The opposition to the Belarus regime has urged Brussels to prohibit EU dealings with two dozen state-owned Belarusian companies, block key exports from Minsk and ban new foreign investment into the country in retaliation for the interception of a Ryanair flight and the arrest of an activist.
EU sanctions should target the country’s oil, petrochemicals, potash fertilisers, metals and wood industries, which together account for about half its merchandise exports, according to a document circulated by the Belarusian opposition and seen by the Financial Times.
The EU is Belarus’s second main trade partner, representing almost a fifth of the country’s business in goods. Last year, it exported about €4bn of goods to the EU and imported slightly more than €6bn, according to EU data. Russia is Belarus’s largest trade partner, with an almost 50 per cent share.
Brussels is under pressure to announce a detailed list of sanctions after president Alexander Lukashenko’s regime triggered a global uproar by diverting Ryanair flight FR4978 that carried dissident Roman Protasevich and his girlfriend Sofia Sapega.
The opposition wants the bloc to ban EU companies from dealing with groups including Belarus’s largest potash producer Belaruskali, fertiliser maker Grodno Azot, oil group Belneftekhim, several refiners and six banks.
The document also proposes a moratorium on new foreign investment in Belarus and on new credit lines for the country’s banks. About €400m of money from the EU was invested in Belarus in 2019.
EU countries, the UK, and Ukraine all agreed on Monday to ban Belarusian airlines from their airspace. By Tuesday, EU airlines also stopped flying over the country.
However, the final decision on EU sanctions will rest with member states. Some, notably Germany, are reluctant to pass sanctions on whole economic sectors over concerns about their effectiveness and durability against legal challenges.
Belarus’s state-owned industries are a crucial source of hard currency for Lukashenko’s regime. Belneftekhim made $4.2bn from export revenues from January to the end of November last year, while Belaruskali, which accounts for about 20 per cent of the global potash market, sold $2.4bn abroad last year.
Some of them have already come under pressure after the US resumed sanctions on nine companies in April, including Belneftekhim and Naftan, the country’s largest oil refinery.
“It would be good if the EU took these companies as a starting point, because these companies don’t really trade so much with the US, so the impact of the US sanctions is still quite limited,” said Katia Glod, a non-resident fellow at the Center for European Policy Analysis, a think-tank.
“But if the EU joined, and European companies and banks that trade with these companies, that would hit Belarus quite painfully.”
Belarus’s hard currency reserves have fallen more than 25 per cent in more than a year to $6.9bn as of April, of which just $2.8bn is liquid. Yields on the country’s 10-year sovereign bonds increased 2 per cent on Tuesday.
The Belarus opposition is also pushing for the EU to respond to the wave of arrests, show trials and torture by pushing for the country’s suspension from Interpol and placing an embargo on exports of goods that could be used for oppression, such as riot gear and surveillance software, according to the document.
Additional reporting by Victor Mallet in Paris
Source: Economy - ft.com
