The European Commission has published a first draft of a new compensation plan. In the new plan, the amount is established according to the 2013 export figures. In addition, the list with products that qualify for compensation will likely be modified. Citrus growers have a chance of being added, and there are plans to merge products. Under American pressure, Japan is considering tightening the sanctions against Russia. The Asian country does not want to lose US military support in regional conflicts. The Russian government anticipates the rating agencies to downgrade the country's status to BBB-. According to Russia though, these ratings, which have a strong influence on interest rates for Russians on international capital markets, shouldn't be valued too highly. And the Belarusians don't know what hit them. European products, prohibitively expensive before the boycott, are now available at much lower prices.
New compensation EU
After the first reports on a new compensation plan were made public yesterday, now there's greater clarity on the proposal of Euro Commissioner Dacian Ciolos. It's not definitive yet, but the commissioner wants to match the compensation amount with the 2013 export value. The amount established by the Commission is deducted from the compensation already paid. The list with products is also likely to see a few changes. There have been calls to expand the list with, among others, citrus growers. Brussels also proposes the merger of some products: for instance, to make available one amount for apples and pears, giving the member states more room to manoeuvre. And as requested by member states, products can be removed from the list.
Japan considering new sanctions
Earlier this month, Japan followed the United States and Europe, imposing sanctions on Russia. Japan did that under pressure from the Americans. In the media, the Japanese government hinted that the American military might was a deciding factor in particular. The country wants to keep the Americans' support in regional conflicts with China, North Korea and South Korea. But the country was reluctant in following the Americans. Japan doesn't want to squander the bilateral relations with Russia. Now Japan is considering following the West in the additional sanctions, that is, the number of individuals on the blacklist will be expanded, and bank assets frozen.
Russia anticipates loss BBB- status
The Russian minister of Economic Development anticipates a possible downgrading of Russia by international rating agencies. This means the minister is one step ahead of the agencies. Russia anticipates loss of its BBB- status, as a result of the sanctions. In April, the country lost BBB status. These ratings are important to companies and governments to collect money on capital markets, influencing interest rates, for instance. Russia attaches little value to the rating agencies, however. According to the minister, the rating mainly has a moral value, and is not a necessary part of a business plan. Whether Russia will get a re-evaluation is unclear.
Russian onion import in danger
The Russian market is well able to cope with the consequences of the boycott, RusInform writes. Only a few products are at risk of becoming unavailable, including lettuce, rocket, avocado, pineapple and juice orange. For all banned products, the price is going up. When it comes to potatoes, Russia has a supply until February. Thereafter, they can be imported from Egypt or China, but only 5% of the potato import is hit by the boycott. For onions it's a different matter, there 38% of the import is at risk. That amounts to 115,000 tonnes of onions a year. Russia itself grows about a million tonnes, and Russian producers think that, starting next year, they'll be able to compensate the losses.
Belarus: "Thank you, Putin!"
Inhabitants and trade companies in Belarus only see positive results from the economic warfare between Russia and Europe. Supermarket shelves are filled with affordable European products such as cheeses, meat and vegetables, which were previously prohibitively expensive for most Belarusians. So for a large group of consumers, the boycott has mainly positive consequences. Some prefer regional products, but those are not available any more, or of bad quality.
Export to Russia has gone up by 7% in recent months, according to ministry figures. "Golden days for the Belarusian exporters, a gold rush," according to the Agriculture Centre at the National Academy of Sciences of Belarus. The Belarusians say Russian buyers are queueing up, with trucks from the Ural coming to collect products. The Belarusian government is not that pleased with the European produce. TV commercials emphasize that Belarusian products are best. The government also has a policy to be 80-85% self-sufficient.
South America anticipating three scenarios
The Argentinian media have listed three scenarios for the development of the Russian fruit market. According to the media, structural changes will take place, should the boycott continue for a long time.
In the first scenario, the boycott will end before January 31, 2015. The media consider this an unlikely scenario, which would have a negative outcome for fruit growers in the southern hemisphere, such as Brazil and Argentina. That's because the Russian market is possibly flooded with European products from growers who have waited a long time to export.
In the second scenario, the boycott will end in August 2015, the announced end date for the boycott. According to the media, around 500,000 tonnes of apples and 250,000 tonnes of pears would be exported from the southern hemisphere to Europe, and Russia in particular. In this scenario, the southern hemisphere is able to temporarily profit from the boycott.
With scenario number three, fruit trade from the southern hemisphere will flourish. The Russian boycott is extended, and South American growers get a definitive entrance to the Russian market. The export could even be gradually adjusted for this. This way, the South American growers are able to make good money. The media conclude that a quick response to the changing market is key to South American success.
India holds 'Made in India Show' in Moscow
India sees a lot of opportunities for export to Russia. Next week, the Indian export organization will hold a 'Made in India Show' in Moscow, where 130 Indian companies are ale to meet Russian customers. Although the country is prepared to expand the number products, potential is higher for products that are already being exported. For instance, potatoes, onions, nuts, fruit and vegetables still have a lot of potential. Fruit and vegetables varieties that are unknown to Russians can also be introduced more easily.
In the second scenario, the boycott will end in August 2015, the announced end date for the boycott. According to the media, around 500,000 tonnes of apples and 250,000 tonnes of pears would be exported from the southern hemisphere to Europe, and Russia in particular. In this scenario, the southern hemisphere is able to temporarily profit from the boycott.
With scenario number three, fruit trade from the southern hemisphere will flourish. The Russian boycott is extended, and South American growers get a definitive entrance to the Russian market. The export could even be gradually adjusted for this. This way, the South American growers are able to make good money. The media conclude that a quick response to the changing market is key to South American success.
India holds 'Made in India Show' in Moscow
India sees a lot of opportunities for export to Russia. Next week, the Indian export organization will hold a 'Made in India Show' in Moscow, where 130 Indian companies are ale to meet Russian customers. Although the country is prepared to expand the number products, potential is higher for products that are already being exported. For instance, potatoes, onions, nuts, fruit and vegetables still have a lot of potential. Fruit and vegetables varieties that are unknown to Russians can also be introduced more easily.