EU Announces Severe Sanctions On Belarus
Brings forward prospects of Belarus integrating within Russia
The European Union has announced significant economic and trade sanctions on Belarus, overcoming initial objections from Austria, which has a significant banking presence in the country. The sanctions include a ban on new loans to Belarusian banks, trading in Belarusian securities and short-term bonds, and the provision of investment services.
Imports of cigarettes, oil and oil products, and potash – used in making fertiliser – have also been introduced, despite the country being a major provision of the chemical to the EU. Telecommunications equipment and even hunting rifles have also been barred from export to Belarus. The measures have been agreed and are expected to become EU law next week. 78 specific Belarus individuals and eight companies are also expected to be included.
Some of the sanctions will damage EU members economic and trade interests. These include Austrian banks, Lithuania, whose Klaipeda Port depends heavily on potash trade, and Poland, whose Potash requirements make up 40% of its annual total needs. Some internal deals have been put in place to make up for these losses, although EU citizens and companies in Klaipeda Port and others involved in Belarus-EU trade and the fertilizer industry will no doubt find employment and trade opportunities diminished. The ban will also hurt Chinese investment in Belarus, with the Great Stone Industrial Park and new container terminal at Minsk airport expected to lie fallow after billions of dollars’ worth of investment. That will impact upon Belarus workers in these facilities who are also likely to face unemployment.
The EU Observer newspaper, based in Brussels, has reported apparent glee at the sanctions also impacting Russia, quoting anonymous sources who have stated the EU sanctions were designed to punish both Belarus and Russia at the same time. “This is brilliant because it makes Lukashenko Russia’s problem. If they don’t give him money, they will get instability in Belarus. And if they do, they will face the anger of both the Belarusian and the Russian people. The Kremlin is trapped” an unnamed source has been quoted as saying.
It remains unclear how ‘The Kremlin is trapped’ as concerns Belarus, however, there have been ongoing discussions about unifying the two countries dating back to 1999. The EU sanctions can now be expected to speed that process up, resulting in Russia’s sovereign borders moving West to provide an additional 1,250km of Russian border directly with the EU. This would specifically redraw the sovereign borders of Latvia, Lithuania and Poland should Belarus cease to exist as a sovereign state. It will also add an additional 1,084km of Russian border directly with Ukraine.
Belarus meanwhile is a member of the Eurasian Economic Union, whose member states Russia and Kazakhstan make up the bulk of its exports, along with China. Belarus exports about 10% of its total export volume to the EU, with Germany, Poland, Lithuania, and the Netherlands the largest recipients. About 10% of Belarusian imports emanate from the EU, with Germany and Poland the largest sellers of produce to the country, while Austria dominates in financial services. That combined trade of about US$6 billion can be expected to be absorbed elsewhere, as Belarus is already largely integrated with trade heading east – its imports from China for example are double those from Germany. A Russian expansion and sovereign integration with Belarus will also have a significant impact on Ukraine, with Kiev just 560km from the Belarusian border.
Integration will also change the make-up of numerous important EU cities, including the Lithuanian capital Vilnius, which would become just 30km distant from the Russian border, the large Polish city of Bialystok just 50km, and Daugavpils, Latvia’s second largest city also about 30km from what would become the Russian border. The EU sanctions upon Belarus would therefore significantly impact the Eastern EU with major demographic changes for businesses and cities close to any newly defined border.
During these uncertain times, we must stress that our firm does not approve of the Ukraine conflict. We do not entertain business with sanctioned Russian companies or individuals. However, we are well aware of the new emerging supply chains, can advise on strategic analysis and new logistics corridors, and may assist in non-sanctioned areas. We can help, for example, Russian companies develop operations throughout Asia, including banking advisory services, and trade compliance issues, and have done since 1992.
We also provide financial and sanctions compliance services to foreign companies wishing to access Russia. Additionally, we offer market research and advisory services to foreign exporters interested in accessing Russia as the economy looks to replace Western-sourced products. For assistance, please email email@example.com or visit www.dezshira.com