View of Russian sanctions shifting, says govʼt official
The assessment of sanctions against Russia, which have been in place for two-and-a-half years, has changed significantly, given that EU penalties often have the opposite effect to that desired, Gyula Budai, ministerial commissioner for economic measures relating to the Russian embargo, told Hungarian news agency MTI on Sunday.
Budai said EU measures introduced in 2014 were not helping to resolve the conflict in eastern Ukraine. In fact, he added, Russiaʼs agriculture and food industry have increased production, so there are more and more products which will quickly make Russia self-sufficient. Russia has become nearly self-sufficient in poultry and is 90% self-reliant in beef, according to Budai.
Meanwhile, Russia itself has extended counter-sanctions, and Russian officials have indicated that the embargo against EU farm and food products could remain indefinite, Budai said. EU businesses affected by the embargo are trying to adapt to the prevailing conditions, he added.
Further unintended consequences are that the pace of foreign investments in Russiaʼs farm and food industry has picked up, since many companies - including Hungarian businesses - have outsourced production to joint ventures operating in Russia as the sanctions do not affect products made by these companies nor technology transfer, Budai noted.
Such Hungarian investments in Russia include M Profoodʼs planned construction of a plant to mix seasoning for meat processing companies near Moscow, along with a warehouse, scheduled to be completed in the first half of next year.
Another company, Agrofeed, which inaugurated a feed plant in October in Tula, some 200 kilometers south of Moscow, plans to set up another feed plant in the same area.
Budai also mentioned that recently established positions in southeast Asia for Hungarian waterfowl and poultry products have offset the losses suffered in Russian exports. He noted that demand exists for such Hungarian products in Hong Kong, Singapore, Vietnam and China.
Budai estimated that Hungaryʼs losses related to the EU sanctions against Russia amounted to about USD 6 billion in the past two years.
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