Finland will impose no new sanctions on Russia – Finnish PM

Finland will impose no additional sanctions on Russia in response to Moscow’s ban of food imports from some EU countries, said Finnish Prime Minister before the presidents of the two countries are set to meet on Friday in the Black Sea resort of Sochi.

The Russian President will meet his Finnish counterpart Sauli Niinisto in Sochi, on Russia's Black Sea coast, where Putin has a residence on Friday, the president’s press service said. Niinist is the first president of a European country to visit Russia in an official capacity since the escalation of the crisis in Ukraine.

The heads of state are to discuss the "peaceful settlement of the internal political crisis in Ukraine and measures to prevent a humanitarian catastrophe", the Kremlin said. Among other issues the presidents will talks about the current state and prospects of bilateral cooperation between Russia and Finland, the Kremlin added.

The office of the Finnish president also stated that the meeting would focus on the Ukraine crisis. However a source told Reuters that Finland is not planning to act as a mediator in resolving tensions between Russia and the West.

The Finnish side had requested the meeting with Russia’s head of state last week, following Russia’s ban on food imports from the EU, US, Australia, Canada, and Norway. The ban was introduced on August 7 for one year and came in response to Western sanctions imposed on Russia over the Ukraine crisis.

On Wednesday, Finnish Prime Minister Alexander Stubb announced that the country will impose no additional sanctions on Russia in retaliation to the food ban. Stubb added that he had informed the EU leadership and German Chancellor Angela Merkel about his country's decision.

“My message to them had two points. First, we will impose no sanctions in response. Second, our agrarian sector needs certain assistance," he told the Yle television company. Stubb added that Helsinki has good and mutually beneficial relations with Moscow.

Russia is Finland's third-biggest export market, while its companies are major suppliers of milk and other dairy products to Russian supermarkets.

The European countries that fell under the Russian food ban have been hit hard by the sanctions. Last year Russia bought $16 billion worth of food from the 28-nation bloc, or about 10 percent of total exports, according to Eurostat. In terms of losses, Germany, Poland and the Netherlands were the top three EU food suppliers to Russia in 2013.

The German Farmers’ Association (Deutscher Bauernverband) said the move could cause an increase of supply on the EU’s internal market which would put additional pressure on local producers.

According to experts from Denmark’s largest bank, Danske Bank, the sanctions imposed by both sides are to last no longer than three months.

“We believe an escalating trade war would be unbearable for both Russia and the EU, and that the EU will revoke the sanctions within one to three months, with Russia abolishing its own sanctions,” said the bank’s report called 'The Ukrainian Crisis: the Nordic angle' on Thursday.

At the end of July, the EU imposed an additional round of sanctions targeting financial, energy and defense sectors of the Russian economy. The sectorial sanctions targeted five major Russian banks, including the country’s biggest, Sberbank. These financial entities were banned from raising capital on the EU’s financial markets. The EU sanctions followed a fresh round of US sanctions also targeting financial and energy sectors.