Sanctioning Yourself

The Kremlin euphemistically called its proposed blanket ban on agricultural imports “special economic measures to provide for Russia’s security”. According to the decree, the ban will last for one year, and will include:

…a ban or restriction on foreign economic operations involving the import to Russia of particular kinds of agricultural produce, raw materials and foodstuffs originating in countries that have decided to impose economic sanctions on Russian legal entities and/or physical individuals, or have joined such decisions.

Included on this list of banned exporters are Canada, the United States, and the European Union, among others.

The announcement followed recent bans on dairy from Ukraine, fruits and vegetables from Poland, beef from Australia and Romania, and fruit from Moldova.

This move is a real political risk for Putin. In many ways he is targeting the same people who protested against him after he declared his intention to return to the Presidency in 2011. The so-called social contract that has propped Putin up for all these years has been that of certain economic guarantees in exchange for political freedom. Imported foodstuffs from the West were part of that guarantee. Yes, the foods were expensive (and the prices jacked up if you were shopping at Azbuka), but you could brag about the fact that you were shopping at Azbuka.

What happens when the middle class can no longer get the items they have grown to expect on a regular basis? Do they again take to the streets?

Russia’s Central Bank has been warning about inflation risks for quite some time. It reiterated its warning on Tuesday, saying that “the ban on importing cheap products from abroad could make it harder to control inflation.”

Russian “state statistics show Russia imported about one-third of its food from abroad in the past decade.”

For a more comprehensive look click on the link below [in Russian]:

The alternative argument is that Putin is appealing to another base, that of the small agriculture enterprises in the regions.

The Washington Post cited Grigory Golosov, a political science professor at the European University at St. Petersburg.

In the provinces… there is a popular conception that “if food imports were reduced, it would revitalize Russian agriculture.”

In a globalized world, things do not quite work that way, but the argument has some appeal amongst those who view their problems as being caused by globalization.

However, the list of banned imports has yet to be drawn up. The only guarantees given so far are that wine and baby food will not be on the list. In leaving the decision of what is to be prohibited open-ended, Putin has given himself enough of a loophole on this ban that he could backtrack by making it less comprehensive, and still look tough. But that is assuming rational thought, and at this point, that is a questionable supposition.

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