Nicholas Richardson
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Trade Routes

It’s an ill wind that blows nobody no good. And the winds of EU sanctions are not so ill as to prevent the flourishing of EU Russia trade in one corner of Europe. Since Moscow imposed an embargo on the import of food from the EU has driven up prices, Russians living in the Kaliningrad area are crossing the Russian-Polish border in increasing numbers. Not for the first time, politicians do one thing and folk simply make the best of it.

The Russian embargo was put in place in response to EU sanctions imposed as a result of Moscow’s alleged support for pro-Russian separatists in eastern Ukraine. A ban on Polish pork imposed earlier has forced some meat processing plants in the Kaliningrad area to close. A surplus of food in Poland has caused prices to drop just as prices in Russian shops increase, encouraging Russians living in the Kaliningrad, who may visit northern parts of Poland without a visa under a local border traffic agreement signed in 2011, to shop here. Similarly, Poles living in the vicinity of the border may cross the border into Kaliningrad.

According to Tadeusz Baryla, from the Centre for Eastern Studies in Olsztyn, Poles go to Kaliningrad for ‘trade tourism’, buying petrol and diesel, while Russians come to Poland to purchase groceries, household cleaning products, as well as baby food. Border traffic has increased significantly since the Russian embargo was put in place, and, even allowing for seasonal holidaymakers, it appears that the majority of Russians are going home do so with some sort of shopping. In 2013, some 25 percent of Polish exports to the Kaliningrad were of food products. As you might expect Kaliningrad is dependent on imports, with 70 percent of dairy products, 50 percent of its fruit, 44 percent of vegetables and 40 percent of its poultry coming from abroad.

Of course, the increased number of shoppers from Kaliningrad will not make up for all Poland’s losses and the EU has announced 125 million euro in compensation for farmers from Poland, Lithuania and other producers hit by Russia’s ban on food imports. Russian consumers, depend on imports of fruit, vegetables and other food products and exports of Polish fruit and vegetables alone to Russia totalled approximately 500 million euro in 2013.

However, those irrepressible optimists in Russia seem unconcerned with the prime minister Dmitry Medvedev saying that a rise in prices in the shops was not inevitable since the ban on EU food imports could stimulate “more competition” on the Russian market. He said that Russian consumers were presented with “a situation where all the apples, for example, come from Poland or some other products – say fish is an example – all from Norway”. I don’t recall an example of a trade embargo having led to greater consumer choice in the past but Russia is ever able to surprise us.

Needless to say, the news behind the EU compensation payments is not uniformly good in the wider sense. The payments will effectively pay farmers hit by the Russian embargo to destroy food. “This is a measure aimed at reducing the level of supply so the prices don’t drop to crisis levels,” said European Commission spokesman Roger Waite. Is it not odd, when there are so many folk in the world without food, the EU thinks it better to destroy surplus food than to send it to places where they might actually eat it. It seems rather inconsistent that one hand the media are ever full of appeals for aid to trouble-torn parts of the world on the while on the other we are destroying food.

Be that as it may, it is good when trade breaks down barriers. Folk who trade with each other are less likely to fight with each other. But isn’t that what they said in 1914 when everybody thought that nobody could afford for the war to continue beyond Christmas? Let’s hope that this really isn’t an ill wind that blows nobody no good after all.

Posted in Current Affairs, Economy, EU, Foreign policy, Trade | Leave a comment