The European Union is preparing to adopt a fifth package of sanctions against Belarus, which will affect entire sectors of the country’s economy
First of all it’s about trade in oil and potash, the country’s main export commodities. Lithuania, along with Belaruskali concern, is now calculating potential losses. Official representatives of Vilnius do not hide it: citizens of the Baltic republic will have to pay for sanctions against “Europe’s last dictatorship”.
The information that the EU could impose sanctions against Belaruskali appeared at the end of May. The issue was discussed at an informal meeting of foreign ministers of the Commonwealth. According to Western media reports, Luxembourg’s foreign minister suggested hitting the chemical industry of Belarus.
Lithuanian Foreign Minister Gabrielius Landsbergis did not interrupt him, but focused his attention on the oil sector.
It was understandable: Belarusian oil had already left Klaipeda, and there had been no problems with the transit of fertilizers so far.
For his part, Lithuanian President Gitanas Nauseda decided not to beat around the bush. He made it clear that his country is not happy about the idea to impose sanctions against Belaruskali.
According to him, this step will be ineffective and even counterproductive – anyone will suffer from it, but not Belarus. And the main beneficiary of such sanctions will be Russia, which has long dreamed of redirecting the transit of Belarusian fertilizers to ports in the Leningrad Region.
Judging by the latest news, the European Union has ignored Lithuania’s arguments. The new sanctions against Lukashenko must affect trade in fertilizers.
This is indirectly proved by the fact that Nauseda is not ready to boycott the implementation of the fifth package, even if Belaruskali is blacklisted.
“Of course, there should be a general agreement on the sanctions; the president will support the proposal, which will be agreed by the general decision”, – was the answer to the question, whether his boss would support restrictions on the import of Belarusian fertilizers to the EU, Darius Kuleshyus adviser to Nauseda.
The statement, though, sounds ambiguous. The import restrictions by themselves do not promise catastrophic problems neither for Belarus, nor for Lithuania. The EU markets account for less than 10% of the total export of Belaruskali. The rest goes to Brazil, India, China and other non-EU countries.
The key question should be formulated differently: will the new sanctions imply a ban on transshipment of Belarusian fertilizers in the ports of the EU?
BNS agency, citing its sources in diplomatic circles, answers in the affirmative. According to its information, the fifth package of sanctions has already been provisionally approved. If nothing changes, Belaruskali will lose the ability to export its products to the EU and use Klaipeda as a transshipment point.
Finally, Landsbergis personally confirmed that the restrictions will not affect trade in potash. But the question of the enforcement of the new sanctions remains open. According to the Lithuanian foreign minister, lawyers are working on it – they have to prepare some kind of “explanations for transit”.
The Baltic republic is more interested in these explanations than any other country.
Another curious statement by Landsbergis: the fifth sanctions package will allegedly be introduced in stages.
The Lithuanian foreign minister is probably hinting that Klaipeda should not be deprived of all Belarusian transit at once.
This is very good news for Lukashenko. He will have time to agree with Moscow on the transfer of potash and other cargoes to Ust-Luga.
By the way, negotiations on fertilizers have been going on for months. The construction of a separate terminal for Belaruskali is on the agenda. In the context of the fifth package of the EU sanctions against Belarus, the implementation of this project becomes a matter of time.
Previously, Lukashenko could ponder whether it would be beneficial for him to leave Klaipeda; now it is too late to think about it. It is necessary to leave as soon as possible.
Yes, in this case Belarus risks losing investments. “Belaruskali owns 30% of shares in bulk terminal of Klaipeda port. It can be sold for next to nothing – no one will offer a good price now. But there is no other way out.
And Lukashenko will get good food for thought: how could he invest in economy of Lithuania that now imposes sanctions against Belarus?
Estimates of potential losses of Klaipeda port, Lithuanian Railways (LZD) and the country’s economy as such vary. Ernst & Young has estimated that the Baltic republic earned €155 million in 2019 on the transhipment of Belarusian cargo (all but mostly fertilizers). This is about 1.4% of all budget revenues. Analysts of the Lithuanian Central Bank are full of optimism: the country will lose only 0.9% of GDP on the potash sanctions. And it will do so against the background of overall economic growth. What is there to be afraid of?
But, first of all, the transit sector “fuels” a number of related sectors of Lithuania’s economy (trade, construction, and so on). Therefore in the end the effect of the sanction boomerang may turn out to be more serious than it looks at first sight.
Secondly, port and railway workers are hardly comforted by the fact that the country’s economy as a whole will grow. Their losses will not be any less.
Of course, the home government will not leave them in the lurch! The Lithuanian prime minister Ingrida Shimonite has already promised to support the affected businesses. But “to promise is not to marry”.
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On the other hand, support is not necessarily money. Lithuanian president’s foreign policy advisor Asta Skaisgiritė has already supported the port workers with valuable advice. That is why she is an advisor.
“Our port and railways potentially have to think about greater diversification now because it is clear that it cannot be the way it was before. And they have to think about how they can fill the gap that will arise,” said Asta Skaisgirite.
The head of container terminal Klaipedos konteineriu terminalas, Vaidotas Šileika, entered into an informal argument with her.
According to him, it will be almost impossible to find an alternative to the Belarusian transit.
“There are no cargoes that today do not have their own port. In fact, it would be very difficult to lure all the cargoes that move through the Baltic states today; it would be a long time. It depends not only on the port companies’ workings, but also on railway tariffs and other things,” says Šileika.
No new cargo can be found and compensatory mechanisms are unlikely to appear in the Lithuanian budget either. The country has no surplus money.
Vilnius has only one thing left: to ask the EU for handouts again.
The sanctions are European — let Europe pay Klaipeda port and LZD compensations for the loss of Belarusian transit!
Probably, in the near future the Baltic republic will officially voice these demands.
Alexey Ilyashevich, Rubaltic.ru