The European Union (E.U.) on June 24 imposed a sweeping set of sanctions against the Belarusian regime, targeting key economic sectors. As anticipated, the new targeted economic sanctions include restrictions on Belarus’ potash trade.
The measures are the E.U.’s strongest response yet to the forced landing of a Ryanair flight and the arrest of journalist Raman Pratasevich and his girlfriend in Minsk on May 23 (GM May 28, p. 1), as well as what the E.U. bloc called “the escalation of serious human rights violations” and “violent repression” in Belarus, according to an E.U. Council statement on June 24.
The sanctions cover imports of Belarus potash into E.U. countries and a transit ban via E.U countries, as well as Belarus NPK fertilizers.
However, in its Official Journal, the E.U. does not include in its list of potash to be sanctioned, “potassium chloride with a potassium content evaluated as K2O by weight, exceeding 40 percent, but not exceeding 60 percent on the dry anhydrous product.”
E.U. List of Potassium Chloride Products Subject to Sanctions
| Name of the good | Combined Nomenclature (CN) code |
| Potassium chloride with a potassium content evaluated as K2O, by weight, not exceeding 40% on the dry anhydrous product | 3104 20 10 |
| Potassium chloride with a potassium content evaluated as K2O, by weight, exceeding 62% on the dry anhydrous product | 3104 20 90 |
| Mineral or chemical fertilisers containing the three fertilising elements nitrogen, phosphorus and potassium | 3105 20 10 3105 20 90 |
| Mineral or chemical fertilisers containing the two fertilising elements phosphorus and potassium | 3105 60 00 |
| Other fertilisers containing potassium chloride | ex 3105 90 20 ex 3105 90 80 |
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This grade is one of Belarus’ key export products, and according to a note by Russia’s VTB Capital analyst Elena Sakhnova, cited by Bloomberg, this grade accounts for 80 percent of Belarus’ supplies to the E.U.
Belarus rails most of its potash for export to the Lithuanian port of Klaipeda, using Lithuanian Railways. Biriu Kroviniu Terminalas (Bulk Cargo Terminal [BKT]), in which Belaruskali owns a 30 percent stake, transships the potash at Klaipeda. BKT handles between 10-11 million mt of Belarusian potash annually
Crucially, Belarus’ current supply contracts with India and China are not subject to the Brussels sanctions. The E.U. states in the Official Journal: “The prohibitions in paragraph 1 shall be without prejudice to the execution of contracts concluded before 25 June 2021, or ancillary contracts necessary for the execution of such contracts.”
According to the head of Lithuanian Railways, cited by a report by Canada’s National Post, the sanctions imposed on Belarus potash have put limits on about 20 percent of exports of the nutrient shipped by Lithuania.
Belarus and Russia in February inked an agreement on routing transshipments of Belarusian oil products through Russian ports, but Belarus Transport and Communications Minister Alexei Avramenko said at the time the shipment of Belarusian potash via Russian ports would need more consideration.
Belarusian Potash Co. (BPC) said on June 25 it would make every effort to meet its commitments to customers, and every type of product was important to the company, irrespective of the volumes supplied.
With the economic sanctions looming, BPC earlier this week warned given that Belarusian potash accounts for more than 20 percent of the world’s exports, restricting a significant volume of supplies would inevitably lead to “an irreplaceable shortage” of potash and “a sharp rise” in prices for the nutrient, and as a result, “food prices would rise the world over”, according to an Interfax report.
The Belarus marketer and exporter said causing a severe shortage of potash in the market “would undermine the foundations of international food security,” and “would be certain to slow the development of world agriculture.”
Belarus exported 11.75 million mt of potash last year, according to Trade Data Monitor (TDM).
Potash is Belarus’ second top export after refined oil products, and in 2019 Belarus’ potash and oil exports together accounted for some 25 percent of the country’s exports in U.S. dollar terms, according to UN Comtrade data. Exports of the nutrient last year netted Belarus some $2.41 billion, according to Belarus’ National Statistical Service (Belstat). Bloomberg reported proceeds from potash exports increased by 18 percent year-over-year in the January-April period this year, reaching $834 million.
In addition to the Belarus potash sector, the new economic sanctions include restrictions on trade in oil products and goods used for the production or manufacturing of tobacco products.
The E.U. sanctions against Belarus are designed to target industries which play a big role for the country’s income and aim to “drain the [Lukashenko] regime’s financial resources,” Bloomberg reported, citing Germany’s Foreign Minister Heiko Maas early this week ahead of discussions at the European bloc’s Foreign Affairs Council.
The E.U. already has sanctions in place against seven Belarusian entities and 88 individuals, including Belarus’ President Alexander Lukashenko, imposed following the disputed presidential election on Aug. 9 and the regime’s subsequent brutal crackdown on protests and protestors (GM Aug. 21, 2020). The E.U. does not recognize Lukashenko as Belarus’ legitimate president.
Following the forced landing of the Ryanair flight, the European bloc on June 4 imposed a ban on Belarusian carriers flying over European airspace, as well as a ban on their landing and taking off from the E.U.’s airports.
The new measures ratified on June 24 also prohibit the supply, sale, and transfer of equipment used for monitoring or intercepting communications and dual-use goods and technologies for military use.
Access to E.U. capital markets is also restricted, and the new sanctions prohibit E.U. companies from providing insurance or re-insurance to the Belarusian government and public bodies. Under the measures agreed, the European Investment Bank is also to cease any payments under existing agreements with the Belarusian public sector.
The move comes after the E.U., the U.S., and the U.K. and Canada sanctioned dozens of Belarusian individuals and organizations in a move aimed at pressurizing the Lukashenko government.
The E.U. alone nearly doubled the number of individuals and entities previously sanctioned, adding 86 people and entities to its list. Several of the individuals are top businessmen, including Russian billionaire Mikhail Gutseriev, who is described as a long-term friend of Lukashenko, according to some media reports. Gutseriev is the main backer of Slavkaliy Co., which is developing the Nezhinsky potash mine and processing plant in eastern Belarus.
The U.S.’ Biden administration has sanctioned Belarus’ top prosecutor, as well as Lukashenko’s top spokesperson, among other of the Belarus president’s associates, and also the chairwoman of Belarus’ upper house of parliament.
According to The Mosaic Co. President and CEO Joc O’Rourke, presenting at the Exane BNP Paribas 23rd European CEO Virtual Conference on June 7, some 700,000 mt of potash a year comes into the U.S. from Belarus.
The new sanctions provoked an angry reaction from Belarus. The country’s foreign ministry warned that Belarus would be forced to take retaliatory measures that would hurt Western companies. Belarus’ state-owned news agency, BelTA, reported that during a working trip to Grodno Oblast on June 24 Lukashenko blasted Western sanctions against Belarus “as testifying to their impotence.”