EU tries to limit fall­out from Rus­sian food em­bargo

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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