Thread: Russia Sanctions Blowback: Finland's Largest Dairy Lays Off 800, Spain Seeks EU Aid,

Russia Sanctions Blowback: Finland's Largest Dairy Lays Off 800, Spain Seeks EU Aid, Poland Complains To WTO

Submitted by Tyler Durden on 08/13/2014 14:44 -0400

Well that didn't take long. Mere day after Russia announced its ban on Western nation food imports, European countries are scrambling (as we explained why here). Greece has already expressed dismay, but now Spanish officials will meet with EU leaders to discuss offsetting the country’s estimated up to $800 million in food and agriculture losses due to sanctions. Poland is pissed and has complained to the WTO claiming "Russia has broken international law in both its embargo;" and Finland's largest dairy producer has announced 800 layoffs due to the sanctions. When does Europe tell Washington - enough!

Spain demands aid... (despite Rajoy's support for anti-Russia sanctions)

Spanish Agriculture Minister Isabel Garcia Tejerina said the restrictions have prompted her ministry to convene a meeting with the European Commission in Brussels on Thursday.

...

The Spanish government has estimated that agricultural losses will amount to €337 million, or about 1.8 percent of Spanish exports. Other groups, like Spain’s opposition Socialist Party, have estimated the losses to be higher- €581 million.

Last year, 37,000 tons of tomatoes, 35,000 tons of peaches, and 33,000 tons of mandarin oranges were exported from Spain to Russia, according to Spain’s Small Farmer’s Association (UPA).

“The decision that was adopted involves many political issues that exist between Russia and the European Union, and not just the EU. As a result, it may be necessary to compensate us for these political decisions - the producers who work all year and want to at least be paid enough at least to cover production costs,” Lorenzo Ramos, Secretary General of UPA, told RT.

Finland suffers...

The largest Finnish dairy producer Valio send a forced leave of the staff with factories working for export to Russia. This is stated in the message of concern.

Restructuring will affect Finnish enterprises' Valio: Plant in Haapavesi ( cheese Oltermanni), Seinäjoki ( oil Valio), Vantaa ( cream cheese Viola) and warehouse in Lappeenranta. Concern revise employment contracts of all the employees of these companies. " Some of the staff ( according to preliminary estimates, 800 people) can go on forced leave to fully clarify the situation, with a portion of employees will not be renewed temporary employment contracts, "- said in a statement.

Poland complains...

Poland's agriculture minister went on television to announce the country was taking action against Russia's new import ban. "We believe Russia has broken international law in both its embargo against Poland and its embargo against the EU," Marek Sawicki said.

Russia banned the import of Polish fruit and vegetables in early August - a move Sawicki said would cost Poland 0.6 percent of GDP.

...

"If a WTO member state believes another WTO member state has taken a measure that is not in conformity with WTO rules, the affected WTO member state may request mediation," attorney and WTO expert Eric Pickett said.

And the Czechs are in for some EU assistance...

• *ZEMAN BACKS EU AID TO CZECH AGRICULTURAL COS. AFTER SANCTIONS

* * *
S&P 500 nears all-time highs as US companies do not seem to suffer at all... We are sure Merkel is watching carefully.





http://www.zerohedge.com/news/2014-0...-eu-aid-poland-

Can Europe Survive Without Russian Gas?

Submitted by Tyler Durden on 08/12/2014 21:20 -0400

The western world has placed many sanctions on Russia and its economy. However, Russia holds major leverage over Europe; it has oil and Europe needs it (and may just do a 'deal').



Source: Visual Capitalist
As Saxo Bank notes,

Tensions rise in Eastern Europe, as the western world hits Russia with new sanctions. Late last month, President Obama and the European Union imposed sanctions in hopes of deterring President Putin from further aggression and putting an end to his support of Ukrainian separatists.

The aim of previous sanctions was to focus on specific individuals and businesses, while the newest ones are aimed at major pillars of the Russian economy. The oil industry is a major target, as Russia has become the world’s largest oil producer and it accounts for a large portion of the Russian economy.

However, the sanctions against Russia do not target the country’s natural gas sector or its state-owned Gazprom, as about one-third of Europe’s gas supplies come from Russia. Last year, Gazprom exported 162 billion cubic meters of gas to Europe.

The escalations in oil sanctions have the potential for major price hikes for Europe, especially since the winter season approaches, which is the peak gas consumption period. If Russia cuts off gas to Europe, then many nations will be scrambling to find alternative gas suppliers and it will inevitably drive up prices.

Also, President Putin signed a $20 billion oil deal with Iran to mitigate western oil sanctions. The deal will see the two nations cooperate on the production and sale of oil, and Russia will help develop Iran’s energy infrastructure and equipment.

http://www.zerohedge.com/news/2014-0...ut-russian-gas

China Begins Direct Sales Of Fruit & Vegetables To Russia

Submitted by Tyler Durden on 08/12/2014 11:04 -0400

Despite the ongoing mainstream media meme that Russia is becoming 'isolated' from the rest of the world thanks to Western sanctions, it appears they have found a few new 'old' friends to become un-isolated with. On the heels of Russia's food-import-ban sanctions last week, Russian and Chinese officials have announced an agreement that China will start selling fruit and vegetables directly to Russia via a special logistics center in Russia's far east. Notably, this week saw Russia's GDP beat consensus expectations, Ruble rally, and stocks jump as German confidence plunged - can you say blowback?
As RT reports,

China will start selling fruit and vegetables directly to Russia, and Baorong company plans to set up a special logistics center in Dongning on the border with Russia’s Far East to do it.

The 70,000 square meter wholesale market and 30,000 square meter warehouse, fitted out with refrigerators and other equipment, will be in a special cross-border customs zone, ITAR-TASS cites the head of the Association of Applied Economy of the Heilongjiang Province Zhang Chunjiao.

“Direct export of fruit and vegetables to Russia will be organized from it," she said.

It will cost $9.7 million to construct. Customs clearance times will be reduced, and there will be no need to double-check the cargo because of video surveillance in the warehouse.

A Chinese company Dili, also intends to create a similar cross-border trade zone by the end of 2014, Zhang Chunjiao added.

The announcement comes after Russia introduced a 1-year ban on imports of some agricultural products from the EU, US, Australia, Canada, Australia and Norway last week. If it lasts, it could cost European Union members $16 billion, Vygaudas Usackas, the EU ambassador to Russia, estimated.

* * *
We assume payment for these imports will be in Rubles or Renminbi... not US Dollars.
* * *
As we noted last week, there is good reason why Europe is being battered by these new sanctions; but who is hit hardest?

EU member states have already complained their economies would be hit hard, with Germany and Poland losing the most trade with Russia, and the Baltic states – Lithuania, Latvia and Estonia – seeing their shares of GDP falling even sharper.



For the US the effect will be very limited, as agricultural exports to Russia are about one tenth of one percent of total US gross domestic product of about $144 billion, according to the US Department of Agriculture.

US food exports to Russia in 2013 amounted to less than 1 percent of the country’s total agricultural exports, the US Department of Agriculture said to RIA Novosti. Conversely, Russian exports to the US and European markets are 13 percent of its GDP. In 2013, the US exported $1.3 billion of food goods to Russia, about a quarter of which were poultry products.

* * *
Furthermore, perhaps in the interests of not embarassing itself, the EU is not asking China to refrain from supportinG Russia:

The European Union has no plans to ask a number of states, in particular China, to refrain from replacing banned European food products in the Russian market, a source close to EU leadership told RIA Novosti on Tuesday.

“There are no concrete plans,” the official said, answering a question on whether the EU will ask China and some other countries not to replace banned agricultural and food products from Europe with their own goods in the Russian market.

Media reports earlier suggested that the European Union planned to convince Brazil, Chile and other Latin American states not to export their food products to Russia. It was said that EU expects these countries not to take advantage of the embargo on European products.

* * *
So it seems, US sanctions sparked European blowback... how long before Washington finds itself alone again.
* * *
More un-isolation?

• *PUTIN SAYS EGYPT READY TO BOOST FURTHER FOOD EXPORTS TO RUSSIA
• *EGYPT STUDIES FREE TRADE ZONE W/ RUSSIA-LED CUSTOMS UNION:PUTIN
• *RUSSIA SEEKS TO DOUBLE EGYPTIAN FOOD IMPORTS, FEDOROV SAYS
• *RUSSIA'S FEDOROV SAYS EGYPT SUPPLIED $460M IN FOOD IN 1H

http://www.zerohedge.com/news/2014-0...etables-russia

Russia Launches Another Military Drill In Northwest: 3000 Paratroopers, 30 Aircraft And Helicopters To Take Part

Submitted by Tyler Durden on 08/12/2014 09:02 -0400

On Friday, the market soared for some inexplicable reason or perhaps very explicable if one assumes the market is now exclusively populated by kneejerk-reacting idiots and busted vacuum tubes that don't even bother to read what is written below the headlines, when Russia confirmed the end of a military drill that previously had been scheduled publicly would end precisely on that day!
As we said "This is in no way a de-escalation - in fact, had Russia continued the exercise that would have been a clear provocation. But as usual Johnny 5 ignites momentum first, finds out he never actually read between the original lines, and asks questions never." Sadly, the "market" took this as news, or merely as justification, to send stocks soaring on upward Fed-facilitated momentum, and to halt what otherwise would have been the S&P's downward descent into the 1800s at this moment.
As we further said yesterday, it was only a matter of time before Russia announced yet another drill just to show to the west that it is by no means telegraphing any weakness through the timing of drills.
We were about 12 hours early, because later that same day, Itar-Tass reported that some 3,000 paratroopers will be airlifted in two districts of Russia’s north-western Pskov region as part of command and staff exercises of the 76th air assault division starting on Monday, Airborne Force spokeswoman, Major Irina Kruglova said. As a reminder, Pskov is located right next to the Baltics, bordering Estonia and Latvia, both of which have been on a rather belligerent diplomatic track with the Kremlin, and thus will likely result in a substantial escalation in Russia-Baltic tensions, not to mention Ukraine as well, now that Putin is no longer counter-un-de-escalating, again.
But back to the latest, greatest, and certainly not last drill, “over 3,000 personnel will be airlifted by 15 Il-76 planes,” the spokeswoman said.



The punchline: The mass landing of paratroopers in an unknown terrain will be held for the first time in military drills of this level, the spokeswoman said.
As long as the surprise terrain is not "Kiev"...
Bad jokes aside, the maneuvers will involve over 30 aircraft and helicopters, including Su-34 fighter-bombers, Ka-52, Mi-28, Mi-24 and Mi-8 helicopters. “The drills’ active phase will take place on August 14-15", the spokeswoman said.
The maneuvers will end with night and daylight firing from all of the division’s organic weapons, including Sprut self-propelled anti-tank guns and Nona-self-propelled mortar systems, as well as Strela-10 air defense missile systems.
So while markets certainly do not care today, when the drill is being announced, be certain sure to buy everything with both hands and feet on August 15, when the mass media announces the end of the drill which will be "spun" as yet another assured, guaranteed demonstration of Putin de-escalating military tensions in the region.
At least until the next week that is.


http://www.zerohedge.com/news/2014-0...aircraft-and-h