Putin makes mistake with food fight
As Russian leaders have often done through history, President Vladimir Putin is making Russians pay for his mistakes.
Last week he announced his latest gambit, aimed at punishing the European Union, the U.S. and a handful of other countries for slapping economic sanctions on Russia for his adventures in Crimea and Ukraine.
Putin’s plan is to stop buying food from the nations that imposed the sanctions. Chicken, nuts, apples and other fruits and vegetables are on his non-shopping list.
But there’s a problem. Russian leaders, particularly Putin, have through the years demonstrated themselves to be unreliable customers anyway. They stop and start buying commodities based on whichever way the political winds are blowing in Moscow. Russia has not bought dairy products or beef and pork products from the U.S. for years. California almond growers, who last year sold Russia about $102 million worth of nuts, began scaling back sales to Russia this year in anticipation of fallout from the Crimea and Ukraine crises.
Putin is only adding to his problems by cutting off food imports from the U.S. and the EU, the source of much of Russia’s imported food. About 60 percent of the food sold in urban markets such as Moscow comes from overseas. Putin figures he can pick up the phone and replace those imports with commodities from South America and elsewhere. Note to Putin: It’s winter in the Southern Hemisphere. Fresh vegetables and fruits there may be in short supply.
Putin’s other problem — one of many — is the value of the ruble. Since western economic sanctions began, the ruble has plummeted to less than 3 cents. That makes foreign food even more expensive for Russians. A recent photo from Russia showed a bag of oranges selling for about 53 rubles. When the average weekly wage is 600 rubles, one has to wonder how much foreign food most Russians can afford anyway.
A likely scenario is that, rather than going without, Russians who have the means will go to the active black market to supply their needs.
Russians have weathered difficult times before. They are stoic, and they are tough. And they know how to get around the bureaucracy to obtain what they need.
In the meantime, experts say world markets will experience a bit of indigestion because of Putin’s mistake. That will be temporary, as free markets will ultimately shrug off Russia’s temper tantrum and reach a new equilibrium.
And it may allow Putin enough time to come to his senses.
If not, it’ll be an especially long winter in Russia.