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| Why Russians may have to do without Bordeaux | Why Russians may have to do without Bordeaux |
| (about 9 hours later) | |
| Already coping without EU cheese, Russians could soon be braced for life without its wine, fine chocolate and flowers. | Already coping without EU cheese, Russians could soon be braced for life without its wine, fine chocolate and flowers. |
| Russian state TV has been suggesting - somewhat gleefully - that such products could be banned in retaliation for the EU extending economic sanctions against Russia. | Russian state TV has been suggesting - somewhat gleefully - that such products could be banned in retaliation for the EU extending economic sanctions against Russia. |
| The European restrictions were introduced last year after Russia annexed Crimea from Ukraine; Moscow hit back with counter-sanctions in August, targeting EU producers' profits. | The European restrictions were introduced last year after Russia annexed Crimea from Ukraine; Moscow hit back with counter-sanctions in August, targeting EU producers' profits. |
| Even the agriculture minister called the idea of adding a European wine ban 'radical,' given that domestic production is nowhere near enough to meet demand, not to mention the quality. | Even the agriculture minister called the idea of adding a European wine ban 'radical,' given that domestic production is nowhere near enough to meet demand, not to mention the quality. |
| But he didn't exclude it. | But he didn't exclude it. |
| The bullish tone of the reporting is typical of the defiant mood in Russia after a year under Western sanctions. | The bullish tone of the reporting is typical of the defiant mood in Russia after a year under Western sanctions. |
| That same mood dominated the St Petersburg International Economic Forum late last week, dubbed the 'Russian Davos,' where a key message appeared to be: 'they didn't break us.' | That same mood dominated the St Petersburg International Economic Forum late last week, dubbed the 'Russian Davos,' where a key message appeared to be: 'they didn't break us.' |
| The glitzy event was boycotted in 2014 by senior US and European executives in protest at the Ukraine crisis. This year some returned to encounter a decidedly upbeat Vladimir Putin informing them that a 'catastrophe' had been averted. | The glitzy event was boycotted in 2014 by senior US and European executives in protest at the Ukraine crisis. This year some returned to encounter a decidedly upbeat Vladimir Putin informing them that a 'catastrophe' had been averted. |
| "We have stabilised the situation […] and are now making our way forward confidently through this difficult patch," Russia's President assured his audience. | "We have stabilised the situation […] and are now making our way forward confidently through this difficult patch," Russia's President assured his audience. |
| As well as asset freezes and individual travel bans, the sanctions limit access to Western financial markets for state firms. They also ban arms trade and the export of equipment used in specific oil projects. | As well as asset freezes and individual travel bans, the sanctions limit access to Western financial markets for state firms. They also ban arms trade and the export of equipment used in specific oil projects. |
| Calculating their precise impact is impossible as the restrictions were imposed at the same time as the price of Russia's chief export, oil, plummeted. | Calculating their precise impact is impossible as the restrictions were imposed at the same time as the price of Russia's chief export, oil, plummeted. |
| But Russia's economy shrank 2% in the first quarter of 2015, the rouble has plunged, inflation has soared and the number of people living below the poverty line has risen. | But Russia's economy shrank 2% in the first quarter of 2015, the rouble has plunged, inflation has soared and the number of people living below the poverty line has risen. |
| "I don't like it when there is some discrimination, that's not fair," Russia's trade minister, Denis Manturo, told the BBC, in response to the news that sanctions were being extended. | "I don't like it when there is some discrimination, that's not fair," Russia's trade minister, Denis Manturo, told the BBC, in response to the news that sanctions were being extended. |
| But he insists it's the oil price that's hurt Russia's economy, not sanctions. | But he insists it's the oil price that's hurt Russia's economy, not sanctions. |
| "To be honest, for me - who is responsible for Russian industry - [sanctions are] a motivation. To motivate Russian companies to produce and supply not only for the local market, but abroad," the minister added. | "To be honest, for me - who is responsible for Russian industry - [sanctions are] a motivation. To motivate Russian companies to produce and supply not only for the local market, but abroad," the minister added. |
| Import substitution has become the official mantra as Russia attempts to capitalise on gaps in the market created by Western sanctions and Russian counter-measures. | Import substitution has become the official mantra as Russia attempts to capitalise on gaps in the market created by Western sanctions and Russian counter-measures. |
| So Mr. Manturov says domestic firms are now supplying energy firms with equipment they once imported, for example, and local dairy production has certainly expanded. | So Mr. Manturov says domestic firms are now supplying energy firms with equipment they once imported, for example, and local dairy production has certainly expanded. |
| But economists warn that the EU ban on credit can't be ignored. | But economists warn that the EU ban on credit can't be ignored. |
| "Sanctions are clearly making the situation a lot worse," explains Moscow-based analyst Chris Weafer, of Macro Advisory. | "Sanctions are clearly making the situation a lot worse," explains Moscow-based analyst Chris Weafer, of Macro Advisory. |
| On paper the ban only applies to state-owned banks, but even non-sanctioned banks and companies are being denied financing by Western institutions wary of the risk. | On paper the ban only applies to state-owned banks, but even non-sanctioned banks and companies are being denied financing by Western institutions wary of the risk. |
| "It's like a voluntary expansion of the sanctions," Chris Weafer explains. | "It's like a voluntary expansion of the sanctions," Chris Weafer explains. |
| With no new money entering the market, and no sign of China rushing to fill the funding-gap, Russian banks prioritise credit to major state-owned firms and the cost for everyone else has soared. | With no new money entering the market, and no sign of China rushing to fill the funding-gap, Russian banks prioritise credit to major state-owned firms and the cost for everyone else has soared. |
| Far from the insistent optimism of the economic forum, the General Motors plant stands almost idle on the industrial outskirts of St. Petersburg. The territory around is filled with unsold cars. | Far from the insistent optimism of the economic forum, the General Motors plant stands almost idle on the industrial outskirts of St. Petersburg. The territory around is filled with unsold cars. |
| US-based GM will shut its plant here for good at the end of June citing a 'challenging economic situation.' | US-based GM will shut its plant here for good at the end of June citing a 'challenging economic situation.' |
| The firm was importing most of its car components and the rouble's fall has hit hard, along with plunging demand for vehicles. | The firm was importing most of its car components and the rouble's fall has hit hard, along with plunging demand for vehicles. |
| "Many people don't know what they will do in the future," says Trade Unionist Maxim Kulayev, who's negotiating for better compensation for 1,200 workers about to lose their livelihood. | "Many people don't know what they will do in the future," says Trade Unionist Maxim Kulayev, who's negotiating for better compensation for 1,200 workers about to lose their livelihood. |
| "The government says there's no problem, they can all find new job. But it isn't true." | "The government says there's no problem, they can all find new job. But it isn't true." |
| In fact, other manufacturers are also laying-off workers due to the downturn. | In fact, other manufacturers are also laying-off workers due to the downturn. |
| "We think the crisis goes on," Mr Kulayev says. | "We think the crisis goes on," Mr Kulayev says. |
| And Russia's influential former Finance Minister, Alexei Kudrin, agrees. He estimates that falling oil price and sanctions are equally to blame. | And Russia's influential former Finance Minister, Alexei Kudrin, agrees. He estimates that falling oil price and sanctions are equally to blame. |
| "Russia is experiencing serious difficulties as we know. Growth has slowed, living standards have fallen. Of course it's difficult," he told the BBC. | "Russia is experiencing serious difficulties as we know. Growth has slowed, living standards have fallen. Of course it's difficult," he told the BBC. |
| But he's still not convinced the sanctions can make any difference, politically. | But he's still not convinced the sanctions can make any difference, politically. |
| "Clearly they were meant to pressure Russia. But I don't think they worked because Putin doesn't respond to that kind of political pressure." | "Clearly they were meant to pressure Russia. But I don't think they worked because Putin doesn't respond to that kind of political pressure." |
| The EU says its restrictions can be reversed when it sees Russia 'contributing actively and without ambiguities' to solving the Ukraine crisis. | The EU says its restrictions can be reversed when it sees Russia 'contributing actively and without ambiguities' to solving the Ukraine crisis. |
| Russia is engaged in a peace process but continues to insist that Kiev - not Russian-backed rebels - is responsible for violating the ceasefire. | Russia is engaged in a peace process but continues to insist that Kiev - not Russian-backed rebels - is responsible for violating the ceasefire. |
| Meanwhile, it remains officially indifferent to the sanctions. | Meanwhile, it remains officially indifferent to the sanctions. |
| So the St. Petersburg economic forum was trumpeted as a great success, as state TV proclaimed a surge in participants as proof the West's attempt to isolate Moscow has failed. | So the St. Petersburg economic forum was trumpeted as a great success, as state TV proclaimed a surge in participants as proof the West's attempt to isolate Moscow has failed. |
| The volume of actual deals done, though, tells a different tale. | The volume of actual deals done, though, tells a different tale. |
| The total value this year was calculated at $5.4 bn by the forum's executive secretary. That's $2bn less even than last year, when so many of the big players stayed away. |