Archives for August 2014

Reuters / Arnd Wiegmann

Serbia said it’s ready to increase exports to Russia of dairy products, primarily cheese, in the next two or three weeks, adding to the list of countries providing substitutes for embargoed goods from the West.

“We will be ready to
deliver dairy products from Serbia if the country’s veterinary
service is ready to provide guarantees,” ITAR-TASS quotes
Russian Agriculture Minister Nikolai Fyodorov after he met with
his Serbian counterpart Snezana Bogosavljevic-Boskovic on
Thursday.

Currently there are 41 firms in Serbia authorized to export food
to Russia. Russia is ready to grant accelerated access to its
market for up to 30 more suppliers, if the country is ready
“to be responsible for the activities of these
enterprises,” Fyodorov said.

“Russia is interested in all our agricultural and food
products, particularly meat, milk, fruit and vegetables. We can
export as much cheese as we can produce,” Snezana
Bogosavljevic-Boskovic, the Serbian Agriculture and Environmental
Protection Minister said, adding that such exports would not
affect domestic market prices.

The Russian embargo on European agricultural goods
created “a unique chance Serbia should use if it is able to
meet Russia’s high standards and regulations,”
Bogosavljevic-Boskovic said.

Trade in agricultural goods between the Russia and Serbia may
almost double from $270 million to half a billion US dollars a
year in a short time, Fyodorov assumed.

Serbia would not allow the re-export of European food products
banned by Russia through its territory, the Serbian minister
said.

“Our side is assuming great responsibility. We promise to do
everything possible to control the export procedures,” she
said.

On top of that, Bogosavljevic-Boskovic said Serbia is willing to
invest in joint agricultural investment projects together with
Russian businesses.

Pakistan also said it was ready to replace Australian lamb
imports, according to the country’s new Ambassador to Russia
Zaheer Aslam Janjua.

Earlier in the month Latin American countries, including Ecuador,
Brazil, Chile, and Argentina confirmed they would increase meat
and dairy product supplies which may appear on Russian
supermarket shelves as early as September.

European Commission spokesman Peter Stano said on Friday the EU
position concerning the substitution of temporarily banned
European goods in the Russian market by third countries,
including candidates to join the union, “is clear.”

The European Union
“expects” these states “will refrain” from
substituting supplies.

READ MORE:EU denies bullying Russia’s trade
partners over food ban

Article source: http://rt.com/business/182076-serbia-food-deliveries-russia/

People stand in front of a building damaged by, what locals say, was recent shelling by Ukrainian forces, in Donetsk, August 20, 2014 (Reuters / Maxim Shemetov)

The turmoil in eastern Ukraine has devastated the economy, putting the International Monetary Fund (IMF) and other Western backers under pressure to save the sinking financial wreck.

“If the conflict lingers for another few months in its
current form the cost to the Ukrainian economy would be
huge,” Vitaly Vavryshchuk, an analyst at Kiev-based SP
Advisors, told the Financial Times.

The MF has delayed Ukraine’s second $1.4 billion aid installment,
and now Kiev is asking to combine the third and fourth tranche
into a $2.2 billion package, according to Ukraine’s Finance
Minister Oleksandr Shlapak.

In order for the loans to be disbursed, the IMF has to confirm
the multi-billion dollar debt restructuring plan is sustainable,
which it may not be at present.

Gabriel Sterne of Oxford Economics predicts that Ukraine’s
GDP-to-debt ratio is on the rise, and by 2018 could hit 87
percent.

“We think the Ukraine economy and the IMF program face such
difficulties that a default is likely, possibly imminent,”
Sterne wrote in an August report.

“It could take the form of a ’precautionary’ default in which
debt falling due over the next three years is forcibly rolled
over. If there is a full-blown Russian invasion then deeper
haircuts may be required,” Sterne wrote.

The IMF approved a two-year $17 billion loan package in
April, and the first disbursement of $3.2 billion was delivered
in May.

If the IMF program falls apart, the country faces default, which would further discredit the
lending institution after its failed efforts in Greece and other debt-ridden economies.

Before, the IMF money was a sure thing; now many analysts
predicted Ukraine could default by the end of the year.

Another looming financial burden hanging over Kiev is the $3
billion in Eurobonds issued from Russia in December 2013. Moscow can demand repayment before
the bonds are due in 2015 if Ukraine’s debt-to-GDP surpasses 60
percent, which at present, seems likely.

Other Western aid includes a $1 billion loan guarantee from the US, up to
$3 billion from the World Bank, €600 million
from the EU, and $100 million from Japan.

Kiev losing control

Ukraine’s eastern industrial base is a large chunk of the
country’s GDP, about 16 percent according to Investment Capital
Ukraine. Lugansk and Donetsk regions account for 25 percent of
industrial goods and services.

“But the situation is dramatic. The country is fighting for
survival. Unfortunately so far there is not much change,”
Dmitry Sologoub, Director of Research at Raiffeisen Aval Bank in
Kiev, told FT.

Shlapak estimates the total damage from the armed conflict in
Eastern Ukraine will exceed $600 million.

Much of the fighting has been centered around key infrastructure
and industry – airports, highways, utility lines, and gas pipes.
The country spent over $6 billion to upgrade infrastructure in
Kiev, Lvov, Kharkov, and Donetsk for the 2012 Euro Cup, which it
hosted with Poland.

Another big economic blow to Ukraine was the loss of Crimea to
Russia in March after the peninsula voted to rejoin Russia.
Kiev-based Dragon Capital says the loss of Crimea will result in
an automatic 3.7 percent GDP contraction.

Kiev has cut economic ties with Russia over the political crisis-
first by signing the European Trade Association Agreement and
second by signing a law that allows sanctions against Russia, which will affect
European gas deliveries.

“I think that the West understands: If Russia boycotted the
country economically, Ukraine has no chance,” Fyodor
Lukyanov, a leading Russian foreign policy expert, said in an
interview with Der Spiegel.

Ukraine plans to ratify the EU trade agreement in September,
President Petro Poroshenko has said.

Gas, growth, and hryvnia woes

Gaping holes in Ukraine’s state budget and foreign reserves, and
instability in financial markets have brought havoc to Ukraine’s
macroeconomic situation.

Ukraine’s Economy Minister Pavel Sheremeta resigned on Thursday
frustrated with the slow pace of economic reform. Sheremeta, who
was appointed soon after the ousting of President Viktor
Yanukovich in February, said on his Facebook page that he no
longer wanted to “fight against yesterday’s system.”

Fitch Ratings predicts the economy will contract by 5 percent in
2014, a pretty conservative estimate compared to other analysis,
which predict a 6.5 percent drop (IMF) or even 8 percent (Oxford
Economics). In 2013, GDP growth was zero.

The national currency, the hryvnia, has weakened to 13.35 against
the dollar, making it the world’s second-worst performing
currency. In January 2014, before protests turned violent, the
hryvnia was pegged at 8.235 to the US dollar.

Depleting natural gas reserves also pose a direct threat to
Ukraine’s economy and general well-being.

Naftogaz, the state-owned oil and gas company, owes over $5
billion to Russia’s Gazprom for unpaid bills.

“The gas needs to be addressed in all its breadth: the debts
of Ukraine, the price of gas, the question of transit,”
Lukyanov said.

Amassing debt prompted Gazprom to cut
off gas supplies to Ukraine, leaving the country in a
difficult energy pinch before the winter. Ukraine’s energy
minister reports the country has 16-17 billion cubic meters in
reserve, which on its own isn’t enough to heat the country
through the winter months. The government has already ordered
a 30 percent cut in gas consumption to save up for winter.

Article source: http://rt.com/business/181884-war-eastern-ukraine-who-pays/

AFP Photo/Nicholas Kamm

America’s second largest lender has reached a $16.65 billion settlement with US federal authorities for selling toxic mortgages misleading investors, the Justice Department said Thursday.

“This historic resolution – the largest such settlement on
record – goes far beyond ‘the cost of doing business,’”
Attorney General Eric Holder said in a statement posted on the US Justice Department
website on Thursday.

The bank will pay out $9.65 billion in cash and $7 billion for
consumer relief – such as modified home loans and refinanced
mortgages.

“Under the terms of this settlement, the bank has agreed to
pay $7 billion in relief to struggling homeowners, borrowers, and
communities affected by the bank’s conduct. This is appropriate
given the size and scope of the wrongdoing at issue,” the
statement says.

The bank has agreed to pay a $5 billion ‘civil penalty’ to settle
claims under the Financial Institutions Reform and Recovery
Enforcement Act (FIRREA), a federal law introduced after the loan
crisis in the 1980s.

To date, President Obama’s Financial Fraud Enforcement Task Force
and its Residential Mortgage-Backed Securities (RMBS) Working
Group, have collected $36.65 billion from banks to redistribute
to consumers and investors misled by the country’s leading
financial institutions.

The fine is the largest single compensation settlement, beating
out JPMorgan Chase Co’s $13 billion penalty paid in November 2013.
Citigroup, another major US bank, had to pay $7 billion in July.

In March, the bank was ordered to pay $9.5 billion to the Federal Housing Finance Agency
to resolve similar misconduct allegations. Since the financial
crisis, the bank has been ordered to pay over $60 billion in
fines, claims, and buying out mortgage bonds.

The bank admitted it misled investors about the quality of
mortgage loan sale prior to the housing crash, when banks lent
out too much money to homeowners who eventually could not pay off
their loans.

This eventually resulted in the collapse of the housing bubble
and the beginning of the recession in late 2007. The banks
defrauded investors about the condition of the loans, which led
to billions in losses while millions of Americans lost their
homes to foreclosure.

Three quarters of the loans in question came from Countrywide
Financial, which Bank of America acquired in 2009, along with
Merrill Lynch. In total, between 2004 and 2008, the groups sold
more than $965 billion in bad loans.

“In the run-up to the financial crisis, Merrill Lynch bought more
and more mortgage loans, packaged them together, and sold them
off in securities – even when the bank knew a substantial number
of those loans were defective,” US Attorney Paul J. Fishman
explained.

Article source: http://rt.com/business/181724-bank-of-america-17-billion/

On Monday, the European Commission announced €125 million in emergency funding for
European farmers hit by the Russian trade ban

Economists at ING estimate the embargo could cost the European
Union €6.7 billion ($9 billion) during a year of lost production.
The report also sees 130,000 jobs at risk in the trade row
between Russia and the West over Ukraine.

The European statistics office, Eurostat, said the ban – which
bars meat, dairy, cheese, fruit and vegetables from all 28 EU
member states, affects €12 billion ($16 billion) worth of EU
exports, or 10 percent of the total.

Hit hardest will be Poland and Norway, both
of which export over $1 billion in sanctioned foods to Russia,
followed by the Netherlands and Spain, both which have strong
trade ties with Russia.

Spain already estimates it will miss out on €337 million in food
and agriculture sales due to blocked access to the Russian
market. The value of sanctioned food exports to Russia is $792
million, according to Russian Federal Customs data.

In Zaragoza, Spain, fruit growers took to the streets dumping out
excess produce and torched an EU flag.

“This price compensation is not enough. Let’s say 20 jobs in
our company will be lost. Our salaries will also be affected-
then, we will just disappear,” a Spanish fruit farmer told
RT.

Exporters may have to further slash prices, which have already
fallen 80 percent in the fruit industry, or even throw away
perfectly fresh produce that can’t be sent to Russia.

In Greece, farmers feel sanctions are putting their livelihood at
stake- being shut out of the Russian market is bad for
business. Producers estimate losses over fruit alone will exceed
€178 million in the next 12 months.

READ MORE: Russian food ban takes huge bite out
of Greek fruit growing industry

“Right now we have no other market to send out produce to,
other than the Russian one,” Fotis Kyriazis, President of
the Irmini Agricultural Cooperative, told RT.

“I don’t think anyone will compensate us for our losses.
Neither Greece nor the EU has the money to compensate us,”
Kyriazis said.

The worst-hit countries have already tried to bypass the restrictions by sending goods via
Belarus, but were stopped by Russia’s consumer watchdog.

Poland, which before the ban exported 50 percent of its apples to
Russia, is feeling the sanctions biting back and is hoping to
launch a complaint with the European Commission and
World Trade Organization.

“The ban has caused horror among Polish producers of fruits
and vegetables. We have to tighten our belts and get production
costs back at the very least,” Jacek Izyucki, Trade Branch
President of the Agrostar Company in Poland, told RT.

“Obviously some unintelligent political decisions were made
and brought harm for all,” Izyucki said.

Article source: http://rt.com/business/181588-eu-russia-food-ban/

RIA Novosti / Egor Eryomov

​Russia’s fresh food safety watchdog, Rosselkhoznadzor, said it has blocked supplies of some banned agricultural products which sanctioned countries like Poland and Greece tried to re-export through Belarus.

“Some EU countries
have started sending their products to Belarus without giving the
real country of their origin. They write, for example –
Macedonia, but we have found out that it is Poland and Greece, as
the Macedonian origin has not been confirmed,” ITAR-TASS
quotes Sergei Dankvert, the head of Rosselkhoznadzor.

In the last few days the watchdog has stopped batches of apples,
peaches, plums, and tomatoes being supplied via Belarus, that
didn’t name the country of origin or said they were produced in
Turkey, Serbia, Macedonia or African countries, in particular
Zimbabwe, which are not covered by Russia’s embargo.

As these supplies had no health check paperwork from the
countries of origin, they caused suspicions.

Rosselkhoznadzor conducted analysis which showed that fruit and
vegetables had been supplied from Poland, Slovenia, the
Netherlands, Lithuania and some other EU countries.

“We are actively monitoring the situation and will be
promptly checking the origin of questionable batches,”
Dankvert said.

In terms of sanctions the health certification for the transit of
European goods is Belarus’ responsibility, Dankvert explained.

“If we uncover quarantine items, we will be imposing
restrictions on supplies from Belarus,” he added.

Rosselkhoznadzor intends to monitor re-exports of dairy, meat and fish products via
Switzerland, Kazakhstan, and the Faroe
Islands.

“Concerning Switzerland there are no cases of violation, the
same applies to the Faroe Islands as there are few companies, and
it will become immediately clear. However Kazakhstan has already
transited goods which are in Moscow,” Dankvert said.

The issues concerning cooperation with Kazakhstan will be
discussed on Wednesday with the country’s authorities, he
concluded.

Article source: http://rt.com/business/181252-rosselhoznadzor-reexport-products-russia/

Reuters / Alessandro Garofalo

As Moscow banned food imports from the West, Turkey voiced its readiness to increase its exports of agricultural products to Russia, Turkish economy minister has said.

“Turkey is a major
supplier of food and agricultural produce to Russia. It is ready
to increase its food exports to Russia if necessary,”
Turkish Economy Minister
Nihat Zeybekci said in an interview with Itar-Tass.

The two countries have
recently reached an agreement to increase the number of Turkish
food suppliers to Russia. A delegation from Russia’s
agricultural watchdog, Rosselkhoznadzor (the Federal Service for
Veterinary and Phyto-Sanitary Control), visited Ankara for
negotiations in the search for alternative food supply sources
following the sanctions imposed on Russia by the EU, Russia’s top
food supplier, the US, the EU, Australia and Canada.

To reciprocate, on August 6 Russia introduced a full ban for imports of beef and pork (fresh,
chilled, refrigerated, pickled, dried or smoked meat), poultry
and any poultry edible products, fish, cheese, milk, dairy
products, vegetables, including root vegetables and tuber crops,
and fruit from Australia, Canada, the EU, the US and Norway.

Moscow is now set to ensure country’s food supply security by
finding new suppliers in countries that have not joined the
sanctions against Russia. Some of the country’s closest
neighbors, China and Turkey, have been among the first
candidates for a lucrative offer to extend their share of the
Russia market.

Turkish food suppliers would do their best to ensure sufficient
good quality, inexpensive food products to Russia to replace
European food supplies, the Turkish minister said.

Last year, Turkey’s agricultural export to Russia reached $1.18
billion, with fruits and vegetables making up nearly 75 percent
($877 million) of the total turnover. In 2014, Turkish
agricultural exports to Russia have so far totaled $409 million.

Zeybekci said that Turkey exported $17 billion worth of
agricultural products in 2013, of which fresh fruit and
vegetables accounted for less than 14 percent ($2.3 billion).
Russia bought 6.9 percent of Turkey’s global exports of
agricultural products.

The head of the Russian agricultural watchdog Rosselkhoznadzor,
Sergey Dankvert, announced on Thursday that his agency has held
talks with 16 countries as alternative supply sources for the
Russian food market. Moscow has been talking to Argentina,
Belarus, Brazil, Chile, China, Colombia, Ecuador, Kyrgyzstan,
Mauritius, Mexico, Mozambique, Paraguay, Peru, Sri Lanka, Turkey
and Uruguay to replace American, Australian, Canadian and
European food suppliers.

The EU Council has already demanded that third countries not to
take advantage of the new trade opportunities brought by the
conflict between Russia and western states, and to resist seeking
to replace European food on the Russian market, in what it is
claiming is a move to promote international unity and compliance
with international law.

The European Commission is now assessing the losses from Russia’s
countersanctions in anticipation of a special meeting of 28 EU
agriculture ministers to be held in September to discuss possible
countermeasures.

Moscow has been warning Western countries for months that
sanctions are counterproductive,
and has said it will first and foremost strike back against
countries imposing them.

According to Russian customs data, Western imports now affected
by sanctions totaled $9.1 billion in 2013. The EU, with its $6.5
billion worth of now-sanctioned products, would suffer the most,
with non-EU member Norway following, with $1.2 billion worth of
mostly fish products. The other countries that joined the
sanctions would lose less, as the US has a $843.8 million food
trade turnover with Russia. Canada’s bilateral trade is $373.6
million and Australian agricultural exports to Russia were
estimated at $182 million.

Article source: http://rt.com/business/180776-turkey-agricultural-exports-russia/

Reuters / Barry Huang

Forget Visa and MasterCard. After the two American credit system payment companies froze accounts without notice in March, Russia has been looking for an alternative in China UnionPay.

China UnionPay plans to have 2 million cards in Russia in the
next three years.

Instead of seeing the small Visa and MasterCard logo on credits
cards, ATMs, and retail outlets, Russians will start to see the
three words “China. Union. Pay.”

China UnionPay first emerged in 2002 on the domestic Chinese
market as an alternative to Visa and MasterCard, but quickly
expanded internationally, and now is already number one in terms
of quantity of cards in the world.

Russia’s biggest banks – VTB- Gazprombank, Promsvyazbank, Alfa
Bank, MTS, and Rosbank- are already making technical
preparations, running tests on Union Bank cards.

“VTB24 already serves China UnionPay cards in its ATM network
and now the bank is in negotiations with this payment system to
start acquiring retail merchants,” VTB24’s press office said
in a statement.

Most banks just began their relationship with China by offering
clients corresponding services- none of the bankers imagined that
they would be issuing Chinese credit cards.

In March, both Visa and MasterCard blocked the accounts of cardholders at
BankRossiya and SMF Bank, both which were sanctioned by the US
over Russia’s involvement in Crimea.

Russian financiers who used to keep their assets in dollars and
euros were shocked by the event, and moved their capital back to
Russia out of fear one day all their assets would be blocked by
politicians in Washington DC.

“Visa and MasterCard have 100 percent trust, but right now,
there is no trust in the system, and many, even our clients, have
shifted their transactions from American dollar and Euro to Yuan.
They are eager to receive this card- we already have a big list
of people waiting to get this card instead of MasterCard and
Visa,” Denis Fonov, Deputy Chairman at LightBank, a small
Moscow-based bank, told RT.

LightBank was working with UnionPay long before it knew the cards
would be coming to the Russian market – and ordered 10,000 cards
pre-emptively as a side service for clients.

As a result of the freeze, Visa and MasterCard will now have to
pay a security deposit to Russia’s Central Bank, which is
estimated to be billions for each company. Similarly, once
UnionPay begins operating in Russia, it will also put down a
security deposit with Russia’s Central Bank, about $3-4 billion,
Fonov said.

$5.3 trillion in payments

There are already 20,000 cards in circulation in Russia, and a
second order of 100,000 cards is planned for September. In Russia
many banks accept UnionPay cards, but not merchants, that’s the
next step.

By the beginning of 2014, the payment system had already issued
4.2 billion cards, mostly in China.

In terms of total world trade turnover, China UnionPay is the
leader in debt cards, with over $5.3 trillion in payments, or
about 47 percent of the market share, whereas Visa has 40.6
percent, and MasterCard only 12.2 percent, according to the
Nilson Report.

In overall transactions, Visa is still the leader with $4.6
trillion, and China UnionPay comes in second with $2.5 trillion
in transactions in the first half of last year.

UnionPay already successfully operates in Australia and Canada,
with their deposits tied to both the local currency and the yuan.
In total, UnionPay operates in 142 countries.

China’s UnionPay will be a temporary solution for Russia to
detach from the West while it prepares to launch its own payment system, which officially isn’t slated
to begin operating for another 16 months, and according to
sources in the industry, it could even be 2-3 years out.

Article source: http://rt.com/business/180696-china-russia-union-pay/

RIA Novosti / Mihail Kutusov

Russia is taking steps to ensure that it protects itself from any future dollar or euro sanctions. Moscow boasts the world’s 5th biggest foreign exchange reserves and the 6th largest gold reserves. In total, the assets amount to over $1.5 trillion.

While the West is continuing to try and punish Russia via
economic sanctions, the response of the Russian Central Bank has
been to diversify away from the euro and dollar – and to buy up
more gold.

As the geopolitical situation in Ukraine deteriorates, Russia is
moving to protect itself from currency risks associated with the
euro and the greenback.

In the first half of 2014, Russia’s Central Bank reduced its
foreign currency reserves by 2.5 percent.

“Due to the worsening geopolitical situation, the Central
Bank actively redistributed foreign exchange reserves, replacing
US Treasury bonds with gold,” Alfa Bank’s chief economist,
Natalya Orlova, told Kommersant.

Instead of buying euros and dollars, Russia’s Central Bank is
eyeing the Chinese yuan and the Japanese yen.

Boosting currency swaps and bilateral payments with China and
other strategic trade partners will continue to bypass the US
dollar. Last week, Russia’s and China’s central banks have
agreed to increase currency swaps.

Holding more of these currencies is a logical move for Russia,
which has high trade volumes with both China and Japan. In
2013, trade turnover with China was close to $90 billion and over $33 billion with Japan.

Russia is fast increasing its gold stockpile and at the end of
July, the total volume was worth more than $45 billion.

According to Yaroslav Lissovolik, chief economist for Deutsche
Bank in Moscow, this is the best way for Russia to provide
stability to its foreign exchange reserves.

“The fact that Russia has intensified its diversification
process reflects the fact that a fairly high proportion of
reserves were held in dollars and euros, while the share of gold
was low,” Lissovolik told Kommersant.

Over the summer, reserves were added at the highest rate since
the end of 2009. In June, Russia’s Central Bank added 54 tons of
gold, which catapulted Russia ahead of China in terms of total
gold, according to IMF data.

In the last decade, Russia has become the world’s top gold buyer,
adding more than 600 tons to its vaults.

Other countries are also actively adding gold. In the last six
months, Kazakhstan’s Central Bank increased its gold investment
from 12 tons to 155.8 tons.

Conversely, developed countries such as the US, Germany, Italy,
France, and Spain are keeping gold reserves at a stasis. Germany
sold 2.9 tons of gold reserves from the Bundesbank but still
remains the world’s # 2 holder of gold, after the USA.

Article source: http://rt.com/business/180588-russia-central-bank-gold/

Hungarian Prime Minister Viktor Orban (AFP Photo / Georges Gobet)

Hungarian Prime Minister Viktor Orban has urged a rethink of the European Union’s sanctions policy toward Russia, saying the measures are like “shooting oneself in the foot.”

“The sanctions
policy pursued by the West, that is, ourselves, a necessary
consequence of which, has been what the Russians are doing,
causes more harm to us than to Russia,” Reuters quoted Orban
as saying on the radio, he added “in politics, this is called
shooting oneself in the foot.”

Russia is Hungary’s largest trade partner outside of the EU, with
exports worth $3.4 billion in 2013. Also it is highly dependent
on Russian energy. Earlier this year Hungary agreed a $13 billion
deal with Russian power company Rosatom to expand the country’s
only nuclear power plant.

“The EU should not only compensate producers somehow, be they
Polish, Slovak, Hungarian or Greek, who now have to suffer
losses, but the entire sanctions policy should be
reconsidered,” the Hungarian Prime Minister said, saying he
is already looking for support to force through changes.

Despite the negative sentiment on Tuesday, Hungary’s Agriculture
Ministry stressed the Russian embargo won’t significantly affect
the Hungarian economy as the banned products account for less
than a third of Hungarian agricultural exports to Russia, being
only one percent of total national farming exports.

Despite weak growth in the eastern countries of the EU, Hungary,
together with Slovakia and Bulgaria have shown better than
expected figures, with 0.8 percent quarterly expansion according
to Thursday’s preliminary GDP estimates.

On Thursday, Matteo Salvini, the leader of Italy’s Northern
League party, called on Brussels to immediately repeal the
sanctions against Russia.

“Only fools, Brussels and Rome, could decide to impose
economic sanctions against Russia, which now sends us back tons
of Italian agricultural products worth more than €1
billion,” Salvini wrote on his Facebook page “Who will pay our farmers?
Renzi? Merkel?”

The politician claims that in order to please US President Barack
Obama and German Chancellor Angela Merkel, the Italian Prime
Minister Matteo Renzi has “ruined the economy” of the
country.

At a meeting in Sochi on Friday with Russian President Vladimir
Putin, his Finnish counterpart, Sauli Niinisto, admitted that
Western sanctions against Moscow and the Russian food ban had
made an impact on economic relations between the two countries.
Niinisto called for an urgent resolution to the Ukraine crisis.

Finland is one of the EU states hardest hit by the embargo.
Russian-Finnish trade fell by 8 percent to $8.3 billion in the
first half of 2014, according to a Kremlin fact sheet.

Article source: http://rt.com/business/180564-eu-russia-sanctions-hungary/

The Financial Times reported the EU is allegedly working to try
and convince Brazil, Chile, and other Latin American countries
not to meet Russia’s demand for agricultural products.

READ MORE: EU to urge Latin America not to export
food to Russia

“The EU is now assessing the impact of Russia’s announcement
on EU products. And we are of course in contact with other
countries, countries that could become potential suppliers for
goods that Russia has banned from its market from EU
producers,” spokesperson Peter Stano told RT in an
interview.

EU countries could be left with a large amount of produce they
aren’t able to sell. Russia imports roughly 30 percent of its
food supply from Europe, so the sudden halt could be a big blow
to the 28-nation bloc.

The EU denies they are putting pressure on third parties.

“We are not pressuring anyone- this is not the nature in
which the EU does policy,” Stano told RT.

Instead, Stano said the EU is explaining its side of the story,
and that Russia shouldn’t be seen as a legitimate player, since
sanctions are politically motivated.

“We are explaining our view [to partners, Ed.] that it’s not
beneficial for them to benefit from the current
circumstances,” Stano said.

Some European producers are asking Brussels for compensation after the sanctions are lifted,
but the EU hasn’t yet calculated the full affect of the Russian
food ban.

“We are willing to take whatever measures necessary to help
our producers,” Stano said, adding that the European
Commission is “still assessing the situation.”

On Thursday, the European Commission will meet with member states
in Brussels to discuss agriculture and trade.

In August the Kremlin restricted imports of meat, cheese, dairy,
fruit and vegetables from the US, EU, Canada, Australia, and
Norway in response to Western sanctions aimed at hurting the
Russian economy.

Whether the EU’s lobby will work remains to be seen, but so far,
Russia has reportedly reached deals with a number of trading
partners.

Ecuador has come out and said it will not be
persuaded, and will decide for itself who it does trade with.
Turkey, Russia’s 5th largest food supplier, also says it is
excited by the opportunity to do more business with Moscow in
lieu of the EU and US products.

Russia also held talks on creating a free trade zone with
Egypt, and countries in East Africa have said
they are ready to triple or quadruple trade with Russia.

“African suppliers have declared their readiness to supply
Russia with up to 100,000 tons of fruit and vegetables per week,
products that before were re-exported to Russia via the European
Union,” Elena Nagornaya, president of the Russia-Africa
trade alliance, told ITAR-TASS.

African countries are ready to directly export pineapples,
bananas, citrus fruits, apples, nuts, avocados, strawberries, as
well as ginger to Russia. Negotiations are underway with major
Russian grocery chains.

Article source: http://rt.com/business/180044-eu-denies-pressure-russia-food/