Russian Prime Minister Dmitry Medvedev has vowed to resolve tensions with Belarus over the arrest of a Russian potash CEO by whatever means necessary. The detainment of Uralkali CEO Baumgertner has outraged the Putin Administration, and Moscow's retaliation against Belarus is under way.
Just two days after Baumgertner was arrested at a Minsk airport, Russian health inspectors called into question the quality of Belorussian dairy products including butter and cottage cheese. 240 samples were taken in Moscow and 30% of the Belorussian dairy products tested did not meet Russian quality standards.
In the first half of 2013, dairy exports from Belarus into Russia totaled more than USD $1 billion, roughly 95% of Belarus' total dairy exports. Dairy products make up 38% of all agricultural exports from Belarus and Russia has targeted the dairy revenue stream before. In 2009, Russia blacklisted 1,300 Belorussian dairy products causing a rift between the two nations and economic hardship for Belarus.
Meanwhile, Russia has banned pork imports from Belarus, citing concerns over African swine fever. At the same time, Russia said it will cut September crude oil sendouts to Belarus by 25%, threatening to taper crude shipments over the coming months if Baumgertner is not released.
The commodity sector in the FSU is giving Russian President Vladimir Putin economic leverage against the actions of Belarus. But so far, Putin is no closer to Baumgertner's release and videos have surfaced showing Baumgertner held in solitary confinement. If Belarus threw down the gauntlet at Baumgertner's arrest, Russia is wasting no time retaliating. An arrest of Uralkali shareholder Suleiman Kerimov could put a spark to the situation, and there's no telling what Putin might do if two Uralkali officers are jailed in Belarus.
Photo credit: World Economic Forum / Foter / CC BY-NC-SA