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6 Aug, 2014 15:34

Romanian beef added to Russia's 'imports black list' in tit for tat sanction row

Romanian beef added to Russia's 'imports black list' in tit for tat sanction row

Russia has imposed a food import ban on Romanian beef, adding to restrictions already in place on Polish vegetables and Ukrainian juice, in what is being seen as an extension of its response to more biting Western sanctions announced last week.

Russian veterinary watchdog Rosselkhoznadzor said on Wednesday it was banning all beef and cattle imports from Romania, citing an outbreak of mad cow disease.

Moscow has never directly linked its trade bans with Western sanctions, but few people doubt they are in retaliation to a new tranche announced by the West last week directed against Russia’s banking and energy sectors.

READ MORE: EU sanctions some of Russia's biggest banks, including #1 Sberbank

The Romanian restriction follows bans already in place on Polish vegetables, Australian beef and Ukrainian juice and dairy products. On Thursday, this was extended to Ukrainian soy products, corn meal and sunflowers. Moscow may also stop the import of US poultry and Greek fruit.

But Russia’s central bank warned on Tuesday that stopping the import of cheap produce could have a knock on effect on inflation.

“We are particularly concerned that the slowdown in inflation was lower than expected in July,” said the central bank as quoted by Interfax.

The Russian annual inflation rate was lower than expected in July at 7.5 percent but remains above the 6.5 percent of 2013. Inflation remains a serious problem for the Russian economy.

Poland has said the ban could damage its economy. Poland is Europe’s biggest supplier of apples and accounts for 50 percent of Russian apple imports.In response, the Poles have launched a social media campaign mocking Russia’s ban.

Russia insists that the ban is for genuine reasons; Rosselkoznador says it found excessive pesticide levels in 90 percent of inspected Polish produce.

As tensions increase further, tit for tat measures from Russia seem likely. On Monday, the business daily Vedomosti reported that Russia is considering banning European airlines from flying over Siberia on Asian routes, which will significantly push up the cost of their flights as they would have to take a much longer route requiring more fuel.

However, speculation of such a move has already hit Aeroflot’s shares, which earns around $300 million a year in fees from foreign airlines flying over Siberia.

Initially, Western sanctions targeted President Putin’s closest allies and business supporters, his so-called cronies, with the stated aim that the Russian leader would change course on his support of Ukrainian separatists in Lugansk and Donetsk.

The West accuses of Russia of arming anti-government fighters in Ukraine, something the Kremlin has denied.

But as Putin’s allies and the Russian business elite stood by him, and as events in eastern Ukraine deteriorated with the shooting down of Malaysian Airlines flight MH17, the US and the EU expanded their sanctions to include banking and energy, which now has made it much more difficult for Russian companies or the government to borrow money.

The result is that ordinary Russians are beginning to feel the pinch. Several travel companies have collapsed and on Monday Aeroflot’s new budget airline Dobrolet announced that it was suspending services because of sanctions.

In what it insisted was a separate development, Coca-Cola announced on Wednesday that it was no longer advertising on four Russian television channels, but said the decision was due to a fall in sales and had nothing to do with sanctions.