The Cable

Russia's Food Fight Could Leave It With Egg on Its Face

Russia banned food imports from Europe and the United States Thursday in retaliation for Western sanctions against the Kremlin, escalating the economic war over the conflict in Ukraine, but in a way that could hurt Russia more than its intended targets.

Economists say Russia's latest volley in tit-for-tat sanctions with the West could raise inflation and hurt its economy. Russia imports over 40 percent of its food, so the ban could cause prices to spike.

Steven Pifer, a former ambassador to Ukraine and a senior fellow at the Brookings Institution, said relying on domestic agriculture will likely prove politically popular for Russian President Vladimir Putin but impractical.

"It will appeal to the domestic constituency in rural areas," Pifer said. "The problem is, you don't build apple orchards to replace 700 tons of Polish apples overnight."

Russia is also threatening to ban European and American airlines from flying over Siberia. That move would boomerang on Moscow as well because foreign carriers pay millions of dollars in fees to Russia's Aeroflot for the privilege of taking a shortcut through Russian airspace.

For American producers, the ban isn't expected to be very painful. The announcement elicited a dismissive shrug from the United States' largest agricultural trade group.

"America's farmers and ranchers would have been more surprised if Russia's leaders had not announced bans and restrictions on food and agricultural imports," stated Bob Stallman, the head of the American Farm Bureau Federation.

Although the ban will hit Europe harder, food exports to Russia are still a small percentage of the bloc's overall exports. Still, the restriction could test Europe's already shaky resolve to sanction Russia. Since March, the United States has sought tougher economic penalties against Moscow for annexing Crimea and destabilizing eastern Ukraine. However, European leaders were more sanguine, holding out for a domestic resolution until recently.

Poland's strong economic ties to Russia could hit it hardest. Tsveta Petrova, a Europe analyst for risk consultancy Eurasia Group, said Poland's trade with Ukraine and Russia has dropped 25 percent since the sanctions merry-go-round started spinning. Poland has led the European charge to sanction Russia.

"Poland is a key state because Poland has for a long time been warning their Western European partners that Russia is becoming too aggressive," Petrova said.

Poland's exports to Russia could drop further -- in half, by some estimates -- but Poland is willing to bear the economic pain in light of the threat that Russia poses. "They prioritize security over economics," Petrova said.

Western European countries such as France, Italy, and Spain might reach a different conclusion. In France, farming unions warn that the ban would be "tragic." Xavier Beulin, the president of the French farmers union FNSEA, told AFP that "products that were originally destined for Russia will end up on the European market and it will create a crisis situation." As Belgian farmers and Norwegian fishermen start clamoring for compensation for canceled contracts, political support for a tough response to Russia could fray.

Outside of the Netherlands, which lost nearly 200 people when Malaysia Airlines Flight 17 was shot down over Ukraine by pro-Russian separatists, enthusiasm for the latest round of penalties was measured. A YouGov poll taken prior to Russia's food ban found that 53 percent of Germans supported sanctioning Russia further. In France, only 48 percent did.

The back-and-forth sanctions' long-term effect on a European economy struggling to recover from the sovereign debt crisis is unclear. But the potential is there: Russia is the European Union's third-largest trading partner, trailing China and the United States. The European Union is Russia's largest trading partner, buying $277 billion in Russian goods.


The Cable

Exclusive: No Congressional Address for Indian Prime Minister

This post has been updated.

Indian Prime Minister Narendra Modi will not address a joint session of Congress during his visit to the United States in September, his first since becoming the country's leader, Foreign Policy has learned.

An invitation for the charismatic Indian politician to address the two chambers, viewed as the highest honor Congress can bestow on a foreign head of state, gained broad support in the House and Senate over the summer. However, House Speaker John Boehner (R-Ohio) informed Modi in a letter dated July 30 that the "unpredictability of the House schedule" meant that Congress could not invite the prime minister for this address after all. Boehner left the door open for a future address at an unspecified date. 

"I would be very interested in exploring with you the possibility of a visit to the United States Capitol and an address to a joint meeting of Congress should your travels bring you back to our country in the months and years ahead," read the letter, obtained by FP.

Many expected Modi to address Congress in the last week of September when he's in the United States to meet President Barack Obama and address the United Nations General Assembly. But House leadership is contemplating calling an early recess in September ahead of midterm elections, which would mean lawmakers would be in their districts during Modi's trip.

The proposed invite, endorsed in eight separate letters circulating in the House and Senate, was seen as an olive branch to India's new leader and an attempt to repair relations after the U.S. revoked his visa in 2005. Then, critics blamed Modi for not stopping the slaughter of Muslims in the 2002 communal riots in Gujarat, where Modi served as chief minister. Modi was the only person ever denied a visa under an obscure provision of the Immigration and Nationality Act, an indignity that continues to breed resentment among Modi's supporters in the United States.

Now, the scheduling conflict could be perceived as yet another slight by the U.S. government at a time of slumping U.S.-India relations.

"Since the expectation of a speech was made public ... Indian and American policymakers are now going to have to manage the disappointment that results from it not materializing," Tanvi Madan, a fellow at the Brookings Institution, told Foreign Policy. "This'll require making sure there's an understanding in India -- especially with the media and public -- that this is not a sign of disrespect to India or Modi, but a result of the Congressional calendar, especially in a midterm year."

The decision has already rankled Democratic lawmakers who signed letters urging a Modi address to Congress.

"The last thing Congress needs is another vacation when there are pressing issues at stake, and that includes hearing from the leader of one of our most important, strategic allies," said Courtney Gidner, spokeswoman for Rep. Joe Crowley (D-N.Y.), co-chairman of the Congressional Caucus on India and Indian-Americans.

Update: The Hindu American Foundation, a large U.S.-based group that supports  stronger relations with Modi, reacted angrily to the news. "It's a shame that some of our lawmakers may be prioritizing campaigning over a rare opportunity to demonstrate good will towards India and its newly elected prime minister," said Suhag Shukla, the group's executive director. "The U.S. needs to demonstrate its will to build real bridges with the largest democracy in an efficient and effective manner."

The letter from Boehner appears below:

Modi Letter


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