Faced with Western Sanctions, Russia Turns South
Russia imposed its own bans on agricultural products from North America and Europe, including meat, poultry, fish, seafood, milk dairy products, fruits and vegetables, which will directly benefit many Latin American coutnries.
For months, Western leaders have been accusing Russia of meddling in Ukraine. Despite blatant support for Ukraine's new leadership – including far-right political groups – by the same Western leaders, the accusations of Russia “destabilising Ukraine” have escalated from rhetoric to actions.
Russia has had sudden, severe economic sanctions placed on it by the United States and the European Union. Within half a year, Russia has found itself estranged from partnerships it had been cultivating since the end of the Cold War. While the souring of relations began with Russia's refusal to allow Western aggressions against Syria, its incorporation of Crimea into its territory following the overwhelming referendum in the autonomous republic, confirmed the new east-west schism.
The sanctions, which hit Russian agricultural, military, financial and political sectors, are meant as a “strong warning.”
As they showed during the Syria situation when they were similarly 'warned', the government of Vladimir Putin was prepared to not only weather measures against it by the West but also ready to respond in kind.
Last week, Russia imposed its own bans on agricultural products from North America and Europe, placing a one-year ban on products from the West including meat, poultry, fish, seafood, milk, dairy products, fruits and vegetables. Russia had grown to become the world's biggest consumer of EU fruit and vegetables, as well as the second largest purchaser of U.S. poultry. The ban may hit the European Union alone for up to $16 billion in export losses, according to Russian estimates.
Fresh off the heals of an extensive Latin American tour that included the BRICS Summit in Brazil, Russia is looking to shift its procurement to new markets, especially its allies in South America who have a lot to offer in produce, thanks to the rich biodiversity of the region.
While the potential increases in exports – as well as their value – are still being negotiated, the likely exports from Latin America to Russia represent a potential boom for Latin American agriculture.
Russia and Argentina already have strong trade relations. In 2013, trade between the two countries reached US$2.6 billion, a 16 percent growth from the previous year. Argentine officials have said they plan to double bilateral trade in 2014, with the hope of exceeding US$5 billion. In the first quater of 2014, over 27 tonnes of meat were shipped to Russia. Besides meat, Russia imports Argentinian pears, grapes, apples, citrus fruits, beef, peanuts, butter, and cheese.
Brazilian exports to Russia in 2012 totaled US$3.14 billion, with Russia as the 2nd largest buyer of Brazilian beef. Other agricultural exports from Brazil to Russia include sugar, soy, coffee, orange juice and bananas. Brazilian meat producers are already preparing for increased exports. Ninety new Brazilian plants have received approval to export beef, chicken and pork to Russia.
In 2013, Chilean exports to Russia equaled US$567 million in agricultural products including salmon, trout, fruit, gelatin, pork, and wine. Chile also exports a wide array of fruits such as grapes, avocadoes, berries, plums, and kiwis.
While current Ecuadorian exports to Russia - including bananas, cut flower, coffee and tea – have not been significant (just US$817,000 in 2013), in the first five months of 2014, Russia imported 580,000 tons of bananas and 9,300 tons of roses from Ecuador.
Uruguay is also looking to get into the Russian meat market, although it currently exports fish, dairy products and fruits. Agricultural exports represent 88 percent of all exports to Russia.