The Slovakian prime minister, Robert Fico, criticised EU sanctions against Russia as a ‘meaningless’ gesture that would hit growth prospects, as officials from the bloc’s 28 states began emergency talks on Russia’s ban on Western food imports today (14 August) .
“Why should we jeopardize the EU economy that begins to grow?” Fico told a news conference. “If there is a crisis situation, it should be solved by other means than meaningless sanctions.”
“Who profits from [the] EU economy decreasing, Russia’s economy having troubles and Ukraine economically on its knees?” he asked.
Fico also said that Slovakia had to be prepared this winter for a potential disruption to the third of EU gas imports that arrive from Russia, 40% of which transit via Ukraine.
Last week, Russia announced a one-year embargo on meat, fish, dairy, fruit and vegetables from the United States, the EU, Canada, Australia and Norway in retaliation for Western economic sanctions over Moscow’s involvement in the Ukrainian conflict.
Analysts say Russia could be inflicting the sharpest pain on itself as it will drive up food prices for its consumers and stoke inflation, but EU farmers are concerned the gluts of fresh fruit and other produce they face will severely undermine the prices they can charge.
Speaking after the EU agricultural experts’ meeting, the bloc’s agriculture commissioner, Dacian Ciolo?, pledged to propose EU-wide measures that would reassure markets and producers alike.
“Early next week, I will come forward with the next market stabilisation measure, targeting a number of perishable fruit and vegetable products which are now clearly in difficulty,” he said. “This action will be proportionate and cost effective.”
Ciolo? also announced that a market monitoring mechanism had been put in place to access sectoral market data more quickly and effectively. Member states’ representatives would meet weekly to discuss the subject until the crisis was resolved, he addded.
The European Commission, the EU executive, has already announced support for peach and nectarine growers which had already been suffering a price collapse that has since been exacerbated by the Russian ban.
In all, EU farm exports to Russia are worth around €11 billion a year, roughly 10% of all EU agricultural sales.
Some nations are more affected than others. Poland is suffering from the loss of its biggest apple buyer, and France, the bloc’s leading agricultural economy, is nervous that their own produce will be driven down by the hundreds of thousands of Polish apples Russia does not import.
After a 2013 Common Agricultural Policy reform, the EU has an emergency €420 million fund available to compensate producers for sudden market distortions.
Commission officials say decisions could be made very swiftly on whether the fund can be used, but they first need adequate data from member states to show who needs it most.
“We are looking to monitor likely patterns on each individual market,” Commission spokesman Roger Waite said.
Supply and demand
The Commission could seek to reduce supply, as it has in the case of peach and nectarine growers. Support for that sector, announced on Monday, consists of increasing the amount of fruit that can be withdrawn from the market to 10% from 5%.
The producers will be compensated by some €20-30 million, according to industry sources for the withdrawn fruit, which is given away to institutions such as hospitals, schools and prisons.
Other options are to improve marketing strategies domestically and in new markets.
Anonymously, EU officials say that talks could be held to dissuade alternative suppliers from selling Russia the food it no longer receives from Europe or other Western nations.
“We understand that individual exporters may decide to use opportunities,” one official said.
“But to have countries actively supporting and encouraging replacing European or American exports, or Australian, which have been banned by the Russian Federation, it seems to us from the political point of view to be something which is hard to justify.”
The European Union decided to impose broad sanctions against Russia in July over Moscow's alleged support for rebels in eastern Ukraine.
For the first time, the sanctions targeted broad sectors of the Russian economy, including oil companies, banks and defence firms.
The measures will shut major state-owned Russian banks out of European capital markets but exclude the vital gas sector, on which Europe is heavily dependent.
Some member states are nervous about the risk to their own economies, and EU leaders struggled to strike a balance between inflicting pain on Russia and preventing fragile EU nations from sliding back into recession.