Sanctions on Russia may hit exports
The US and Western sanctions on Russia will have a trickle down
effect on Russia's relations with other countries and its trading
partners according to international relations experts.
Russia, an oil and gas rich country, is a major trading partner
between the East and the West. Russia provides around one third of the
EU's oil and gas and around 40 percent of the gas is exported through
Sri Lanka has a substantial trade exposure with Russia which imports
a large quantity of Ceylon Tea.
National Chamber of Exporters, President and Heladiv Group Chairman
Rohan Fernando said that the situation in Russia after the annexation of
Crimea will lead to a lot of issues pertaining to trade. As it is, the
Russian economy is not on a strong footing and the Rouble is being
devalued against major currencies, primarily the US Dollar.
“We are already experiencing problems by not receiving payments on
time and some of the transactions take a long time for clearance.
"If the US and Western Europe enforces trade sanctions, trade between
Russia and other countries will definitely be hampered, similar to what
Iran is experiencing,” Fernando said. Putin being adamant to go through
with his decision to annex Crimea, is rather vulnerable in today's
context of being isolated by the US and the West which the average
Russian does not like. “We see a bad picture for tea exports to Russia
in the coming months due to these reasons,” he said.
The United States and the European Union have imposed tough sanctions
on Russia for annexing Crimea which the West and the US believe is a
violation of international law. US President Barack Obama has threatened
further sanctions if Russia takes steps to destabilise Ukraine.
US and Western sanctions are aimed at Russia's energy sector and
making Europe less dependent on Russian gas. Experts believe sanctions
will push Russia to deepen ties with BRICS states, in particular, and
strengthen ties with China, which will possibly turn out to be a big
catastrophe for the US and the EU.
The World Bank has warned that further sanctions could send Russia
into deeper recession. With suspension of Russian participation in G8
and possible strengthening of economic sanctions, the experts expect
some industries to be targeted, including limits on imported products.
Apparel exporters said that though Russia is not a major market for Sri
Lankan apparel the situation in the region could have an adverse impact
on exports to the EU in the long term.
Apparels Exporters Association President Yohan Lawrence said there
has been no impact as yet on apparel exports due to the crisis in
Russia. In 2013, exports to the Russian Federation was US $20 million.
The Russian market has been identified as a market for growth for Sri
Lankan apparel. Experts believe that sanctions on Russia will have a
negative impact on Europe as many countries depend on Russia for oil and
gas. Italy imports around 30 percent of its natural gas from Russia.