Russia Retaliates For Western Sanctions With Ban On Food Imports

Aug 7, 2014
Originally published on August 28, 2014 6:43 pm
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Transcript

AUDIE CORNISH, BYLINE: Some tit for tat from Russia today. The country retaliated against the U.S. and its allies for economic sanctions they've placed on Russia for supporting separatists in Ukraine. At a televised cabinet meeting, Russian Prime Minister Dmitry Medvedev laid out a broad ban on food imports from North America, Europe and Australia. As NPR's John Ydstie reports, the ban may hurt Russia more than the U.S. and its allies.

JOHN YDSTIE, BYLINE: U.S. exports of food and agricultural products to Russia are very small - just $1.3 billion a year. By comparison, the total U.S. annual economic output is $17 trillion, says Anders Aslund of the Peterson Institute for International Economics.

ANDERS ASLUND: So this has no impact whatsoever on the U.S. economy, a little bit on a few meat exporters.

YDSTIE: And even though Russia is the second-largest market for U.S. poultry, the effects on that industry will be minimal, says Toby Moore, a vice president at the USA Poultry and Egg Export Council.

TOBY MOORE: Based on what I've seen, the comments from some of the countries, this will be a hiccup more than anything else.

YDSTIE: Had this ban come 20 years ago it might've been different, says Moore. But currently Russia accounts for just 7 percent of U.S. poultry exports.

MOORE: This is down from a high of about 40 percent of those exports in the mid-1990s.

YDSTIE: But the impact will be significant in Europe, says Florence Ranson, communications director of FoodDrinkEurope.

FLORENCE RANSON: Russia accounted for almost €9 billion exports for our industry in 2012. So yes, it will be a blow, not just to our industry, but to the economy at large.

YDSTIE: Poland and tiny Lithuania will be hit hard. They each export more than a billion dollars worth of food and agricultural products a year to Russia. The Netherlands exports around $700 million worth. An industry official there called on the Dutch and EU governments to help farmers who will be hurt. The lost exports could subtract three-tenths of a percentage point from Europe's GDP growth. That would be an unwelcome drag on an economy already growing very slowly. And it could mean that the biggest problem for the U.S. is lost exports to Europe, not Russia. But the Russian population may face the biggest pain, says the Peterson Institute's Aslund.

ASLUND: A lot of products will not be available in Russia any longer. But more important, this will cause a pressure on prices.

YDSTIE: And Russia already has an inflation problem. It's around seven and a half percent. It's central bank has already raised interest rates to cope with that. Another hike in response to food inflation could stunt Russian investment and growth. Aslund says that could lead to popular discontent.

ASLUND: What I would look for now is a popular unrest in the big industrial cities outside Moscow and St. Petersburg.

YDSTIE: Florence Ranson of who FoodDrinkEurope says there are Russian officials saying we're going to import food from other sources.

RANSON: And we're going also to improve our own agricultural production, except that cannot be done overnight.

YDSTIE: Anders Aslund agrees, and he predicts the situation will put Vladimir Putin on shaky political ground. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.