Lithuania’s Transport Ministry has proposed a law introducing sanctions for goods directly or indirectly imported, bought, or transferred from Belarus, the Baltic News Service (BNS) has reported.
The bill, registered on Dec. 10, would allow Lithuania to prevent any transit of Belaruskali potash or fertilizer via Lithuania’s territory, the ministry said.
“Contracts signed before the implementation of sanctions in Lithuania must be terminated unilaterally or under mutual agreement or their implementation must be suspended for the durations of sanctions. Contracts running counter to sanctions implemented in Lithuania are forbidden,” the bill reads, according to the report.
Belarus rails most of its potash for export through Lithuania, into the Lithuanian port of Klaipėda for onward shipment.
The law, if implemented, could lead to losses for Lithuanian businesses because of any restrictions, but to mitigate its effects, the Transport Ministry has proposed a transitional period.
The proposal comes amid Lithuania’s failure to stop the transit of Belarusian potash after the U.S. sanctions on Belarus state-owned producer Belaruskali came into effect on Dec. 8. following a four-month wind-down period (GM Aug. 13, p. 1).
Additional U.S. sanctions were imposed on Dec. 2 on Belarusian Potash Co. (BPC), the Belarusian marketer/exporter of Belaruskali’s potash, which was not included on the initial U.S. sanctions list. They come into effect on April 1, 2022 (GM Dec. 3, p. 1).
The U.S. sanctions do not cover Lithuania itself, but – as with E.U. sanctions against the Belarusian regime – many Belarusian banks are under sanction, as are U.S. financial entities now prohibited from doing business connected with Belarusian potash; consequently, they can no longer process Belaruskali’s financial transactions.
The timeframe for progressing the Transport Ministry’s proposed law remains unclear at press time. But according to a bne IntelliNews report mid-week, Lithuania’s parliament “is scrambling” to pass legislation to ban the transit of Belarusian goods, including potash.
That shipments via Lithuania did not stop after the U.S. sanctions kicked in has embroiled Lithuania’s government, leading to the prospect that the entire cabinet might resign, according to another bni IntelliNews report early this week, citing the country’s Prime Minister Ingrida Šimonytė.
Two Lithuanian ministers already have tendered their resignations following strong criticism that the country’s state-run railway, Lietuvos Geležinkeliai (LTG), continues to transport Belarusian potash, despite the U.S. sanctions (GM Dec. 10, p. 1). Foreign Minster Minister Gabrielius Landsbergis stepped down last week, and Transport Minister Marius Skudos has also tendered his resignation, according to the Deutsche Presse-Agentur (DPA) newswire, citing a BNS report on Dec. 13.
However, the prime minister announced late on Dec. 14 that the two ministers will remain in their posts, and, in an apparent about-face, said her government would not step down, according to a Dec. 15 bni IntelliNews report.
Instead, LTG CEO Mantas Bartuska agreed to step down in an attempt to “de-escalate” public outcry over the transport of potash from sanctions-hit Belarus, according to a report from Brussels-based media outlet Euractiv, citing LTG Chairman Kęstutis Šliužas, in a specially-convened news conference on Dec. 14. The CEO will leave after a transitional period.
However, the railways company lacks sufficient legal grounds to stop its transportation of potash, according to an LTG statement.
Earlier this month, Bartuska told a Lithuanian parliamentary hearing that LTG was continuing to transport Belarusian potash because the sanctions only apply to U.S-connected entities. The CEO also told the parliamentary committee the railways company has a contract with Belaruskali that expires at the end of 2023, and LTG cannot terminate it.
European Union (E.U.) sanctions that came into force against the Belarusian regime on June 25 and restrict imports on Belarusian potash into E.U. countries and a transit ban via E.U. countries, of which Lithuania is one, exclude a key grade of Belarusian potash (GM June 25, p. 1). The excluded grade potassium chloride with a potassium content evaluated as K2O by weight, exceeding 40 percent, but not exceeding 60 percent on the dry anhydrous product, which accounts for around 80 percent of Belarus’ potash supplies to the E.U.
Additionally, Belarus’ current supply contracts with India and China – i.e., those concluded before June 2021 – are not subject to the Brussels sanctions.
Some 10.7 million mt of Belarusian potash was transhipped through Klaipėda in 2020. The U.S. imports about 550,000 mt of potash a year from Belarus.
LTG earlier reported Belaruskali also had made advance payments back in November for rail transport through end-February, complicating any move to halt shipments.
Nevertheless, reports emerged early this week that the railways company was looking for ways to return Belaruskali’s advance payment for potash shipments in January and February.
According to the BNS report, citing LTG spokesperson Mantas Dubauskas on Dec.10, the railways company tried to transfer the advance payment back to Belaruskali after a meeting at the office of the Lithuanian prime minister on Dec. 7, the day before the U.S. sanctions against the Belarusian potash producer came into effect, but the transfer was rejected.
According to a Dec. 9 report by BNS, citing Igor Udovickij, the majority shareholder of Klaipėda’s Bulk Cargo Terminal (Birių krovinių terminalas, BKT), which handles Belaruskali shipments via Lithuania, the transit of Belarusian potash via Lithuania cannot be suspended, as he said “that would run counter to international agreements of Lithuania, the E.U., and the U.S.”.
Belaruskali owns the remaining 30 percent stake in the terminal.
According to a bni IntelliNews report, citing the Lithuanian news portal Delfi, Lithuanian President Gitanas Nausėda in mid-June had wanted Belarusian potash to be left off the E.U. sanctions list, amid concerns about losses for Lithuanian businesses and fear of a Russian takeover of Belarusian potash enterprises. But once the E.U. sectoral sanctions were implemented, the president said he would support them.
Lithuania is seen as one of the main advocates of Belarusian democracy, and since the disputed Belarusian presidential election on Aug. 9, 2020, the Lithuanian government has been pushing for tough sanctions against the Lukashenko regime. A migration crisis on Lithuania’s border with Belarus – widely attributed to the Minsk regime – continues to deteriorate.
This week the husband of exiled Belarus opposition leader Sviatlana Tsikhanouskaya was jailed for 18 years by a Minsk court for – according to a Bloomberg report – allegedly organizing mass unrest, public order violations, stirring “social enmity,” and obstructing the central election commission. Five other people on trial with Sergei Tikhanovsky were also jailed for between 14 and 16 years.
If transhipment of Belarusian potash via Lithuania were to be halted, Belaruskali/BPC would likely have to look to Russia. Lukashenko has long threatened to divert the export of Belarusian potash from Klaipėda – despite Belaruskali owning a 30 percent stake in the BKT terminal – to Russia’s Baltic ports, Ust Luga and Primorsk, even though they are some 600 km further away.
The Belarus potash producer also is reported to have approached several Latvian freight carriers in recent weeks, regarding the possibility of transhipping potash via Latvia and Latvian ports, according to BBC International Reports (Europe). According to the report, private Latvian carriers have said no.
Latvia’s Baltijas Expresis (BE), which transports freight to the Latvian port of Ventspils, was one of the companies cited by the report. BE’s Board Chairman Maris Bremze said Latvia is in the same situation as Lithuania, and is an E.U. member state with the same legal consequences.
The Latvian Baltic port of Ventspils used to handle Belaruskali potash and could be capable of doing that now, but the volumes would be lower than the 11 million mt/y Belarus currently transports via Lithuania and the port of Klaipėda, said Bremze.