Putin Strikes Back With His Own Sanctions

It has been less than two weeks since the US and EU hit Russia with their toughest sanctions yet and Putin has responded with some sanctions of his own.

Today, Dmitri Medvedev, the Russian Prime Minister, announced that Russia would ban all beef, pork, fruit, vegetables and dairy products from the European Union, the United States, Canada, Australia and Norway for one year.

“We hoped until the very last that our foreign colleagues would realize that sanctions are a dead end and that nobody needs them,” Medvedev said. “Things have turned out in such a way that we have to implement retaliatory measures.”

But that may not be all.

Medvedev confirmed that the cabinet is also considering a proposal to ban all European and American flights from flying over Russian air space en route to Asia. He added that Moscow was also “potentially ready” to introduce protective measures in a number of industrial sectors, including the automobile industry, shipbuilding and aircraft production.

English: Dmitry Medvedev and Vladimir Putin

While Medvedev maintains that he – and by extension Putin – doesn’t believe that these sanctions are the best way to handle the ongoing crisis in Ukraine this move is a clear indication that the US and EU sanctions did their job.

Putin felt them. And he’s striking back.

To be sure, the EU will be hit harder than the US. EU officials say that they need more time to fully evaluate what the impact of the Russian sanctions will be, but it is clear that the sanctions are part and parcel of a widening trade war.

“Following full assessment by the commission of the Russian Federation’s measures, we reserve the right to take action as appropriate,” Frederic Vincent, EU spokesmen, said.

According to the Financial Times, Finland’s prime minister, Alexander Stubb, has suggested that Finland should be compensated for any disproportionate losses incurred in a trade war sparked by sanctions, under an understanding that the 28 members of the EU should spread the pain of an economic showdown.

Putin has made it clear that the ban could be lifted if “the situation changes” but we can’t know at this point if that’s likely to happen.

“Strategically, this is a good move as Russia’s high levels of dependence on food imports have always been a concern from the national security perspective,” said Vladimir Tikhomirov, chief economist at BCS Prime, the Moscow brokerage. “Tactically, consumers and the economy will be under pressure. We expect that this latest move could boost price growth by 1 to 1.5 percent year on year between December and May.”

Russian officials are said to be in talks with Latin American leaders about increasing the amount of food they import from them. But even if Russia does strike a deal with Latin American nations, they will have a difficult time in the short-term.

While hurting ordinary Russians was never the goal, it’s good to see Putin scrambling. Now is the time to keep up the pressure.

Read more at Forbes.com