Putin orders retaliatory sanctions on US, EU imports

Putin's executive decree "either bans or limits... the import into the Russian Federation of certain kinds of agricultural products, raw materials and food originating from countries that have decided to adopt economic sanctions against Russian entities and (or) individuals".

The Russian government announced Thursday that is was extending the ban to "all imports of meat, fish, milk and milk products and fruit and vegetables from the United States, the European Union, Australia, Canada and Norway", Prime Minister Dmitry Medvedev said.

Medvedev further said that Russia could block overflights between Europe and Asia in retaliation for Western sanctions. He said the government was considering a series of measures in direct response to the sanctions that shut down the country's first low-cost airline.

"First is a ban on using the airspace of our country for transit flights by European and US airlines in the ... Asia-Pacific region," said Medvedev.

Apart from boosting local production and expanding cooperation from sanction-resilient countries, Putin's decision may well become a self-made sanction on the population, said Dmitry Polevoy, ING's chief economist specialising in Russia and the CIS (Commonwealth of Independent States).

"Even though from a political point of view the move may look appropriate, and it will indeed hit countries supplying food to Russia, the move will likely only amplify the effects of financial/sectoral sanctions imposed on Russia," Polevoy said.

"This will likely add to overall sanction costs via higher food inflation and, so, will have a widespread effect on households," he added.

The Kremlin's move follows the latest round of sanctions against Russia imposed by the European Union last week, which for the first time targeted entire sectors of the Russian economy.

The US and the EU have accused Russia, which annexed Ukraine's Crimean Peninsula in March, of fomenting tensions in eastern Ukraine by supplying arms and expertise to a pro-Moscow insurgency, and have imposed asset freezes and loan bans on a score of individuals and companies.

Russia depends heavily on imported foodstuffs – most of it from the West – particularly in the largest and most prosperous cities such as Moscow.

Russia will compensate for the bans by increasing imports of meat from Brazil and cheese from New Zealand, the agriculture minister said on Thursday.

(FRANCE 24 with AP, REUTERS and AFP)