Russia blocks Lithuanian dairy imports

By bne IntelliNews October 7, 2013

bne -

Russia is blocking Lithuanian dairy product imports starting on October 7, the country's top public health official has announced. The move appears the latest measure intended to punish Vilnius for encouraging former Soviet states to move towards the EU.

As threatened over the last few weeks, Russia will halt all dairy product entering from Lithuania, Russia's Chief Sanitary Doctor Gennady Onishchenko said on October 5. "From the beginning of the coming week we shall start a complex of measures, which we have manifested earlier, to prevent access to the Russian market of products from Lithuania, which do not comply with the Russian legislation on protection of consumer rights and on safety," he said, according to Itar Tass.

Russian consumer rights watchdog Rospotrebnadzor said in mid September that it was applying additional measures to Lithuanian dairy products following safety and quality tests. Several samples, it said, did not comply with the technical requirements for dairy products of the Customs Union.

Onishchenko is the Kremlin's point man in the trade wars it has been rolling out in recent weeks in a bid to halt the move of former Soviet states to the west. Insisting they should join its Customs Union instead, Moscow is furiously trying to prevent Ukraine and Moldova - amongst others - from agreeing association and trade pacts with the EU at a summit in November. As holder of the rotating EU presidency, Lithuania will host the event, and has offered much encouragement to the pair to stay the course.

On top of its control of the region's gas supplies - which it used to help persuade Armenia to quit the EU route recently - Moscow is also selecting sensitive economic sectors via which it hopes to exert pressure. Onishchenko recently announced import bans against Ukrainian chocolate and a host of other goods, and Moldovan wine.

By way of contrast, it was hardly coincidental that he recently reopened the Russian market to Georgian wine and water. The reintroduction of those imports from the Caucasus followed a seven-year ban, and accompanied a new government in Tbilisi more friendly to Moscow. While Georgia is also due to agree a preliminary EU agreement, it is also rapidly moving closer to Russia just five years after the pair fought a war.

Growing tension

However, Russia has also shown it's not afraid to go after EU states either. While pressure is growing on other eastern EU states - Poland in particular - Lithuania is a major target. On top of its leading role in the summit, Vilnius is also in the midst of tough talks over a new gas deal with Gazprom, and with the Baltic state looking to leverage several points the tension between the two countries is growing daily.

Huge lines of Lithuanian trucks are currently stuck at Russian customs posts due to expanded administrative procedures since the start of September. Lithuanian Prime Minister Algirdas Butkevicius - often criticized as being too soft on Russia - claimed on September 19 that the situation is getting close to an "economic war" against his country.

Since, Lithuanian officials have issued (barely) veiled threats that Vilnius could disrupt transport and other links to the Russia enclave of Kaliningrad. Brussels has also heavily backed the country in the fight. On October 3, the EU announced it is now drawing up a charge sheet stemming from its year-long anti-trust investigation into Gazprom's contracts in the CEE region.

That the Lithuanian transport sector is under the spotlight is no accident; thanks to the country's posting, it's a key industry. Lithuanian dairy producers meanwhile are hugely exposed; the country sells 50% of its output overseas. A whopping 85% of those exports head to Russia, reports Itass.

The small Baltic state is not alone in the EU however. On October 4, Moscow reminded Poland that it is at risk - Warsaw having been playing a major role as mediator with the likes of Ukraine. Rosselkhoznadzor, the Russian Federal Service for Veterinary and Phytosanitary Supervision, delivered a fresh warning about a batch of Polish meat entering the country, according to Polish state news agency PAP.

Rosselkhoznadzor has regularly reported concerns about the quality of Polish food in recent months. That comes at a sensitive time for Warsaw. Poland has been pushing the sector as a major source of export revenue recently, but has fought what it says is protectionism in CEE markets. For instance, it had a major spat over claims of poor quality food imports from the Czech Republic through the summer.

Polish food producers have enjoyed success in Russia, and the country is now the fifth largest importer of food from the EU state. The dynamic growth of Polish food exports to Russia in recent years is summed up by earlier expectations that pork exports were expected to double in 2013. However, that was before the tension began to rise in recent weeks.

Individual shipments of Polish pork and cheese to Russia were halted in August, with increased controls placed on those particular products. Polish food safety officials said at the time that the state had not received any notification on the issue.

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