The European Parliament this week urged European Union (EU) Member States to adopt new sanctions on Belarus over its continuing crackdown on opposition within the country to the current presidential regime and its support for Moscow’s war in Ukraine.
The adoption of proposals made by the EU in January that would toughen sanctions on Belarus and would align them with those already imposed on Russia, and also – according to a Bloomberg report – could include tougher restrictions on Belarus’ potash sector, have been delayed by differences between EU countries over food security. Some Member States, according to reports, are calling for exemptions for potash and other fertilizers, although the exact nature of these exemptions is unclear.
EU officials noted that Belarus has continued to export potash to markets like China and Brazil, despite EU and US sanctions, and the blocking of its former key export route for seaborne shipments via Lithuania since Feb. 1, 2022.
Lithuania is among the countries that want the sanctions package to include stronger restrictions on potash exports and fewer exemptions, according to the report, citing unidentified people familiar with the matter.
But countries like Spain and Portugal believe stricter sanctions would harm poorer countries in terms of their access to food.
Despite the Member State differences, the EU hopes to agree to the new sanctions on Belarus by the end of March, according to reports.
The EU imposed a full ban on imports of Belarusian potash into the Bloc on March 2, 2022 (GM March 4, 2022), closing loopholes under earlier EU sanctions on Belarusian potash imposed in June 2021 that came into force on June 25, 2021 (GM July 2, 2021; June 25, 2021). The sanctions also included, among other things, a ban on the trading and transit of potash across EU territory.
In June of last year, the EU, as part of its sixth sanctions package against Russia and Belarus, also implemented direct sanctions against Belarus’ state-run potash producer OJSC Belaruskali and its potash marketing/export arm JSC Belarusian Potash Co. (BPC) (GM June 3, 2022). The new sanctions were adopted on June 3.
The US imposed sanctions on Belaruskali in August 2021 (GM Aug. 13, 2021), and on BPC in Dec. 2021, giving the marketing/export company until April 1, 2022, to wind down transactions (GM Dec. 3, 2021). Belaruskali’s own wind-down period expired on Dec. 8, 2021.
Belarus – officially, at least – has not been able to export potash or NPKs via the Lithuanian port of Klaipėda since Lithuania’s government terminated the railway transit contract between the country’s state-owned railway company Lietuvos Geležinkeliai’s (LTG) and Belarus’ state-owned Belaruskali over national security concerns in the wake of the EU and US sectoral sanctions (GM Jan. 14, 2022).
But since then, Belaruskali and BPC have sought to secure other routes to market. The Belarusian authorities have repeatedly emphasized the need “to make the maximum use of Russian ports” to ship Belarus’ goods.
In an attempt to mitigate the loss of shipping via the port of Klaipėda, Belarus last year was reported to have increased “substantially” its exports to China by rail in 2022, which included more than 1 million mt of potash, according to an Interfax report on Jan. 5, citing Belarus Transport and Communications Minister Alexei Avramenko, as quoted by BelTA (GM Jan. 6, p. 28).
As noted above, Belarus also has continued to ship potash to certain other markets, including Brazil.
Belarus no longer reports export data. Based on year-to-date import data (some December import data is not yet available), imports of potash from Belarus for 2022 show a 57% decline over 2021, to 3.977 million mt from 9.267 million mt, according to Trade Data Monitor (GM March 3, p. 27 ).
Based on the import data, though not final, Green Markets’ Research Director Alexis Maxwell estimates that Belarusian 2022 potash exports will be some 4.3-4.5 million mt.
Belarus’ exported 11.8 million mt of potash in 2020, according to Trade Data Monitor. Almost 10.7 million mt of this total was shipped via the Biriu Kroviniu Terminalas (Bulk Cargo Terminal [BKT]) terminal in Klaipėda port, according to LTG (GM July 2, 2021). Belaruskali owns a 30% stake in the BKT terminal.
In a separate development, Lithuania’s Ministry of Foreign Affairs and Ministry of Transportation are calling on the European Commission to expand sanctions against Belarus to include Belarusian urea after a crackdown on sanctions’ evasion schemes (GM March 10, p. 1).
The moves follow the seizure by Lithuanian authorities of “thousands of tonnes” of Belarusian urea that had entered Lithuania on trains that were headed for the port of Klaipėda, according to a report by the Organized Crime and Corruption Reporting Project (OCCRP). The Lithuanian government is also considering a ban on all rail shipments from Belarus, as well as from Russia.