Thursday, August 07, 2014

Putin Launches New Cold War

Seeking to do something to distract average Russians from the growing isolation that he has created for their nation, Vladimir Putin has announced a ban against US and EU imports of foods stuffs and meats.  While the pundits debate who will suffer more economic harm from Putin's game of tit for tat, common sense suggests that Russia will ultimately be the bigger loser.  Reportedly, Putin is also prepared to introduce measures in the aviation, shipbuilding and automobile sectors which might kill France's sale of ships to Russia and force wealthy oligarchs to have to drive Russian made cars rather than the high end Rolls Royces and Mercedes that are their preference.  A piece in The Guardian looks at Putin's escalation of a new cold war to satiate his enormous ego and delusions that he is Russia's new Tsar.  Putin might do well to remember that Nicholas II's views of Russian power and his own rightness did not translate into reality and ended disastrously.  Here are excerpts:
Russians will no longer be able to buy fruit, vegetables, meat, fish or dairy products from the EU and the US, as the full scope of Moscow's food import ban became apparent on Thursday.

President Vladimir Putin told officials on Wednesday to come up with a list of western agricultural products and raw materials to be banned, in reaction to western sanctions over Russia's policies in Ukraine.

Russia's prime minister, Dmitry Medvedev, said the ban was effective immediately and would last for a year. It covers most foodstuffs from the US, the 28 EU countries, Canada, Australia and Norway.

The key question is whether the import ban would hurt European producers more than Russian consumers. The Kremlin's English-language channel, Russia Today, said the food ban could spark a "crisis in Europe" and would cost billions of pounds in lost revenues.  There was less musing on the cost to ordinary Russians, who have become used to readily available imported foods.

"I am sure that our market will be filled with fresh quality Russian products, which anyway many Russians prefer to the imported ones," said Medvedev.

The agriculture minister, Nikolai Fyodorov, said more Brazilian meat and New Zealand cheese would be imported to offset the newly prohibited items. He also said Moscow was in talks with Belarus and Kazakhstan to prevent the banned western foodstuffs being exported to Russia from the two countries.

Medvedev said Russia was prepared to introduce further measures in aviation, shipbuilding and automobile sectors, but said it would do so carefully. Moscow has already floated the idea of banning European airlines from flying over Russian airspace, which could add several hours to some flights between Europe and Asia.

Financial markets were quick to react to Putin's tit-for-tat move. Moscow's main two share indices extended Wednesday's sharp declines, with retail and banking shares among the biggest fallers. The RTS index lost 1.9%, and the rouble-denominated Micex fell 1.5%. European indices were also weaker.

Russia is carrying out military exercises near the border with Ukraine this week, and there are fears that the option of a ground invasion is still on the table. Nato said earlier this week that Moscow had amassed around 20,000 troops near the border and could be planning an invasion under the guise of a humanitarian intervention.
By isolating Russia Putin seems to be demonstrating the mindset that prevailed at times in Russia prior to Peter the Great when isolation only served to marginalize Russia and make it more backwards compared to Western Europe.  But then again, Putin seems to see himself as the new Ivan the Terrible.  Historically, Russia has flourished the most when it has been most open to the West as under Peter the Great, Catherine the Great, Alexander I, and even Nicholas II under whose reign Russia reached a pinnacle in the arts and was rapidly industrializing.   Putin reportedly likes to read about Russian history but he seems to be ignoring periods that might teach him that he is on a course backwards in time, but not in a positive way.


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