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Russia’s food embargo on Ukraine aims to protect domestic market

November 19, 2015, 18:19 UTC+3 Zamyatina Tamara
© Alexandr Ryumin/TASS

MOSCOW, November 19. /TASS/. Russia’s upcoming food embargo against Ukraine aims to protect the domestic market from the penetration of foodstuffs from third countries under the guise of Ukrainian goods, experts polled by TASS said on Thursday.

Russian Economic Development Minister Alexey Ulyukayev announced on Wednesday about the government’s decision to impose a food embargo against Ukraine from January 1.

Director for International Development at the Institute for Contemporary Development (INSOR) Sergey Kulik said that the economic part of Ukraine’s Association Agreement with the European Union would come into force from January 1, 2016.

"This agreement stipulates gradual measures to set zero customs rates in trade between Ukraine and the EU. That is why, Russia justifiably intends to protect its market from European goods that may arrive under the guise of Ukrainian products," Kulik said in an interview with TASS.

In the expert’s opinion, Kiev signed the free trade deal with the EU in the hope to find sales markets for Ukrainian goods in Europe.

"The EU primarily views Ukraine as an agrarian country, which boasts 50% of the world’s black earth. Perhaps, cheaper Ukrainian agricultural produce would have found its niche in Europe. But the EU agrarian lobby is even stronger than financial lobbyists. It is enough to recall mass protest actions by European farmers staged near government buildings and ministries with the demands to support the agrarian sector. That is why, Kiev won’t be able to supply its products to the EU without Brussels’ political decision," Kulik said.

At the same time, Kiev can hardly count on any favor from Brussels, the expert said.

"No less than a third of the EU budget until 2020 has been set aside for paying compensations to the agrarian sector and these allocations amount to hundreds of billions of US dollars. East European rivals also suffering from Russian counter-sanctions would hardly agree to share these huge funds, all the more so with Ukraine," the expert said.

"After the Russian markets are closed for Ukrainian goods, Kiev will be forced to search more actively for an alternative in third countries - the Pacific region and South-East Asia. Ukraine counts on China where a program has been adopted for switching to imported eco-friendly foods. But even in China, Kiev will be confronted with rivals from Eastern Europe," the expert said.

The loss of the Russian food market will cost Kiev much, the expert noted. Ukrainian Prime Minister Arseniy Yatsenyuk has calculated that Ukrainian suppliers may fall short of about $600 million in 2016 from Russia’s food embargo.

"The Russian consumer may also feel losses from the embargo on the deliveries of Ukrainian meat and dairy products. The delivery of alternative foreign goods to the Russian market and the so-called substitution of imports with domestic products lead to higher prices. But Russia’s and Ukraine’s losses are incomparable owing to the different scope of their economies," the expert said.

Director of the Institute of Globalization Problems, Doctor of Economic Sciences Mikhail Delyagin also believes that Russia’s upcoming food embargo on Ukraine primarily aims to protect the national agrarian market and is a forced measure.

"Despite the termination of military and technical cooperation and air communication initiated by Kiev, our country has not yet imposed any economic measures against Ukraine in response to Kiev’s support for Western anti-Russian sanctions," the expert said.

"Moreover, Moscow is offering Kiev gas price discounts and has agreed to restructure Ukraine’s $3 billion debt. Official Kiev’s Russophobic sentiments evidence that the Ukrainian authorities are living outside economic logic," Delyagin told TASS.

TASS may not share the opinions of its contributors