Belarus faces new sanctions by the EU and asset seizures by Ukraine

Belarus faces new sanctions by the EU and asset seizures by Ukraine
/ Photo by Shamil Zhumatov/EPA-EFE
By bne IntelliNews January 30, 2023

After the first statements on new sanctions were made by European Commission President Ursula von der Leyen in early January, the EU’s new sanctions package against Belarus is now starting to take form. By the looks of it, the new package will make the existing sanctions on Belarusian industrial and export capability hit even harder.

On January 12, the spokesperson of the EU’s High Representative Josep Borell clarified that the EU is applying two separate sanctions regimes against Belarus. The first one is related to Belarus’ last presidential election in 2020 and the related (and still ongoing) domestic political repressions, which are constantly increasing in depth and scope. The second one is related to Belarus’ military support for Russia’s 2022 full-scale invasion of Ukraine.

Earlier, von der Leyen said that the EU would “keep pressure on the Kremlin for as long as it takes with a biting sanctions regime.” She also emphasised that sanctions will be expanded on the countries that militarily support Russia, such as Belarus or Iran.

The new sanctions package against Belarus will align Moscow's ally with the EU’s previously imposed sanctions on Russia. Bloomberg reports that the proposed measures will include:

  • Export bans on dual-use goods and technologies used for military purposes and that could enhance Belarus’ industrial capacity.
  • Sanctions on oil, coal, steel products and gold.
  • Trade restrictions on luxury goods, investments and the provision of certain services.
  • Restrictions against Belarus’ aviation and energy sectors as well as other key providers of revenue.

The package includes exemptions for medicinal, agricultural and food products. Additionally, it will allow the EU to target legal persons that help circumvent the sanctions imposed on Belarusian individuals and entities.

Key Belarusian export sectors have already been targeted by previous EU and US sanctions, but also in national sanctions legislation by different EU countries. However, in a lot of cases the sanctions have mostly been related to stopping the export of Belarusian goods through EU ports.

An important aspect of the new package is that the EU will now not only target more specific Belarusian companies and broaden its sanctions against various sectors, but also look to punish the people helping them evade sanctions. Earlier this month, bne IntelliNews reported on how companies in Central Asia help Belarus bypass Western sanctions.

Belarus’ military-industrial complex likely even began to adapt its supply chains to survive Western sanctions prior to 2022. Belarus is not only currently deepening its military co-operation with its traditional post-Soviet allies but is also seeking new co-operation to produce artillery shells with Iran. Nevertheless, dual-use goods and technologies are of a vital importance not only to Belarus’ military capability, but in the long run also to that of its ally, Russia.

On October 18, 2022, Belarusian authorities stated that they would to set up a “microelectronics association” in the form of a concern headed either by Integral OAO (a state-owned Belarusian microelectronics manufacturer) or Belarus’ Academy of Sciences. The association will unite all domestic manufacturers and developers “so that we can solve this problem in its entirety.” The idea was supported by Belarusian President Alexander Lukashenko.

While officially, the association is said to be set up to facilitate the industrial production of electric passenger cars, Belarus’ manufacturing of microelectronics is known for its strategic place in both Belarus’ and Russia’s military-industrial complexes. Earlier in October 2022, Lukashenko appointed a new executive of Integral OAO and told him that “during the latest negotiations the Russian president remarked they are ready to pay anything for microelectronic products…” continuing with “… Microelectronics is vital. Aircraft, missiles, high-precision weapons are impossible without it,” adding that the industry needs “a major breakthrough.”

Long before the latest expansions of sanctions on dual-use technologies to Belarus were even announced, Belarus had already begun to consolidate its R&D forces in this sector. However, the new sanctions will surely make it considerably harder for Integral OAO and its partners to achieve their goals of technological independence.

Asset seizures and terminated co-operation with Ukraine

Since Russia began its full-scale invasion of Ukraine last year, Belarus has had 5,000 items of rolling stock stuck in Ukraine belonging to the state-owned company Belarusian Railways. The wagons were officially seized by the Ukrainian authorities in July 2022. According to Ukraine, they carried Russian soldiers and military equipment. According to Belarus, they carried processed oil products, chemical fertilisers, construction materials and food products. Thus they are wagons specially designed for the transport of some of Belarus’ most vital export goods.

In October 2022, the question of the rolling stock received increased attention from Belarusian state media. According to the head of Belarusian Railways, Vladimir Morozov, “It's a serious number. It's the republic's state property. The task is to return and assess the damage. Five thousand is almost BYN900mn [estimated at ≈$355mn in October 2022] for the Belarusian Railway.” Morozov added that the matter had been discussed with President Lukashenko. The rolling stock was planned to be used over a five-year period with regards to Belarus’ production capabilities of new stock.

The question of the fate of these wagons now seems to be settled. This weekend, Ukraine imposed sanctions on 182 Russian and Belarusian companies. The assets of the sanctioned companies will be seized in order to be used for Ukraine’s defence. Among the affected companies are state-owned Belarusian potash producer Belaruskali and the Belarusian Railways. While Minsk had probably already come to terms with the fact that this would probably happen, it still deals a long-term blow to Belarusian export capabilities.

Although Minsk is not willing to join a Russian attack on Ukraine, the political rift between Belarus and Ukraine continues to deepen in the form of terminated agreements and of course, ongoing military tensions.

Throughout 2022, Ukraine terminated several agreements with Belarus. In November and December alone, Ukraine unilaterally terminated seven agreements reaching across the economic, military and security spheres to the spheres of space, geodesy and cartography. Minsk specifically commented on the terminated agreements in the military and security spheres, saying that it was a course “for the degradation of our relations, for the dismantling of our legal field.”

Ukraine has been a vital economic partner for Belarus since 1991, and so have its western EU-neighbours. Over the course of the past year, not only economic and diplomatic connections are being severed, but also co-operation in areas such as education and security, and even regarding questions of space and geodesy. In today’s world, data-sharing is key in every aspect of life, and this development underlines Belarus’ increasing regional isolation.

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