ATHENS – A one-year Russian food ban on goods from the US, Europe and allies could cut deep into Greece’s nascent recovery just when the country seems to be turning the corner.
Russia is Greece’s biggest trading partner, according to data compiled by Bloomberg. The value of total trade between the two nations reached 9.3 billion euros ($12.5 billion) in 2013, surpassing trade flows between Greece and fellow EU-member Germany.
Russia made the move in retaliation for western sanctions for its implicit support of Russian separatist rebels who seized part of Ukraine. While Greece supported the measures, Greek officials made it known they weren’t happy about it, as did those in Cyprus, a fellow EU country which has many ties to Moscow.
An analysis by Bloomberg showed that while losses to Greek farmers and other foodstuff suppliers is expected to be about 180 million euros, the overall effect could be far worse.
“The estimated total cost of Russian counter-sanctions for the Greek economy may look tolerable, but the impact could be quite damaging for industries such as tourism and agriculture amid the fragility of a slowly recovering economy,” Thanos Dokos, Director-General of the Hellenic Foundation for European and Foreign Policy, a Greek think-tank told the news agency. “It also raises questions about energy security in the coming autumn and winter.”
The recent depreciation of the ruble amid the sanctions and the situation in Ukraine may mean that Greece will see 200,000 fewer Russian tourists this year than originally expected, said Xenophon Petropoulos, Director of Communications at the Association of Greek Tourism Enterprises, also known as SETE.
That could deal a potential 300 million-euro blow to Greece’s biggest industry, based on preliminary estimates, just as Greece is experiencing a second straight record year for visitors who are providing a big boost to the beleaguered economy.
Tourism contributes more than 16 percent to Greek Gross Domestic Product, according to SETE data, and Russia has been the fastest growing source market for visitors to Greece. Tourism revenues from Russia increased 42 percent last year to 1.34 billion euros, according to Bank of Greece data.
The European Commission forecasts the Greek economy will grow by 0.6 percent this year, its first annual expansion since 2007, and by 2.9 percent in 2015. That comes after it lost about 25 percent in the four years since first asking international lenders for what turned into 240 billion euros ($327 billion) in two bailouts.
The hit from Russian sanctions on Greek agricultural exports is more difficult to estimate as it will go beyond the direct value of sales, Georgios Polyhronakis, spokesman for the Association of Greek Export and Consignment Enterprises for Fruit, Vegetables and Juices told Bloomberg.
“The biggest impact from the Russian embargo will be from the indirect fallout as Russia’s ban on EU fruit and vegetables means that large quantities of fresh produce suddenly become available, swamping the market,” he said. This will “send prices falling across Europe, hitting both the volume and value of Greek exports towards other countries,” Polyhronakis said.