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Russia Responds to Western Sanctions With Its Own Russia Responds to Western Sanctions With Its Own
(35 minutes later)
MOSCOW — Russia announced on Thursday that it was banning the import of a wide range of food and agricultural products from Europe and the United States, among others, responding to Western-imposed sanctions and raising the level of confrontation between the West and Moscow over the future of Ukraine.MOSCOW — Russia announced on Thursday that it was banning the import of a wide range of food and agricultural products from Europe and the United States, among others, responding to Western-imposed sanctions and raising the level of confrontation between the West and Moscow over the future of Ukraine.
Dmitri A. Medvedev, the prime minister, announced that Russia would ban all beef, pork, fruit, vegetables and dairy products from the European Union, the United States, Canada, Australia and Norway for one year.Dmitri A. Medvedev, the prime minister, announced that Russia would ban all beef, pork, fruit, vegetables and dairy products from the European Union, the United States, Canada, Australia and Norway for one year.
“We hoped until the very last that our foreign colleagues would realize that sanctions are a dead end and that nobody needs them,” Mr. Medvedev said. “Things have turned out in such a way that we have to implement retaliatory measures.”“We hoped until the very last that our foreign colleagues would realize that sanctions are a dead end and that nobody needs them,” Mr. Medvedev said. “Things have turned out in such a way that we have to implement retaliatory measures.”
Russia was still considering various measures involving aviation, including a ban on flights over Siberia, which would affect routes used by European and American airlines that fly to Asia, he told a cabinet meeting broadcast live on state-run satellite news channels.Russia was still considering various measures involving aviation, including a ban on flights over Siberia, which would affect routes used by European and American airlines that fly to Asia, he told a cabinet meeting broadcast live on state-run satellite news channels.
Narrowing the air corridors open to Western carriers was another possibility, he said. Mr. Medvedev announced that all Ukrainian air carriers were barred from transiting Russian air space — effectively ending many flights to former Soviet republics from Kiev. In the Soviet era, all Western airlines were barred from flying across Russia, and barring them now would increase both costs and flying times again.Narrowing the air corridors open to Western carriers was another possibility, he said. Mr. Medvedev announced that all Ukrainian air carriers were barred from transiting Russian air space — effectively ending many flights to former Soviet republics from Kiev. In the Soviet era, all Western airlines were barred from flying across Russia, and barring them now would increase both costs and flying times again.
Finally, he said Russia was studying the possibility of introducing restrictions on the import of planes, navy vessels and cars, although the government would first make a realistic assessment of its own production capabilities.Finally, he said Russia was studying the possibility of introducing restrictions on the import of planes, navy vessels and cars, although the government would first make a realistic assessment of its own production capabilities.
The European Union’s policy-making body said it regretted Russia’s move, saying it reserved the right to impose additional retaliatory measures.
“This announcement is clearly politically motivated,” the European Commission said in a statement Thursday. "We underline that the European Union's restrictive measures are directly linked with the illegal annexation of Crimea and destabilization of Ukraine. The European Union remains committed to de-escalating the situation in Ukraine. All should join in this effort."
Analysts suggested that President Vladimir V. Putin, who enjoys huge popularity at home, felt the need to respond in some way as Western nations and even Japan added more and more sanctions after three rounds.Analysts suggested that President Vladimir V. Putin, who enjoys huge popularity at home, felt the need to respond in some way as Western nations and even Japan added more and more sanctions after three rounds.
The United States and the European Union have said that Russia, after taking the Crimean peninsula from Ukraine last March, is destabilizing the rest of the country by supplying arms and fighters to a rebellion in the east. Russia denies it is fueling the insurgency.The United States and the European Union have said that Russia, after taking the Crimean peninsula from Ukraine last March, is destabilizing the rest of the country by supplying arms and fighters to a rebellion in the east. Russia denies it is fueling the insurgency.
Western sanctions started with freezes on the assets of senior officials and of companies linked to Mr. Putin or Crimea, but last week they were increased to include some financing for state banks, many arms deals and important technology for the energy sector.Western sanctions started with freezes on the assets of senior officials and of companies linked to Mr. Putin or Crimea, but last week they were increased to include some financing for state banks, many arms deals and important technology for the energy sector.
Economic analysts suggested that the measures would have an immediate but moderate impact on the Russian economy, mostly as the country seeks other suppliers in Latin America and Africa for most of the food imports from Europe.Economic analysts suggested that the measures would have an immediate but moderate impact on the Russian economy, mostly as the country seeks other suppliers in Latin America and Africa for most of the food imports from Europe.
“Even if Russia says it will try to find additional sources of supply, it will be difficult in the short term,” said Ivan Tchakarov, the chief economist at Citibank for Russia. “Consumers will feel some pinch but I don’t think it will be a massive impact.”“Even if Russia says it will try to find additional sources of supply, it will be difficult in the short term,” said Ivan Tchakarov, the chief economist at Citibank for Russia. “Consumers will feel some pinch but I don’t think it will be a massive impact.”
The crisis next door in Ukraine is likely to have much more of an impact than the new food sanctions, but it could affect prices.The crisis next door in Ukraine is likely to have much more of an impact than the new food sanctions, but it could affect prices.
“The key question is what the effect on inflation will be,” he said. The bank is estimating that price increases could add one or two points to the inflation rate for 2014, currently running around 6.5 percent.“The key question is what the effect on inflation will be,” he said. The bank is estimating that price increases could add one or two points to the inflation rate for 2014, currently running around 6.5 percent.
According to figures compiled by the bank and other agencies, Russia imports about 25 percent of its food, worth some $43 billion annually. Of that, about 75 percent, or $30 billion, comes mainly from Europe and the United States. The other 25 percent is mainly from former Soviet republics.According to figures compiled by the bank and other agencies, Russia imports about 25 percent of its food, worth some $43 billion annually. Of that, about 75 percent, or $30 billion, comes mainly from Europe and the United States. The other 25 percent is mainly from former Soviet republics.
Wealthy consumers in Moscow and St. Petersburg consume goods like cheese and fruit from the West in far greater amounts than consumers in other parts of Russia. However, the cheaper dairy products and other goods that ordinary Russians buy often came from Ukraine and are now banned as well.Wealthy consumers in Moscow and St. Petersburg consume goods like cheese and fruit from the West in far greater amounts than consumers in other parts of Russia. However, the cheaper dairy products and other goods that ordinary Russians buy often came from Ukraine and are now banned as well.
“Over all, I think it will have a moderate impact on consumption and a moderate impact on inflation,” Mr. Tchakarov said.“Over all, I think it will have a moderate impact on consumption and a moderate impact on inflation,” Mr. Tchakarov said.