by Tyler Durden
It was all fun and games while the grand western “Pariah Putin is evil” alliance was calling the shots, lobbing one sanctions after another, and Russia was quietly sitting there and taking it all. But once Europe realized that suddenly its food exporters are about to see their revenues plunge (and ostensibly lead to even more domestic deflation as all the excess produce floods domestic markets) and lead to gaping trade deficits, suddenly cries that Putin’s retaliation is “unfair” have filled the air. What’s worse, the moment Russia retaliated, the grand alliance started to crack. Enter Greece which has hundreds of millions in food exports to Russia, and which was the first country to hint that it may splinter from the western “pro-sanctions” alliance.
According to Bloomberg, earlier today the Greek foreign minister and former PM said that “we are in continuous deliberations in order to have the smallest possible consequences, and if possible no significant impact whatsoever.” He added that Greece is trying to protect agricultural production, keep friendly relations with all countries, and fulfill its EU obligations. The problem is that it can’t satisfy everyone, and certainly not its food exporters if it wants to remain on friendly terms with the same artificial union that has kept it on life support for the past 4+ years.
Bloomberg adds that Greece will set up a task force to monitor exports of Greek products to Russia, according to e-mailed statement from country’s Foreign Ministry. The task force will be comprised of representatives of Greek exporters and government officials, and its role will be to examine ways to expand markets for Greek, fruits and vegetables, in response to Russia’s decision to ban most food exports from EU countries. Greek Foreign Ministry has taken action to ensure smooth access of agricultural products to Russian market. The problem is that Putin has clearly rejected any such “action”, and the moment when largely agricultural Greece will where its allegiances lie, is coming.
And making it very clear that this will be a major political issue was a statement by the main opposition party Syriza which today said that the Greek government’s “blind obedience to the Cold War strategies of Brussels and Washington will be disastrous for country’s agriculture.” In a moment of surprising clarity, Syriza asked govt to immediately lift all sanctions to Russia, as they don’t contribute to a solution of the Ukrainian crisis, and “instead fuel an economic and trade war, in which Greece has unfortunately become involved.” Syriza concluded that the government hasn’t weighted Greece’s special interests and bilateral relations with Russia.
It’s not only Greece, however. That other country which recently spat in the general direction of Brussels and instead aligned itself with Russia and the South Stream gas pipeline, Austria, also made it very clear that the sanctions approach won’t stand. Exports to Russia developed better than average in recent years, Austrian Agriculture Minister Andrae Rupprechter says in e-mailed statement.
Austria exported €238 million of agricultural products, edibles to Russia last year; Russia is Austria’s 3rd biggest export destination for such products outside of the EU. These exports have grown in all but 2 years since 2006, with Austria last year mainly exporting prepared foods, meat, animal feed, coffee, tee, spices, milk.
The implication there is quite clear too: sanctions are fine and all, but the second Russia retaliates, all bets are off.
And where things get really interesting is that Germany itself, that biggest wildcard in the grand Eurasian “counter USD” alliance, said moments ago that the Russian ban on imports of meat, fish, dairy products, fruits and vegetables from EU and U.S. will have “noticeable” impact, German Agriculture Minister Christian Schmidt says in e-mailed statement.
“I very much regret that Russia has taken this clearly politically-motivated step” Schmidt said, adding that “This action by Russia undoubtedly puts the previously constructive cooperation between the Russian and the German government on the export of agricultural goods to a tough test.”
It would appear that Herr Schmidt, too, is shocked that Putin didn’t merely crawl back into his cave but decided that the logical response would be its own round of sanctions. His anger is palpable: “This Russian decree isn’t suitable as a means of political pressure. Russia’s boycott decision will not only have a profound impact on the German and European economy, but will also directly affect Russian consumers.”
Sure, but more importantly, it will first affect German agricultural exporters, and they, unlike Russian consumers, get to vote in German elections. They also happen to be very vocal when they see their top-lines get crushed due to idiotic propaganda policies.
But the coup de grace, and what assures that things are only about to get much worse (before they get even worse) is the following:
- RUSSIA PREPARING RETALIATORY MEASURES AGAINST INDUSTRY: IFX
In other words, the moment of truth for Europe is almost here, and very soon the insolvent continent will have to decide: blind allegiance to the world’s (fading) reserve currency, i.e., the US (which is so friendly to its allies, it was just exposed in the biggest spying scandal with Germany in recent history), or the country which provides it with nearly a half of its energy needs and which just showed it can and will cause far more pain to Europe than vice versa.
TLB recommends you visit Zero Hedge for more great articles and pertinent information.