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Friday, August 15, 2014

Ukraine Crisis - EU embargo - Russia retaliates - apples, peaches fruits rot

A convoy of 280 Russian military vehicles -- all painted a nice, soothing white, brandishing flags of the Red Cross – are at the centre of all media as they moved in  Moscow suburbs on a long journey to Ukraine.  Russian state-controlled media reported them to be transporting around 2,000 tons of baby food, grain, bottled water, sleeping bags, sugar, and medicine to a war-ravaged nation next door.  But there has been cynicism. Ukraine and its Western allies want to ensure that the cargo contains only relief supplies and not items that could help pro-Russian fighters battling to survive a Ukrainian offensive. Fearing that the convoy of trucks was a modern day trojan horse, Ukraine had warned Russia that it wouldn't let them cross the border despite Moscow's insistence that they contained only humanitarian aid and not supplies for anti-Kiev rebels.

Some reports suggest that the trucks in Russia's convoy  bound for rebel-held Ukraine are largely empty, despite Moscow's claims the fleet of trucks are crammed with desperately-needed aid. The convoy, which set off from the Russian capital on Tuesday, was finally opened to photographers, revealing that many of the vehicles are carrying nothing more than a few bags of food or boxes. One answer from the drivers at the camp in Kamensk-Shakhtinsky, less than 20 miles from the Ukrainian border,  is that it was so that  they could take on extra cargo if any of the other vehicles break down.
After the Ukraine crisis blew over, Russia was slapped with additional sanctions by the United States. Speaking to reporters at the White House  US President Barack Obama said Washington and its EU partners only planned on pursuing a path of diplomacy for the Ukrainian crisis. However, Russia's refusal to stop supporting separatists in eastern Ukraine was too serious to ignore and required immediate action. Washington had, therefore, joined Brussels in approving fresh sanctions, the US leader said. Earlier the EU imposed broader economic sanctions, including an arms embargo for future deals, and a ban on exports of some sensitive technologies. The 28-member bloc also approved a ban on the sale of bonds and equities by state-owned Russian banks in European capital markets.

~ it naturally had its impact too !! There is news that Poles are encouraging countrymen to eat apples as part of a social media push to protest Russia's ban on Polish produce. Poland says the law is punishment for it supporting the latest round of EU sanctions. Responding to EU economic sanctions, Russia has banned food imports from the West. The ban comes at a bad time for the struggling eurozone economy, and some have called for government compensation. Fruit farmers described scenes of mayhem with hundreds of trucks carrying consignments of fruit now lining the roads of Bulgaria, Romania, Moldavia and Ukraine after being forced to return from the Russian border. An estimated 15,000 families in the fruit-producing regions of northern Greece survive on the industry, according to producers.  There are around 3.5m kilos of peaches currently rotting in trucks and at the height of the summer another 3.5m kilos have yet to be harvested, says the head of the federation of Greek truckers.

Food imports involve large sums of money: According to the Commission, EU food exports to Russia were worth almost 12 billion euros ($16 billion) in 2013. For the most part, this trade will now likely cease to exist. Local Russian producers are expected to fill the gap, though their efforts are likely to fall short. Imports of Brazilian meat and cheese from New Zealand are expected to fill some of the gaps. According to German Agriculture Minister Christian Schmidt, the consequences will be noticeable as Russia is an important market for their export foods, mainly meat and milk products."

The food embargo might just be the beginning of Moscow's retaliatory sanctions. Prime Minister Dmitry Medvedev has also threatened that Russia could close its airspace to flights by Western airlines to and from the Asia-Pacific region or restrict the import of cars and planes.  Elsewhere there are reports that upto 1,000 Spanish trucks carrying fruit have reportedly been turned back from Russia.  The refusal of entry for trucks carrying fruit and seafood shipments ordered ahead of the ban is certainly creating major problems for freight shippers and forwarders.

EU fruit and vegetable exports to Russia total around 2.2 million tonnes annually,  - the equivalent of 105,000 truck runs, the vast majority taking place during the summer months. Those involved in the trade feel that the ban has come at a worst time affecting them economically.  It is reported that European authorities have begun examining whether to compensate farmers hit by Russia's bans on food imports, a move that would help neutralize any backlash against the European sanctions that prompted Moscow's retaliation. Cries are already arising from farmers in a number of nations for help from the EU after Moscow announced bans on products ranging from fruit to cheese to shellfish. Polish apples, Spanish fruits and vegetables and Dutch cheese are among the products hardest hit by the Russian ban. Farmers have reported that prices for a number of goods are beginning to drop as producers scramble to find other buyers for their harvest.

~ that may not guarantee you any drop in price of exotic fruits in local market

With regards – S. Sampathkumar.

15th  Aug 2014.

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