage is telling. Some branches will suffer serious losses, especially milk and dairy production.

Finland hurts itself making the country plunge into crisis. Finish Prime Minister Alexander Straub believes the sanctions war may lead to “economic collapse 2.0”.  Poland, Lithuania, Finland, the Czech Republic and France, approached the European Union to request compensation for the losses. But that’s something the EU can hardly afford.  Euromonitor International Ltd is a privately owned, London-based market intelligence firm, providing market research, business intelligence reports, and data to industry. According to its research, Germany is the country to be most affected by the ban. Only the sheer size of German economy saves it from being the largest loser. According to German calculations, the country is expected to lose 600 million euros yearly with many jobs lost.     

Lianne van den Bosof EuromonitorInternational explains that German export of meat and meat products is the most vulnerable to the sanctions. In 2012 the export accounted for $900 million.  

According to ARD-Deutschlwill oppose and Trendsurvey, 46% of Germans would oppose the Russia and Ukraine policy implemented by Brussels and Berlin if sanctions badly hurt economy and jobs.

The prospects for finding new markets are dim enough. If the countries of Central and South America will open the door for EU imports the prices for their own commodities will immediately go down. 

Brussels is trying its true and tried policy of political pressure. It started talks with Latin American states to dissuade them from stepping in to replace Europe’s banned agricultural exports to Russia.   The Russia's ban on Western food products offered a lucrative windfall for meat exporting Brazil. About 90 new meat plants in this country were immediately approved to export beef, chicken and pork to Russia and Chile hopes to be a leading beneficiary of Russia’s embargo on fish. The Financial Times reports, that such excitement in the agricultural powerhouses of Latin America has triggered concern in Brussels. “We will be talking to the countries that would be potentially replacing our exports to indicate that we would expect them not to profit unfairly from the current situation,” said one senior EU official at a briefing on the situation in Ukraine. The official said he understood that individual companies could sign new contracts with Russia but it would “be difficult to justify” countries pursuing diplomatic initiatives to fill the gap left by the EU, the US, Norway and Australia. (1) The expectations that Latin America would follow the EU policy are hardly substantiated.  The world food market is the largest and most dynamic, it evolved by its own rules and the European Union may find itself left with nothing.  

While obediently dancing to the Washington’s tune, the Brussels leaders turn a blind eye on the fact that the European interests do not coincide with the interests pursued by the United States.  It’s impossible to make the European solidarity be aligned with economic needs.   

According to RicSpooner, Chief MarketAnalyst for CMC Marketsin Australia, the Russian ban on agricultural products from the European Union, Norway, the United States and Australia will knock out other markets’ prices while exporters will be looking for new markets.(2) This is a tough situation for the European Union but it has to reap what it sows.

 

 

[1] http://www.ft.com/intl/cms/s/0/4730c97a-216a-11e4-a958-00144feabdc0.html#axzz3AGf8yos0

[2] AP 080417 GMT Aug 14

RELATED ARTICLES