Putin hits back with ban on food from sanction nations

Dmitry Zaks
Russian President Vladimir Putin attends a local administration meeting as he visits Voronezh on August 5, 2014
Russian President Vladimir Putin attends a local administration meeting as he visits Voronezh on August 5, 2014 (AFP Photo/Alexey Druzhinin)

Moscow (AFP) - President Vladimir Putin on Wednesday slapped one-year bans and limits on food and agricultural imports from nations that have imposed sanctions on Russia over its defiant stance on Ukraine.

The decision marks yet another escalation in a furious diplomatic standoff that has seen Russia slip into growing international isolation and the onset of what some US media are calling a "new Cold War".

It also threatens to send the price of Russian food soaring and feed public discontent with an economic slowdown that analysts partly blame on Putin's perceived backing of pro-Kremlin insurgents in eastern Ukraine.

Putin had earlier promised to shield consumers from the effects of any retaliatory steps he would take against the West for its painful new measures against Russia.

The Kremlin said in a statement that Putin's executive decree "either bans or limits... the import into the Russian Federation of certain kinds of agricultural products, raw materials and food originating from countries that have decided to adopt economic sanctions against Russian entities and (or) individuals."

Russia's Rosselkhoznadzor agricultural sector watchdog said it would publish its list of recommendations by Thursday evening.

Sources at the agency told Russian state media that the list would include all fruits and vegetables produced in the 28 EU nations. The ban would also cover US chicken and other agricultural goods.

State statistics show Russia having imported about a third of its food from abroad in the past decade.

Some of those deliveries have come from ex-Soviet nations with strong ties to Moscow. But Russia's expanding middle class has also become accustomed to fancier packaged imports from Europe lining their grocery shelves.

- 'Significant costs' for Russia -

Russia has already halted some food imports from a range of European countries as well as Ukraine.

But Moscow had previously denied that the measures were in any way linked to punishing new financial restrictions imposed by EU nations and the United States on top state companies and officials with close links to Putin.

The latest punitive steps forbid companies in Europe and the United States from striking future deals in Russia's vital oil and arms sectors.

Top state-held firms have seen their access to Western borrowing markets severely restricted and face a possible freeze on trade of their shares on both European and New York exchanges.

The volatility has stemmed the flow of Western investment into Russia and forced the Kremlin to search for new alliances with China and even nations such as Iran.

Moscow's Vedomosti business daily said the Russian government was considering whether to strike back at the European Union by placing a total or partial ban on its airlines' flights over Siberia to Asia.

"Given the escalatory atmosphere, we expect Russia to take measures in the security arena, and steps against US and EU firms," the Eurasia Group political risk consultancy said in a report.

The Western sanctions are expected to send Russia's fragile economy to the brink of a recession by the end of the year.

"The scenario of retaliation entails significant costs to the Russian economy," the London-based Capital Economic consultancy said in a research note.

"In the short term, the economy would fall into a deep recession, with output contracting by 2-3 percent."

- Shift to Latin America -

But the West's increasingly strict approach has so far failed to soften Putin or force him to call on the separatist militias fighting Kiev forces since April to lay down their arms.

NATO this week said Russia had boosted its military presence along its western neighbour's border to 20,000 from 12,000.

The Western measures also seems likely to push Russia into a closer alliance with emerging Latin American and Asian powers such as China and Brazil that have notably failed to criticise Putin's latest display of military and diplomatic might.

Russia's agricultural sector watchdog late on Wednesday lifted temporary restrictions it had earlier place on Brazilian poultry and meat.

The agency's head also intends to meet the ambassadors of four Latin American countries on Thursday to discuss new deliveries that could help replace Western products and keep Russian prices from spiking.