“I never could have imagined that a high-level political conflict between Obama, Merkel and Putin would end up ruining a lot of people in this village,” laments Vicente López.
López, his brother and a partner own a fruit-growing business in La Almunia de Doña Godina, a small municipality of 7,800 residents near Zaragoza.
The ban on European fresh food imports imposed by the Kremlin in 2014 in retaliation for EU sanctions over the Ukraine conflict has put many Spanish growers up against the ropes.
Even tourism, the great engine of economic growth in Spain, is feeling the effects of the strained relations
Now, these entrepreneurs are being forced to find alternative buyers at lower prices as a result of the excess supply of fresh fruit and vegetables.
“Last year I had losses. And I know many people who are bankrupt and on the verge of selling their land,” says López.
His own 170-hectare property produces 3.5 million kilograms of fruit a year, including peaches, nectarines, cherries and apples. He also has a warehouse where he negotiates exports, 30 percent of which go to Russia, like all the other fruit and vegetables grown in this region.
López says he has found new markets for this year’s crop in Latin America, besides selling part of it in Italy, France, as well as within Spain.
But the EU is absorbing a lot of fruit that used to be bought by Russia, which especially favored Polish produce, and this excess of supply in the European market is driving prices down. Brussels has figured that the Russian ban would mean losses of around €338 million for Spanish growers the first year. And nobody knows about the long-term effects.
In the Catalan province of Lleida, fruit growers already know all about the consequences of the ban. Russia was one of their main markets, buying 15 percent of their peach and nectarine production. The sector, which employs 24,000 people, ended 2014 with such a price drop that it became the worst year for sales in three decades.
Both the Spanish government and the EU have put subsidies in place to allay fears within the farming sector, funding the withdrawal of some of the banned products to avoid an excess of supply. But Agriculture Minister Isabel García Tejerina has noted that Spain is “the country that has benefited the most” from European aid, receiving €30 million for fruit and vegetables growers.
But farmers’ unions underscore that red tape meant that the aid did not reach all growers. “This year, new buyers have been found for the crops that were initially going to Russia, but sales prices are lower,” says Andrés Góngora, of the COAG union. “A lot of production was sold at a 50-percent discount last year, which does not even cover production costs.”
Pressure from Spain
Even though Spain is not, in fact, the hardest-hit country, Foreign Minister José Manuel García-Margallo has been one of the most vocal political opponents of tougher economic sanctions against Russia. In a visit to Moscow in March, García-Margallo warned that adopting new restrictive measures would have “a very severe cost for the entire world” and stated that the EU had already sustained losses worth €21 billion.
Why is Spain spearheading the effort to relax sanctions against Russia? “Trade relations are fluent, although not strategic,” says Nicolás de Pedro, chief researcher at think tank CIDOB. “But traditionally, Spain has had a very understanding attitude towards Moscow. There have always been sympathies between the establishments of both countries. Now the situation is more complicated, because Spain must show support for the EU’s positions, even if these are harsh.”
This expert feels that if European sanctions were to remain in place, in the midterm some Spanish oil or infrastructure companies might also sustain losses.
“Even so, Spain must support the EU’s position. If there is real unity, it must be demonstrated,” he says.
Even tourism, the great engine of economic growth in Spain, is feeling the effects of the strained relations. Russia’s unstable economy has caused the ruble to depreciate, keeping many Russians away from the Spanish coast. Between January and April of this year, 161,813 Russians visited Spain, a drop of nearly 30 percent from the same period in 2014. And plans to eliminate the need for visas for Russian and European travelers have been put on the back burner, for now at least.