Russia has imposed bans on Western food imports, including fruits and vegetables, dairy, meat and fish products from the European Union, the United States, Australia and Canada. This uneasy decision, that would mostly hit EU farmers, was taken in response to the sanctions against Russia imposed by the US and the European Union.
Vladimir Sotnikov, Director of the East-West Strategic Studies Center in Moscow, Arseniy Demidenko, Commercial Executive of Business Development Platform, Alexander Zotin, observer in Dengi, Russia’s leading business weekly, Gerhard Mangott, Professor of International Relations at the University of Innsbruck, Austria, shared their opinions with Radio VR.
Vladimir Sotnikov: I think this was an uneasy decision. I imagine that in a matter of two or three months these sanctions will somehow come to an end on both sides. The main problem is the economy of the Western countries and the economy of Russia. I seriously doubt that the domestic producers can substitute such vast amounts of money. $15 billion is a huge sum of money. And I doubt that other countries, like Latin America, could, because it is more expensive to deliver apples or apricots, or bananas from Latin America to Russia. So, I think in a matter of three months the sanctions will be dropped.
In fact, this is the point which was made by President Putin this week in Crimea. He was also saying that we with our Western partners have to look for the way out of that. And Putin said that he already has a feeling that they are in the process of reconsidering the whole situation.
Vladimir Sotnikov: I saw yesterday that the European parliamentarians were very much unwilling to sit down, discuss and adopt a new round of sanctions against Russia. They are calculating and in economy there is such a term as “the lost opportunity cost”. In terms of the lost opportunity cost, this cost is huge and the Europeans should think about that.
To what extent Europe would be able to withstand the pressure, what is the mood like?
Gerhard Mangott: Among the political elites, of at least some states, there is already a very bad feeling about the decision to impose sanctions on Russia. This is particularly true in countries like Slovakia, Austria, Greece and some other smaller countries, which have always been rather hesitant to impose sanctions on Russia, but there was this pressure from the EU that everybody should go along the line.
Among the people in Europe, the position is different. In some countries we do have the majority for imposing sanctions on Russia, like in Germany. But in others, we don’t, like, again, in Austria and some other states of the EU. So, there is no elites’ consensus in the EU and there is no popular consensus on the sanctions.
And I fully agree, the cost of lost opportunities is something which is very prominent in the thinking of many companies’ and enterprises’ elites in the EU.
But is there an understanding that this trade war was actually imposed on us, that we didn’t want that?
Gerhard Mangott: Yes, there is this understanding, of course, because the first two rounds of sanctions were worked out by the EU under the pressure of the US. So, everybody understand that Russia is not just sitting idly, saying “thank you for the sanctions, we will not respond”. Of course, there is this understanding that once you do sanctions, you have to take into account that the other side will retaliate. And that is what happened.
And particularly in the economic community, among the company owners there is an increased debate whether it was right in the first place to impose those sanctions, given the fact that Russia is retaliating. Everybody is speculating now about what the next move will be.
We all heard that the spokesman of the European Commission said, after Russia imposed those food import bans, that the EU will take appropriate measures. And having heard that, many in the public debates said – let us not enter into a spiral of sanctions, which will harm both sides. The expectation is that the EU will not impose any further sanctions, unless we have a worsening of the conflict in Ukraine.
What is the mood among the Chilean producers and exporters you are working with? How do they see this crisis? Do they see it as an opportunity to upgrade trade with Russia?
Arseniy Demidenko: We have been working in Russia for five years and never complained about the weak demand for the Chilean products in this country. And also, we always felt a permanent interest and attention of the Chilean business to this market. Maybe someone will be surprised, but the Chilean products have a strong market share in Russia. People know and like them, because of the high quality of these products.
Regarding us, our business platform represents more than 40 Chilean companies in Russia. And they are producers and exporters of such products like fresh and dried fruits, meat, fish and seafood, dairy, olive oil, wine, mineral water, canned food etc. And actually, we expect the rise in all these categories. For our partners it is a good opportunity. Those, who already export to Russia, have a great opportunity to increase their volumes. And companies which are making the first steps towards the Russian market, they got a chance to strengthen their positions in Russia, and after that go on developing the sales in future.
To what extent do you think we would be able to switch to the Latin American market and markets of other non-Western countries?
Alexander Zotin: I think it is really hard to compete with such big exporters of food as France, Holland, the US. I’ve been to Chile, it is a very fast growing food exporter. The aim of Chile is to enter the list of top ten world exporters of food by 2020.
So, do you agree that for Chilean producers this can be a chance to upgrade their position on the Russian market?
Alexander Zotin: Yes, I think it is possible. The volume of export to Russia is growing very fast. For example, in 2012 it was only $400 million a year. And in 2013 $600 million. So, the growth rate is 50%. It is really hard to substitute European exporters, the US, but the potential is very good.
