Although the EU imposed new sanctions on Crimea, the tone towards Russia also changed. Several political leaders said that the sanctions could be discussed if the Crimea agreements are observed. These agreements arrange a cease-fire in Eastern Ukraine. In European industry, there have also been calls not to tighten the sanctions. German industrials fear that the carefully established trade relations will be disrupted, car manufacturers are talking about a bloodbath due to the devaluation of the rouble. Moroccan citrus growers are worried about the decreasing rate of the rouble. Russia is a big market for the Moroccan sector. India is feeling the consequences of the rouble's devaluation as well. Iran, on the other hand, recently concluded negotiations. From 2015 onwards, the country is allowed to export to Russia. The transactions are completed in national currencies or through barter trade. The Ukrainian currency is also decreasing in value, causing the important products to become increasingly expensive. Fruit Inform calculated that the prices have increased for the seventh week in a row.
EU and industry question sanctions
The tide in Europe seems to have turned. During a European Union meeting last week, several political leaders spoke out on lifting the sanctions against Russia. French president Hollande, German chancellor Merkel and others said that the sanctions could be discussed if the Minsk agreements are observed. In these agreements, concluded a few months ago in Minsk, a cease-fire for Eastern Ukraine is arranged. Since the agreements, the situation in the east of Ukraine is still uneasy.
Despite the European leaders opening the door slightly, and the tone being less rough, new sanctions were imposed against Crimea. The allowed trade with the peninsula is tightened, in financial and other areas.
Russian crisis has negative consequences for India and China
The crisis threatening Russia, is also heading to India. Exporters of grapes and gherkins, for instance, are likely to be the first victims. Large companies such as Mahindra & Mahindra are also affected. The export to Russia is a small part of the company's total trade. In Indian media, the CEO calculates that the multinational was planning to export 30-50 of every 1000 containers to Russia. That expectation has now been adjusted downwards, to 15-20 containers. One exporter of gherkins says that his customers are asking him to take back the containers.
Ukrainian currency also in downward spiral
Just like Russia, Ukraine is also dealing with a quickly depreciating currency. Prices for imported fresh produce have increased significantly. Fruit Inform calculated that prices for fruit and vegetables increased by 11.6% in the week until December 19. That was the seventh week in a row during which prices increased: by 54.1% in total. On the other hand, domestic products are being sold at comparable prices, despite growing demand.
Iran starts export in 2015
The negotiations between Iran and Russia, which have been running for a few months, have led to an agreement. Starting 2015, Iran is allowed to export fruit and veg, dairy and meat to Russia. Last week, the Russian phytosanitary service visited Tehran to coordinate the quality requirements and to select a number of companies eligible for export. Remarkably, the transactions won't be paid in dollars. Although usually the dollar is used in the international market, Russia and Iran opt for the use of the national currencies, or to set up barter trade. According to Russia, "everyone understands that the exchange rate of the dollar and the rouble is unnaturally high, and doesn't reflect the rouble's purchasing power."
German industry advocates against new sanctions against Russia. The trade relations with Russia, established over decades, shouldn't be torn down in a few months, Werner Wenning argued in the Frankfurter Allgemeine Zeitung. Wenning holds several high positions in German companies. Other representatives of German industry also argued against sanctions. French-Japanese car manufacturer Renault Nissan speaks of a 'bloodbath' in the car industry, due to the rouble's devaluation. Several car manufacturers are not taking new orders from Russia, and prices of car types have increased.
Morocco concerned about low rouble rate
Moroccan citrus growers are worried about the devaluation of the rouble. The Russian currency has lost about 60% of its value this year, which affects trade between the two countries. Morocco is the second most important trading country for Russia in Africa. The main export products are citrus and fish. Russian importers are offering prices that are too low for the products. There's also the risk that growers aren't getting paid. This could affect the entire citrus sector in the country. After the difficulties with the EU, Russia was a good alternative.
Morocco concerned about low rouble rate
Moroccan citrus growers are worried about the devaluation of the rouble. The Russian currency has lost about 60% of its value this year, which affects trade between the two countries. Morocco is the second most important trading country for Russia in Africa. The main export products are citrus and fish. Russian importers are offering prices that are too low for the products. There's also the risk that growers aren't getting paid. This could affect the entire citrus sector in the country. After the difficulties with the EU, Russia was a good alternative.
Russian crisis has negative consequences for India and China
The crisis threatening Russia, is also heading to India. Exporters of grapes and gherkins, for instance, are likely to be the first victims. Large companies such as Mahindra & Mahindra are also affected. The export to Russia is a small part of the company's total trade. In Indian media, the CEO calculates that the multinational was planning to export 30-50 of every 1000 containers to Russia. That expectation has now been adjusted downwards, to 15-20 containers. One exporter of gherkins says that his customers are asking him to take back the containers.
Chinese traders see that Russian customers are cancelling orders or decreasing the numbers. In addition to fresh produce exporters, car manufacturers are also affected. Companies that traded in dollars, aren't hit as hard as companies that got paid in roubles.
Ukrainian currency also in downward spiral
Just like Russia, Ukraine is also dealing with a quickly depreciating currency. Prices for imported fresh produce have increased significantly. Fruit Inform calculated that prices for fruit and vegetables increased by 11.6% in the week until December 19. That was the seventh week in a row during which prices increased: by 54.1% in total. On the other hand, domestic products are being sold at comparable prices, despite growing demand.
Iran starts export in 2015
The negotiations between Iran and Russia, which have been running for a few months, have led to an agreement. Starting 2015, Iran is allowed to export fruit and veg, dairy and meat to Russia. Last week, the Russian phytosanitary service visited Tehran to coordinate the quality requirements and to select a number of companies eligible for export. Remarkably, the transactions won't be paid in dollars. Although usually the dollar is used in the international market, Russia and Iran opt for the use of the national currencies, or to set up barter trade. According to Russia, "everyone understands that the exchange rate of the dollar and the rouble is unnaturally high, and doesn't reflect the rouble's purchasing power."