EU Extends Sanctions on Russia

The EU on Thursday extended sanctions against Russia for another six months over Moscow’s actions in Ukraine.

The Council of the EU unanimously adopted the extension on the restrictions, which were originally imposed in July 2014 following Russia’s annexation of Crimea, citing Moscow’s “actions destabilising the situation in Ukraine.”

The sanctions target the financial, energy and defense sectors, as well as the area of dual-use goods — products that can be for either military or civilian use. The measures include limiting access to EU markets for five major Russian majority state-owned financial institutions and their majority-owned subsidiaries, as well as for three energy and three defense companies.

The sanctions also entail a ban on arms trade and curtailing Russian access to certain “sensitive” technologies that can be used for oil production and exploration.

EU leaders have said that the sanctions will be lifted once all sides in Ukraine commit to the ceasefire agreed in the Minsk accords.

How Sanctions Changed Russian Food Market for 3 Years

During the past three years, something Russians were used to doing in the 1990s has made a triumphant comeback: the habit of bringing food home from trips abroad. Shopping for food on vacation outside Russia has become a routine pastime for them since August 2014, when the Kremlin banned import of dairy, produce, fruit, meat, poultry, fish and seafood from the U.S., European Union and several other countries.

Authorities at the time maintained that the move would punish the West and boost the country’s agricultural sector, spurring it to thrive in the absence of competitors offering less-expensive products.

Three years later, officials insist it did. A closer look, however, presents a more uneven picture. Food production in Russia has increased, but so have prices. Higher prices have led to changed and lowered consumption, and in turn, reduced sales. Inflation has eaten into the promised government support to help food production. And, say consumers and people in the food industry, the overall quality of available food isn’t as high as it was prior to the food import ban.

The food embargo came at a bad time for Russia. Oil prices were at a record low, the ruble had plummeted and the country’s relationships with Western nations was worsening. The term “isolation” dominated the news here.

In an attempt at positive spin, the Kremlin announced that the food import embargo would boost “import substitution” and help Russians overcome what many politicians labeled their “addiction” to imported goods and become self-sustainable. Companies in the agricultural sector were promised financial and infrastructure support from the state. Many companies immediately jumped at the chance to conquer the market.

The agricultural sector has indeed increased production of some food items in the past three years, according to data provided by Rosstat, Russia’s state statistics service. Russian companies produced 17.5 percent more beef in 2016 than in 2014. Pork production increased 30.6 over the same period, poultry production 11.9 percent, frozen vegetables 31.6 percent, milk 5.8 percent and cheese 20.2 percent.

“The embargo was quite an incentive for us because it meant we’d be able to produce more,” says Andrei Danilenko, chairman of the Soyuzmoloko, Russia’a association of dairy producers. “Over these years, we filled the niche completely – together with Belarus that supplies the rest.”

Spokespeople at the Agriculture Ministry are even more positive. “For the first time in many years, Russian food items started to dominate on the shelves,” officials said in a written statement.

Food imports during the past three years dropped almost in half, the ministry said, from $43 billion to $25 billion, whereas overall Russian agricultural production has increased by 11 percent.

“Achievements of the agricultural sector in recent years allowed us to edge even closer to full self-sufficiency when it comes to food,” ministry spokespeople said.

However, there was a downside. Rising prices, spiked by the embargo and fueled by inflation, changed consumer behavior. People started buying less and sales started to drop.

“People in general are saving money on food, and we end up selling less,” says Pavel Grudinin, head of the Sovkhoz Imeni Lenina agricultural holding that produces vegetables, berries and fruit in the Moscow region.

With some products, consumers started choosing cheaper options, and that kind of behavior significantly affected the country’s fish market, says Timur Mitupov, head of the Fishery Information Agency.

“Russia used to import 600,000 tons of fish from countries under the embargo every year,” he says. “Then people saw that fish is disappearing from the shelves and becomes more expensive. So they started replacing fish with something more affordable – like chicken.”

Yearly consumption of fish dropped from 22 kilograms (48 pounds) per capita to 16-17 kilograms, Mitupov says.

Adding insult to injury, the promised state support turned out to be not much of a help, Grudinin says.

“Financial support from the government on paper increased this year, but if you convert it into hard currency, you’ll see that in reality it actually decreased, because hard currency is more expensive now.”

At the same time, he adds, various taxes and levies have increased during the past three years, and so have crediting rates: “So there is simply no money to invest into growing.”

For the restaurant industry, the food import ban is a double-edged sword. Many restaurants had based their cuisine on imported food items and shut down after the embargo, unable to adjust to the new reality quickly enough. Those that survived are experiencing a gastronomic renaissance, says Alexandra Sutormina, restaurant consultant and food critic for GQ Russia.

“Restaurateurs discovered Russian meat, Russian seafood, Russian vegetables. Russian food has become a thing,” she says. “They started experimenting with it, setting up their own small farms, selecting products more carefully.”

The quality of Russian food products, however, is far from the best, argues Victoria Lavrushkevich, manager of Saxon&Parole, an upscale restaurant in Moscow.

“We offer quality seafood and quality meat,” she says. “But Russian (food) products or products we now have to buy in other countries are worse in quality and the same in price compared to what we used to get from Western suppliers.”

Some food has turned out to be flat-out irreplaceable – like cheeses from Italy and France. It takes decades to produce a good mature cheese, notes Lavrushkevich.

Sutormina agrees: “Even though many small cheese farms appeared across Russia over these three years, wonderful cheeses from Europe is the one thing we all miss.”

The embargo has hurt the ordinary consumer in more basic ways, says Vasily Uzun, economy professor at the Russian Presidential Academy of National Economy and Public Administration.

“The embargo took the cheapest products off the shelves: Polish apples, American poultry and European cheeses. Products that replaced them turned out to be more expensive and of lower quality,” he says.

Almost 20 MT of Apples and Pears Destroyed in Tomsk

Employees of the Rosselkhoznadzor and Tomsk customs found 19.5 tonnes of apples and pears in the logistics centre of the municipality of Zorkaltsev which were prohibited from being imported into the territory of the Russian Federation.

The fruits subject to sanctions have been destroyed, in accordance with the Decree of the President of the Russian Federation, as reported by the PR service of the Tomsk customs. The boxes containing apples and pears had their labels destroyed, and a number of stickers were allegedly added confirming the “Russian” origin of the fruit.

However, during the inspection of the 14.105 tonnes of apples and 5,376 tonnes of pears, employees of the Rosselkhoznadzor found that “part of the packaging still contained labels indicating the the true country of origin of the apples was Poland and that of the pears was Belgium,” said the statement.

EU renews Ukraine-related sanctions against Russia

The European Union is extending for six months the sanctions targeting people and entities involved in what the EU considers Russia’s illegal annexation of Crimea from Ukraine. The extension, officially announced Thursday, consists of an asset freeze and a ban on EU travel, and affects 146 individuals and 37 entities.

The measures, originally introduced in 2014, were last extended in March, the EU said in a statement. The latest action endorsed by representatives from the 28 EU member states means the punitive measures can remain in force through March 15, 2017.

On September 1, the United States has added 37 individuals and entities to its sanctions blacklist aimed at Russia over its continuing support for separatists in eastern Ukraine and the 2014 annexation of the Crimean Peninsula. The United States blacklisted a number of Russian companies operating in Crimea, including construction firms Mostotrest and SGM-Most which have been helping to build a bridge from Russia to the peninsula. Six separatist representatives in eastern Ukraine and 11 officials in Crimea were also sanctioned.

Kremlin softens the food ban, making exception for products used for baby food production

Prime Minister Dmitry Medvedev has signed a decree on Wednesday to shorten the list of Western food products banned in Russia. Poultry, beef and vegetables used in the production of baby food have been removed from the blacklist.

The import of these products to Russia will be allowed if it is proved they will be used in the production of baby food, according to the amendment.

Last week, after the G7 discussed extending sanctions against Russia, Medvedev ordered the embargo on Western food products to be prolonged till the end of 2017.

“Our agricultural companies have repeatedly asked to continue the embargo on products from countries that had imposed sanctions against Russia or later joined them. I ordered draft proposals on extending the countermeasures not for a year but until the end of 2017,” Medvedev said.

European leaders are meeting in July to vote on whether to extend sanctions against Russia, which were imposed in 2014. The sanctions targeted Russia’s financial, energy, and defense sectors, as well as some government officials, businessmen, and public figures.

French parliament votes against sanctions

French parliament debated about the extension of European sanctions against Russia. Voting indicated that a majority is opposed to the sanctions. The centre right party that requested the debate carried a motion to stop the sanctions. The French parliament only had indirect influence on the decision. European heads of government have to decide on the sanctions next month.

US, EU extend sanctions against Russia for Ukraine action

U.S. President Barack Obama extended Executive Order 13660 on Wednesday, which outlines the sanctions against certain Russian individuals and entities over Moscow’s role in the Ukrainian crisis.

Moscow said it regrets Washington’s decision to extend the sanctions against for another year.

In addition, the European Union has also decided to extend its sanctions on 149 Russian and Ukrainian nationals that it sees as responsible for the conflict in Ukraine for a further six months. The list includes senior Russian politicians and close allies of Russia’s President Vladimir Putin.

Relations between Moscow and the West deteriorated sharply over Russia’s annexation of Crimea from Ukraine almost two years ago. The U.S., EU, and some other countries imposed several rounds of sanctions on Russia’s energy, banking, and defense industries.

Moscow responded then with a EU and U.S. food import ban. It’s not clear if Russia will respond again with any counter measures, Russians are divided over how the government should react.