On Thursday, Russia said it will ban certain food imports from countries that imposed sanctions over the Russia's actions in Ukraine. Russia imposed a one-year ban on fruit, vegetables, meat, fish, cheese, milk and dairy products from the U.S., the European Union, Australia, Canada and Norway. Russian Prime Minister Dmitry Medvedev said Russia is also considering banning U.S. and EU carriers from flying over Russian airspace.
Yahoo Finance Senior Columnist Michael Santoli said the ban probably won’t have much of an effect on the Western countries. Russia is a reasonably big market, with 150 million people, and imports more than a third of its food. However, “the dollar numbers are just not that big,” Santoli said. “They’re easily absorbed by those countries that are looking to export to Russia as a market.” In fact, the U.S. Department of Agriculture lists the top 15 countries for agricultural exports in 2013 and Russia didn’t make the list.
The ban could end up affecting Russian consumers more than Russia's trading partners. The ban is likely to be felt acutely in urban areas like Moscow where it’s estimated that 60%-70% of food is imported. Therefore the ban could have the potential to create more hardships within Russia, and reflect poorly on Russian President Vladimir Putin, Santoli said. “It sends a message about Putin’s willingness to have his people suffer on this score,” he said.
The import ban is also an indication of how much leverage Putin has outside of military action. “They’re just not that big an economic player,” Santoli said. “The rest of the world needs him, less than he needs them in large measure.”
The bigger picture is how much is Putin willing to further isolate Russia on the world stage, according to Santoli.
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