Russian Sanctions against the West
Russia has completely banned the importation of beef, pork, fruits and vegetables, poultry, fish, cheese, milk and dairy products from the European Union, the United States, Australia, Canada and the Kingdom of Norway.
He also noted that Russia is considering revoking or changing airspace rights over Russia’s Asia Pacific region or Siberia. This is not a small matter, and would make many flights from airlines in the affected countries far more expensive (while allowing their competitors, in countries which haven’t imposed sanctions on Russia to out-compete them.)
As zero-hedge points out, the agricultural ban will have a significant negative effect on the European economy, which is already sputtering, and will likely lead to more special monetary policy (giving money to the already rich).
Such policy is very good at pumping up stock markets, but as the US experience indicates, it does nothing for ordinary people, whose wages in the US have fallen (only the top 10% has seen increases). I warned in 2009 that the policies of the Fed and Obama would lead to at least a generation of worse economy. Special monetary policy is worse than doing nothing, and very quickly.
The continued pivot away from the West and towards BRICS and other nations is not a good thing for the West. An integrated Russia is in the West’s best interest: a Russia in the arms of China, is not. I still cannot imagine anything in the Ukraine that is worth this.
The line in most Western media is that this will hurt Russia more than it does the West and perhaps even cause protests in Russia due to rising food prices. We’ll see, to be sure, in the short to medium term it will hurt Russia, but Russia does still have plenty of inefficiently utilized agricultural land, and the rest of the world will be happy to sell to Russia. Note, however, that the US, Canada, and the EU are very cost-efficient agricultural producers and the alternative suppliers are in the southern hemisphere, as a rule. This will cause a permanent rise in the cost of food in Russia, whether it will be offset by a rise in domestic production leading to higher incomes for farmers remains to be seen. Such would take time, in any case.
I note, finally, that if you are going to go to war with someone, you should cut off your food dependency before you do. Certainly NATO may not intervene if Russia decides to help the rebel states in the Ukraine, but certainly sanctions would ratchet. If Russia intends to invade the Eastern Ukraine, it might as well do this now and prepare its economy.
Interesting times. Let us hope this isn’t another step towards the interesting experience of a nuclear exchange over a country most Americans couldn’t find on a map.
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