This morning business daily Vedomosti has reported, Russia may begin restricting European airlines from flying over Siberia on Asian routes. The move, if enacted, would imposed crippling costs on some European carriers. To make matters worse, the underlying business infrastructure of all countries will certainly be negatively affected.
Vladimir Putin at State Council Presidium meeting on developing social protection system for senior citizens. – Via The Kremlin
The move/strategy, would reportedly put European carriers, and potentially some Asian partners. During the Cold War, most Western airlines were barred from flying through Russian airspace to Asian cities. Now, due to continued sanctions against Russia over Ukraine and other political footballs, European air carriers that fly over Siberia to China, Japan and South Korea, will have to find other more expensive routes.
Vedomosti contended some airlines like; Lufthansa, British Airways and Air France, would lose 1 billion euros ($1.3 billion) in only 3 months if a ban is imposed. Other estimates suggest European airlines would lose some €200 to €300 million over the course of a year. Widened EU sanctions just recently forced Russia’s largest air carrier, Aeroflot, to suspend new low cost airline, Dobrolet, over aircraft leasing arrangements.
On the larger stage, Russian President Vladimir Putin has called for a wide array of counter-sanctions in answer to Washington’s and the EU’s onslaught of economic initiatives against his country and its businesses. Just this week, a natural gas deal with India was announced. This is clearly a circumvention of further pitfalls imposed by the US and the EU. Also this week, Putin signed a major oil deal with Iran that shows a clear alternative posture toward the west.
These moves, and others in the news in light of the west’s economic war on Russia, have many economists worried over the wisdom of these anti-Russia moves. Rob Dobson, a senior economist at Markit, for one, told The Telegraph:
“The UK manufacturing sector started the third quarter on a firm footing. Although cooling in July, growth rates for production and new orders remain well above their long-run trends, supporting continued solid job creation in the sector.”
Taken in total, the tip of the iceberg on Washington and London policy moves may seem strategic, but underneath where business is done, hurting Russia may hurt the west even more. This is particularly true in the tourism industry where a great many associative businesses are affected. Aircraft manufacturers, tour operators, down to hotels and restaurants receiving guests from Russia and the BRICs will certainly be negatively affected, and at the worst possible time.
