Belarus authorities engage in a sanctions war with the West

Brief: <ul type="disc"> <li>On 30 March 2021 Lukashenko signed Ordinance #128 “On the application of special measures”, which provides for the possibility of banning imports of goods and services from countries that have imposed sanctions against the Belarusian authorities after the 2020 presidential elections.</li> <li>The decree comes into force on 12 April 2021. The list of banned goods and services will be approved by the government.</li> <li>Theoretically, the sanctions may affect imports from about 40 countries, including the EU, UK and US. For these countries, it will not be sensitive, as the Belarusian market is not significant for them.</li> <li>Undeclared sanctions are already applied to brands that refused to support the 2021 IIHF World Championship in case it is held in Belarus. The reorientation of Belarusian oil export flows from Klaipeda (Lithuania) to Russia can also be called a sanction.</li> <li>The Belarusian authorities are unlikely to duplicate the Russian list when compiling their sanctions list, as the parties have opposing interests in a number of commodity items.</li> <li>Belarus cannot impose large-scale sanctions because it is a country with an open economy and depends on external markets. Therefore, the sanctions are likely to be targeted. Because of the likely increase in the cost of imports, the sanctions will hit consumers in Belarus.</li> <li>Experts see the ordinance on sanctions more as a political declaration intended for propaganda purposes. Nevertheless, it is also in line with the objective of protecting the domestic market.</li> </ul> MINSK, Apr 5 - PrimePress. Belarusian president Alexander Lukashenko on 30 March 2021 signed Ordinance #128 “On application of special measures”, which provides for banning imports of certain categories of goods, as well as imports of works and services by entities and individuals of the states, which imposed sanctions on Belarusian companies and individuals. The ordinance has been designed as a counter-sanctions response to the sanctions introduced by western countries after the 2020 presidential election in Belarus. According to the ordinance, a list of banned goods, works and services and, if necessary, foreign entities and individuals, as well as the period of bans are set by the government. The bans do not apply to the transit of goods through Belarus. The document instructs the government to take measures to balance markets and prevent the accelerated growth of prices of goods, works and services, as well as to substitute the goods banned for import in the domestic market with goods produced in Belarus and other member states of the Eurasian Economic Union. “The document was adopted to ensure security and protection of national interests of the Republic of Belarus.” The counter-sanctions ordinance will come into force on 10 April 2021. On 31 March, Belarus’ Prime Minister Roman Golovchenko commented on the government's intended steps to implement the ordinance: “We will act (...) very selectively (...) The ordinance will apply only to those firms and companies that apply unfriendly actions against our country.” Following severe suppression of massive protest actions against the official voting results began in Belarus after the 2020 presidential election, European countries, the United States, the United Kingdom and their allies imposed personal sanctions against a group of Belarusian officials, including Lukashenko, and a number of Belarusian companies, Beltechexport, Minsk Wheel Tractor Plant, Dana Holdings managed by Serbian businessmen, and Synesis IT company among them. The EU said it would expand the sanctions against Belarus, unless the situation in the country improves. The Baltic states separately introduced their visa sanctions in March 2021, with 118 names on the list. Apart from security officials, the lists include judges, prosecutors and press secretaries. Poland responded to the attacks against the Polish community in Belarus in March 2021 by proposing that the Baltic states should impose economic sanctions without waiting for the EU. Moreover, on March 31, 2021, Spokesman for the US Department of State, Ned Price, said that the U.S. would re-impose suspended (until 26 Apr 2021) sanctions against nine Belarusian companies, part of the state concern Belneftekhim, starting from April 26. The sanctions were imposed in 2006 against Belarusian Oil Trading House, Belneftekhim and its American subsidiary, Belshina, Grodno Azot, Grodno Khimvolokno, Lakokraska, Naftan and Polotsk Steklovolokno. “Regrettably, we find the human rights situation has deteriorated to arguably the worst point in Belarus’ independent history,” Price said. He assured that the decision to reintroduce the sanctions is reversible, on condition that Belarusian authorities release all political prisoners. Commentary Golovchenko’s statement that the Belarusian government will act selectively and carefully in developing counter-sanctions may be explained by the fact that the Belarusian economy is too dependent on the external market. The European Union is one of the largest trade partners of Belarus, accounting for about 20% of exports and the same share of imports. The balance with the EU countries is traditionally positive. As for Belarusian services exports, it is conditioned by the geographical position of the country. For this reason, over 42% of services exports are transport services. Computer services account for 29% of exports. Belarus exports services to the EU, the Russian Federation and the USA. If we consider the number of countries that have imposed sanctions against the Belarusian authorities, the Belarusian counter-sanctions could theoretically affect about 40 countries. For these countries, it will not be sensitive, as the Belarusian market is not significant for them. The main importers to Belarus are Russia with half of all imports, China (10%), Germany (4.5%), Ukraine (4%), and Poland (3%). The share of the US and the Baltic States in Belarusian imports is less than 1%. All EU countries supply about 20% of goods and about 40% of services to Belarus. The high share of services from the EU is due to the transshipment of Belarusian export cargoes in Baltic ports. However, the Belarusian side has actually already applied sanctions here (reorientation of transit of Belarusian oil products from the port of Klaipeda (Lithuania) to Russian ports), no decree was needed for that. Moreover, it should be noted that the economic effect of this project for Belarus is still unclear. Probably, transshipment via Russia remains more expensive. Earlier, the Belarusian side actually imposed sanctions against imports of Skoda Rapid (Gosstandart found some problems with these cars), the Liqui Moly brand was also forced to leave the market. It is worth reminding that Skoda, Liqui Moly and Nivea brands refused to support the World Hockey Championship in 2021 if the event was to be hosted by Belarus. As for the food products, according to experts, the Belarusian counter-sanctions might affect, for example, imported cheese, including cheese from Lithuania and Poland. The decision to limit the import of a number of food items would fit perfectly with the authorities' plans to increase the share of retail sales of domestic goods. It should be reminded that the authorities have recommended retailers to increase the share of the Belarusian food products in total sales of food from 77% to 80-85%. Belarus also set up a special interdepartmental commission to protect the domestic market, which began its work in March 2021. Belarus imports quite a lot of fruit and vegetables from Europe. The ban on apple imports may be quite sensitive for Poland. However, the Belarusian authorities are unlikely to agree to it, given that Belarus earns good money on re-export of apples to Russia. For the same reason, the ban is unlikely to affect imports of seafood on a large scale, although targeted measures are possible. Experts doubt that the authorities will copy the Russian list of sanctions, as the parties have opposing interests in a number of commodity items. Belarus may lose more from the counter-sanctions than countries on the sanctions list. First, the domestic market will not be closed to sanctioned goods - they will be free to come from Russia. As a result, Russian importers will benefit, while Belarusian consumers will suffer because the products will become more expensive for them. Secondly, Belarus will suffer reputational losses. Investors will be afraid to come to Belarus, knowing that the country is under sanctions and is itself waging a sanctions war with the EU and the United States. Third, the sanctions war may make it difficult for the authorities to find new foreign loans, increasing the cost of servicing for earlier borrowings. Fourth, other Western countries may also go for imposing economic sanctions, if the confrontation intensifies. This threatens Belarusian exports as well as the supply of critical imports to the domestic market and the purchase of technologies. From the political point of view, the Belarusian sanctions may mean an escalation of the conflict between Belarus and the West. Experts see the reason for this escalation in the fact that for Lukashenko it is a matter of principle to respond to pressure from the West. The sanctions may also pursue other goals. Lukashenko thus demonstrates to Russia that he is ready to suffer the same hardships as Russia and needs not only political but also greater economic support. Nor can it be ruled out that strained relations with the EU and the U.S. may be linked to the logic of the search for external enemies. Against the backdrop of an aggravating economic crisis in the country, Lukashenko may try to convince his electorate that internal problems in the economy are caused exclusively by external pressure.

2021-04-05

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Belarus authorities engage in a sanctions war with the West

Brief:

On 30 March 2021 Lukashenko signed Ordinance #128 “On the application of special measures”, which provides for the possibility of banning imports of goods and services from countries that have imposed sanctions against the Belarusian authorities after the 2020 presidential elections.
The decree comes into force on 12 April 2021. The list of banned goods and services will be approved by the government.
Theoretically, the sanctions may affect imports from about 40 countries, including the EU, UK and US. For these countries, it will not be sensitive, as the Belarusian market is not significant for them.
Undeclared sanctions are already applied to brands that refused to support the 2021 IIHF World Championship in case it is held in Belarus. The reorientation of Belarusian oil export flows from Klaipeda (Lithuania) to Russia can also be called a sanction.
The Belarusian authorities are unlikely to duplicate the Russian list when compiling their sanctions list, as the parties have opposing interests in a number of commodity items.
Belarus cannot impose large-scale sanctions because it is a country with an open economy and depends on external markets. Therefore, the sanctions are likely to be targeted. Because of the likely increase in the cost of imports, the sanctions will hit consumers in Belarus.
Experts see the ordinance on sanctions more as a political declaration intended for propaganda purposes. Nevertheless, it is also in line with the objective of protecting the domestic market.

MINSK, Apr 5 - PrimePress. Belarusian president Alexander Lukashenko on 30 March 2021 signed Ordinance #128 “On application of special measures”, which provides for banning imports of certain categories of goods, as well as imports of works and services by entities and individuals of the states, which imposed sanctions on Belarusian companies and individuals. The ordinance has been designed as a counter-sanctions response to the sanctions introduced by western countries after the 2020 presidential election in Belarus.

According to the ordinance, a list of banned goods, works and services and, if necessary, foreign entities and individuals, as well as the period of bans are set by the government. The bans do not apply to the transit of goods through Belarus.

The document instructs the government to take measures to balance markets and prevent the accelerated growth of prices of goods, works and services, as well as to substitute the goods banned for import in the domestic market with goods produced in Belarus and other member states of the Eurasian Economic Union.

“The document was adopted to ensure security and protection of national interests of the Republic of Belarus.” The counter-sanctions ordinance will come into force on 10 April 2021.

On 31 March, Belarus’ Prime Minister Roman Golovchenko commented on the government's intended steps to implement the ordinance: “We will act (...) very selectively (...) The ordinance will apply only to those firms and companies that apply unfriendly actions against our country.”

Following severe suppression of massive protest actions against the official voting results began in Belarus after the 2020 presidential election, European countries, the United States, the United Kingdom and their allies imposed personal sanctions against a group of Belarusian officials, including Lukashenko, and a number of Belarusian companies, Beltechexport, Minsk Wheel Tractor Plant, Dana Holdings managed by Serbian businessmen, and Synesis IT company among them. The EU said it would expand the sanctions against Belarus, unless the situation in the country improves.

The Baltic states separately introduced their visa sanctions in March 2021, with 118 names on the list. Apart from security officials, the lists include judges, prosecutors and press secretaries.

Poland responded to the attacks against the Polish community in Belarus in March 2021 by proposing that the Baltic states should impose economic sanctions without waiting for the EU.

Moreover, on March 31, 2021, Spokesman for the US Department of State, Ned Price, said that the U.S. would re-impose suspended (until 26 Apr 2021) sanctions against nine Belarusian companies, part of the state concern Belneftekhim, starting from April 26. The sanctions were imposed in 2006 against Belarusian Oil Trading House, Belneftekhim and its American subsidiary, Belshina, Grodno Azot, Grodno Khimvolokno, Lakokraska, Naftan and Polotsk Steklovolokno.

“Regrettably, we find the human rights situation has deteriorated to arguably the worst point in Belarus’ independent history,” Price said. He assured that the decision to reintroduce the sanctions is reversible, on condition that Belarusian authorities release all political prisoners.

Commentary

Golovchenko’s statement that the Belarusian government will act selectively and carefully in developing counter-sanctions may be explained by the fact that the Belarusian economy is too dependent on the external market.

The European Union is one of the largest trade partners of Belarus, accounting for about 20% of exports and the same share of imports. The balance with the EU countries is traditionally positive.

As for Belarusian services exports, it is conditioned by the geographical position of the country. For this reason, over 42% of services exports are transport services. Computer services account for 29% of exports. Belarus exports services to the EU, the Russian Federation and the USA.

If we consider the number of countries that have imposed sanctions against the Belarusian authorities, the Belarusian counter-sanctions could theoretically affect about 40 countries. For these countries, it will not be sensitive, as the Belarusian market is not significant for them. The main importers to Belarus are Russia with half of all imports, China (10%), Germany (4.5%), Ukraine (4%), and Poland (3%). The share of the US and the Baltic States in Belarusian imports is less than 1%. All EU countries supply about 20% of goods and about 40% of services to Belarus.

The high share of services from the EU is due to the transshipment of Belarusian export cargoes in Baltic ports. However, the Belarusian side has actually already applied sanctions here (reorientation of transit of Belarusian oil products from the port of Klaipeda (Lithuania) to Russian ports), no decree was needed for that. Moreover, it should be noted that the economic effect of this project for Belarus is still unclear. Probably, transshipment via Russia remains more expensive.

Earlier, the Belarusian side actually imposed sanctions against imports of Skoda Rapid (Gosstandart found some problems with these cars), the Liqui Moly brand was also forced to leave the market. It is worth reminding that Skoda, Liqui Moly and Nivea brands refused to support the World Hockey Championship in 2021 if the event was to be hosted by Belarus.

As for the food products, according to experts, the Belarusian counter-sanctions might affect, for example, imported cheese, including cheese from Lithuania and Poland.

The decision to limit the import of a number of food items would fit perfectly with the authorities' plans to increase the share of retail sales of domestic goods. It should be reminded that the authorities have recommended retailers to increase the share of the Belarusian food products in total sales of food from 77% to 80-85%. Belarus also set up a special interdepartmental commission to protect the domestic market, which began its work in March 2021.

Belarus imports quite a lot of fruit and vegetables from Europe. The ban on apple imports may be quite sensitive for Poland. However, the Belarusian authorities are unlikely to agree to it, given that Belarus earns good money on re-export of apples to Russia. For the same reason, the ban is unlikely to affect imports of seafood on a large scale, although targeted measures are possible.

Experts doubt that the authorities will copy the Russian list of sanctions, as the parties have opposing interests in a number of commodity items.

Belarus may lose more from the counter-sanctions than countries on the sanctions list.

First, the domestic market will not be closed to sanctioned goods - they will be free to come from Russia. As a result, Russian importers will benefit, while Belarusian consumers will suffer because the products will become more expensive for them.

Secondly, Belarus will suffer reputational losses. Investors will be afraid to come to Belarus, knowing that the country is under sanctions and is itself waging a sanctions war with the EU and the United States.

Third, the sanctions war may make it difficult for the authorities to find new foreign loans, increasing the cost of servicing for earlier borrowings.

Fourth, other Western countries may also go for imposing economic sanctions, if the confrontation intensifies. This threatens Belarusian exports as well as the supply of critical imports to the domestic market and the purchase of technologies.

From the political point of view, the Belarusian sanctions may mean an escalation of the conflict between Belarus and the West. Experts see the reason for this escalation in the fact that for Lukashenko it is a matter of principle to respond to pressure from the West.

The sanctions may also pursue other goals. Lukashenko thus demonstrates to Russia that he is ready to suffer the same hardships as Russia and needs not only political but also greater economic support.

Nor can it be ruled out that strained relations with the EU and the U.S. may be linked to the logic of the search for external enemies. Against the backdrop of an aggravating economic crisis in the country, Lukashenko may try to convince his electorate that internal problems in the economy are caused exclusively by external pressure.

2021-04-05

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