Yesterday, Russia cut off over $9 billion in food imports. "Russia is imposing a full ban on deliveries of beef, pork, fruit and vegetables, poultry, fish, cheese, milk and dairy products from the EU, the USA, Australia, Canada and Norway" Prime Minister Dmitry Medvedev said. The ban will last for one year.
"If our partners demonstrate a constructive approach on issues of co-operation, the government is prepared to reconsider the duration of these measures" he said.
It's in retaliation to the US and EU cutting off major state-owned banks' access to Western capital markets and banning exports of defense and oil technologies to Russia.
Australia's farm exports to Russia are worth $400 million a year and Agriculture Minister Barnaby Joyce is busy looking for alternative markets. There has been no Australian beef exported to Russia since April after an offal ban was imposed in January.
For the Russian people, an increase in food prices will be unavoidable, economics say, even if Russia succeeds in replacing banned imports with products from other countries like South America, Central Asia, China, Israel and Belarus.
Moscow and St Petersburg will be affected most as reliance on imported food in these two major cities is 40 per cent but the average across Russia is only 15 per cent. The wealthy and middle-class will be hurt the most as they have a taste for the high quality European products and they aren't easy to replace.
Fruit and vegetables will also be a problem for the Russian people because of the long, cold winters. They don't have long-term food storage facilities so come November, the local produce will run out.
This could be an ideal opportunity to help Russian farmers fill the need and I hope it does. But their cold weather means they can only harvest their crops once a year, unlike farmers here in Australia and other warmer climates, so the sanctions would have to last longer than one year for them to reap the benefits.
We live in a democracy yet when our leaders do stupid things, there's not a thing we can do about it. But in the end you have to pick a side and the whole world can't be wrong.
All Putin has to do is pull back from Ukraine and all the trouble will disappear.