The Cattle Quarrel

MOSCOW, Russia -- Now it is the trade dispute that is escalating between Ukraine and Russia. With the gas war not over yet, all statements to the contrary notwithstanding, beef and dairy clashes are coming up to take its place.

Moscow shopper looks over the selection of steaks at a grocery store

After banning import of animal products from Ukraine January 20, Russia has not only hit the economy of Ukraine but may also trigger a surge in inflation in its own country.

The government of Ukraine takes the incident as misunderstanding, Alexander Baranivsky, minister of agriculture of Ukraine, said January 20, when commenting on the beef and dairy war. According to the minister, Russia’s veterinary services notified him about closed borders for beef and dairy on January 19 and he was ready to send a delegation to Moscow on the same day. But the meeting was denied by Russia’s Agriculture Minister Alexey Gordeev, Baranivsky specified.

Statistics differ when it comes to import of Ukrainian animal products by Russia. Ukraine is not covered by Russia’s quotes for meat import and the quoting has not been discussed so far. On the other hand, the efforts of Russia’s lobby resulted in reducing deliveries from 110,000 tons of beef in 2002 to nearly 50,000 tons in 2005.

Russia’s authorities are apparently in no mood to negotiate, adding even positions strongly needed by Russia (cheese, for instance) to the list of quarantine products. The decision is too simple and too large-scale not to signal to some political backdrop.

Besides, the reasons for opening the second, beef and dairy front in Russia’s-Ukrainian relations are numerous. Despite the declared peace in gas war and an agreement of January 4, 2006, the countries do clash when it comes to gas. Last week, for example, Energy Minister Ivan Plachkov said Ukraine would insist on fixing the price at $95/ths cubic meters for five years for shipping gas via RosUkrEnergo (RUE). Moreover, Plachkov confirmed Ukrainian intention to revive long-term direct purchase of some portion of gas in Ukraine, by passing RUE.

As a result, the Ukrainian drafts of gas agreements submitted to Russia’s Industry and Energy Ministry and Gazprom have not been approved so far with the signing of contracts with Gazprom, Naftogaz Ukrainy, RUE and Turkmenistan put off from January 20 to January 25. By rumors, Plachkov talked to Turkmenistan President Saparmurat Niyazov in Moscow yesterday. Niyazov will meet President Putin today to canvass the gas issues.

Source: Kommersant