August 2, 2015


Analysis

Russia prepares for new era of self-reliance

Goodbye, Roquefort cheese, feta, prosciutto and jamon. So long, German raspberry jam, U.S.-made Planters nut mixes, Norwegian salmon and Faroese shrimp. In his efforts to hit back at the West, President Vladimir Putin is depriving Russians of the delicacies to which they have grown accustomed since the Soviet Union collapsed.

On Putin’s orders, the Russian government Thursday banned the import of certain kinds of European, U.S., Canadian and Australian food for a year in response to those countries’ Ukraine-related sanctions against Russia. Unlike Western governments, Putin is not concerned about minimizing the effect of sanctions on his own country’s businesses. The measures will hurt Russian retailers and importers as much as Western exporters. To ordinary Russians, the measures show how serious Putin is about returning to Soviet times, when all grocery stores were called simply "Food" and sold almost exclusively local produce — when they had anything to sell.

Russian President Vladimir Putin.

ALEXANDER ZEMLIANICHENKO / THE ASSOCIATED PRESS FILES

Russian President Vladimir Putin.

The embargo appears focused on products that Russia can source internally or from friendlier countries. It includes all kinds of dairy, fruit and vegetables, meat and seafood. Parmesan cheese is banned, but Italian olive oil isn’t. German sausage is out, but German beer can still be imported. French foie gras is out, but Sauternes is in. Irish cheddar will be gone from the few Russian stores that sell it, but Irish whiskey will still be served in Moscow bars.

Russia imports more than $30 billion worth of food a year from countries outside the former Soviet Union. In all, Europe’s biggest economies plus Poland, Norway, the U.S., Canada and Australia stand to lose some $6 billion in the next year from the Russian food sanctions.

That is far from deadly for them. The Russian Micex stock index has lost a third of that amount in capitalization since the food sanctions were announced, because they are expected to hurt retailers such as the discounter Magnit, which has called itself the biggest food importer to Russia. More upscale retailers will need to reconsider their entire sales matrices, shifting to Asian and Latin American imports. That cannot but have an effect on their bottom lines.

Putin appears to care little about the effect of the sanctions. His focus is, as ever, domestic. He is showing his voters in the most tangible way possible that Russia doesn’t need the West to survive. The Kremlin’s propaganda is already playing up this message. "I can survive perfectly well in a world without Polish apples, Dutch tomatoes, Latvian sprats, American cola, Australian beef and English tea," Yegor Kholmogorov wrote on Izvestia.ru before it became clear that tea or cola would not be sanctioned. "Especially if this results in a substituting expansion of Russian agribusiness and food industry."

Blanket-bombed by the state TV channels, most Russians will swallow the patriotic line, as they have bought Putin’s takes on Ukrainian events and the annexation of Crimea. To the few propaganda-resistant citizens, the food embargo is another step toward the Soviet era of self-reliance. They’ve been stocking up on the last French cheese they’re going to see for at least a year and chuckling at the latest Putin joke: "The president decided to show he’s a Western leader, too, and imposed sanctions on Russia."

Bloomberg View contributor Leonid Bershidsky is a a Moscow-based writer.

—Bloomberg News

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