MOSCOW Wed Aug 6, 2014 9:10am EDT
MOSCOW (Reuters) - Russia has extended food import bans to Romania, stepping up its response to more biting Western sanctions for its support for separatist rebels in Ukraine, though Moscow's measures could be rebounding on its own economy.
Russian veterinary watchdog Rosselkhoznadzor said on Wednesday it was suspending beef and cattle imports from Romania, citing an outbreak of mad cow disease.
Moscow has already imposed bans on Ukrainian juice and dairy produce, Polish vegetables and Australian beef and has said it might target Greek fruits and U.S. poultry.
However, the Russian central bank warned on Tuesday that the ban on importing such cheap products could make it harder to control inflation.
"We are particularly concerned that the slowdown in inflation was lower than expected in July," Interfax quoted the central bank as saying. Inflationary pressures usually ease in the summer thanks to the arrival of cheap fruit and vegetables.
The annual inflation rate fell to 7.5 percent in July, but it remains well above the 6.5 percent increase seen in 2013.
Moscow's trade bans follow new sanctions against Russia's banking and energy sector imposed by the West, which accuses the Kremlin of financing and supplying arms to rebels in eastern Ukraine who are fighting for independence from the government in Kiev.
Moscow has never directly linked its trade bans to the Western sanctions, but few doubt they are retaliation amid the worst crisis in relations with the West since Soviet times.
TROOPS ON BORDER
Countries such as Poland have said the bans would lead to significant damage to their economies, but economists warn they could also hit ordinary Russians.
President Vladimir Putin ordered his government on Tuesday to work out retaliatory sanctions but said the government should make sure consumers don't get hit.
On the same day, business daily Vedomosti reported that Russia might restrict or ban European airlines from flying over Siberia on Asian routes, which would make their flights take longer and require more fuel.
However, that hit shares in Russia's Aeroflot, which gets around $300 million a year in fees from foreign airlines for flying over Siberia, according to Vedomosti.
The Western sanctions first targeted the closest allies and businessmen around Putin in the hope they would put pressure on the Russian leader to change course on Ukraine.
But as the business elite stood firm behind Putin, the sanctions were expanded to include energy, which provides more than half of federal revenues, and banking, making it much more difficult for the country and its companies to borrow money.
It has already been a miserable summer for some Russians; holidaymakers have been hit by the collapse of a series of travel companies as the economy flirts with recession and the rouble falls, and those holding Russian shares saw them touch three-month lows on Wednesday on fears that the Ukraine crisis would escalate further.
NATO said on Wednesday that Russia had amassed around 20,000 combat-ready troops on Ukraine's eastern border and could use the pretext of a humanitarian or peace-keeping mission to invade.
Coca-Cola Co said on Wednesday it had taken advertisements off four Russian television channels, but it denied the decision was due to sanctions. It said a fall in second-quarter sales had prompted a rethink of its marketing plans.
In 2013 Coca-Cola had a 23.5 percent share of the Russian juice market, worth an estimated $4.6 billion, while rival PepsiCo had 35.5 percent.
(Reporting by Maria Kiselyova, writing by Dmitry Zhdannikov; Editing by Jason Bush and Will Waterman)
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