EU tries to limit fallout from Russian food embargo

EU regulators in Brussels began a product-by-product impact analysis on Monday of a Russian ban on EU food imports announced in retaliation for Western sanctions over Moscow’s actions in Ukraine, according to the policy and news site Euractiv.com.

But they said it was too soon to decide how much, if any, of a 400 mln euro EU compensation fund might be paid out to help farmers, the website reported.

Agriculture Commissioner Dacian Ciolos interrupted the traditional European Commission August break to return to Brussels at the weekend, together with other senior staff, and on Monday they set up a task force.

The aim is to identify alternative markets and to analyse the fallout from Russia’s one-year ban, announced last week, on imports of meat, fish, dairy, fruit and vegetables from the US, the EU, Canada, Australia and Norway.

With some member states piling on the pressure for redress, they could also agree to award compensation from a special fund signed into law at the end of 2013, as part of agricultural reforms. To date, the fund has never been used.

“We still feel it’s a little bit soon to discuss the cost implications,” Roger Waite, a spokesman for the EU’s executive Commission, told reporters.

“We are looking at every product individually. We hope that by Thursday, we will be in a position to have a clearer picture of the potential impact so that we can discuss it with the member states.”

Agricultural experts from the EU’s 28 member states will meet in Brussels on Thursday to plan a coordinated strategy.

Last month, Brussels agreed its toughest sanctions yet against Moscow in response to Russia’s annexation of Crimea and support for separatist rebels.

Moscow initially said it would not stoop to a tit-for-tat response, but last week it took aim at Western food imports, a move many analysts say could hurt Russian consumers more than it affects Western exporters.

Ciolos has said he is confident the EU farm sector can quickly find new markets for exports to Russia worth around EUR 11 bln, roughly 10% of all EU agricultural sales outside the bloc.

A separate Russian ban on EU pork announced earlier this year has had relatively little impact, the Commission says, as farmers have found new markets in Asia and helped to fill the gap left by an outbreak of pig disease in the United States.

“We will have to make an increased effort on other markets in the Asia region, in the Middle East and in North Africa,” Austrian Agriculture Minister Andrae Rupprechter told broadcaster ORF last week, but he said there could also be a case for compensating the hardest hit.

“European leaders brought about tougher sanctions on Russia, which we respect, but we also have to respect the consequences and not leave in the lurch those who are bearing the burden,” he said.

In France, Europe’s biggest agricultural nation, farmers have voiced concern about the risk of a glut of unsold produce from Eastern Europe flooding the Western European market.

Taking Russia to the World Trade Organisation over the food bans could be unwise, Brussels-based lawyers said, arguing that the EU concern was to de-escalate the crisis.

In Ukraine meanwhile, the state gas grid operator Naftogaz said that it would continue uninterrupted pumping of Russian gas exports to Europe through its territory even if Ukraine imposes its own sanctions on Russia.

“Naftogaz affirms its readiness to continue smooth transit of natural gas to European consumers,” the chief executive Andriy Kobolev said in a statement on Monday.

Ukraine’s parliament was expected to debate sanctions against Russia yesterday, which could include bans on Russian gas and sanctions against Russian banks.

Russia halted gas supplies to Ukraine in June due to disagreements over pricing, but gas transit through Ukraine to Europe was unaffected.

Russian gas accounts for about a third of Europe’s needs, and about half of that passes through Ukraine.