Russia institutes import ban on goods from US, EU

Russian authorities, in an escalating war of economic sanctions, have instituted a ban on importations of food and agricultural products from Europe and the United States, as well as some of their allies who supported sanctions against Russia. Prime Minister Dmitri Medvedev announced that all beef, pork, fish, fruit, vegetable, and dairy products from the EU, US, Canada, Australia, and Norway would be halted for one year. However, the major issue is not what products in particular are banned, but the creation of an atmosphere of uncertainty that the ongoing crisis has generated, according to Mario Draghi.

After the United States, Russia is the second largest consumer market for European agricultural exports, valued at roughly $15.7 billion, or about 10% of the European agricultural trade. Economic analyses say that ordinary Russians may feel the pinch, but the impact is likely to be “negligible to moderate.” President Vladimir Putin announced that he is aware of the danger of rising prices on the morale of the Russian people, and while a ban on European goods is likely to make him less popular among urban elites, the fact that Mr. Putin’s approval ratings are so high (about 87% and rising steadily since the annexation of Crimea) means little.

However, the main issue for the West is if the sanctions have actually had any impact, and if retaliatory sanctions are indicative of that fact. Analysts from the Council on Foreign Relations agree that “we are not seeing it in a macro economically significant way yet – but we are certainly seeing investments being reduced,” said Robert Kahn, additionally predicting a severe recession in the next year and a half. Capital flight from Russia in the past six months has totaled $75 billion, which is highly troubling to Russian value investors. Despite the heady impact on the Russian economy, the West is being affected as well. European shares slumped, and initial gains on Wall Street faded earlier this week, with the consistent issue cited as an uncertainty with the Ukrainian crisis, as well as airstrikes in Iraq against ISIS, and the ongoing war in the Gaza Strip.

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