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Belarus and its neighbourhood become a dead end for Europe

In the fifth round of EU sanctions adopted in response to Putin’s invasion of Ukraine, the union prohibited freight transport on member state territory by Russian and Belarusian carriers from 16 April. Alongside the EU prohibitions on flights and...

In the fifth round of EU sanctions adopted in response to Putin’s invasion of Ukraine, the union prohibited freight transport on member state territory by Russian and Belarusian carriers from 16 April.

Alongside the EU prohibitions on flights and the Baltic States’ decision to close their ports to Belarus, the new restrictions doom the country and its neighbourhood to degradation.

Transit sanctions on Belarus are a part of an economic war against Russia launched in response to its invasion of Ukraine, rather than a part of a realistic plan for regime change in Minsk.

All roads lead to Russia

After Brussels banned Belarusian and Russian heavy goods vehicles (HGVs) from entering the EU territory, many branch operators expected the worst. They feared Minsk would mirror the response and prohibit all EU freight carriers from entering the country. So far, the Belarusian government has taken a milder course. It has restricted EU-based HGVs from moving inside Belarus farther than 50 km. All HGVs will have to deposit their freight at logistics centres in Belarus. From these centres, transportation will be taken over by Belarusian or Russian firms.

Image: State Border Committee of Belarus.

Brussels’ move didn’t come from the blue. Poland and Lithuania began unofficially limiting the transit of goods via Belarus approximately a year ago. For example, in mid-February, Lithuania and Poland processed only 60 per cent of the daily, officially agreed to norm. Last week, the Belarusian State Border Committee complained that Polish and Lithuanian authorities were processing less than 40 per cent of the mutually agreed norms for HGV trade.

The bad news, therefore, was not unexpected in Minsk. But it still comes as a blow. HGV transport had been a growth industry, ranking second behind IT in Belarus’ export of services. The Belarusian Ministry of Transport calculates, that in 2021, the value of transport services had increased by almost 40 per cent to $4.3bn. This is the fastest growth rate in the sector’s history. Of this growth, automobile transport companies provided 76 per cent of the total.

Much of this business presumably involved the transport of goods to and from the EU. Minsk continues to withhold accurate statistics. The disruption of supply will not only result in economic decline. It will also reorientate Belarusian citizens more firmly to Russian, Chinese, and other non-Western sources of consumption. Divisions with the EU will not only be political but increasingly a cultural divide, too. This may prove to be the worst blow to regional cooperation and reintegration.

Belarusian access to the sea

Image: BelTA

Roadway transportation has been exacerbated by continuing difficulties with shipping Belarusian exports and imports. Belarus, as a landlocked country, is now totally dependent on Russian ports. Other neighbouring countries have prohibited Belarusian entities from using their seaports. After the EU introduced limitations on the export of Belarusian oil products, Minsk signed a February 2021 agreement with Moscow on the export of these goods via Russian ports. A one-sided Belarusian dependence on Russia is solidifying.

Minsk has worked to retain access to the sea. Two years ago, Lithuania started to restrict Belarusian potash exports. After Vilnius had rejected the Belarusian investors’ offers to develop the Lithuanian port of Klaipeda, Minsk looked for alternative export routes. Officials redirected leftover credit from a Russian loan to finance a nuclear power plant. In the second half of 2021, these funds were used to begin construction on Belarus’ own, purpose-built port facility near Saint Petersburg, in Russia. These terminals, built specifically for the export of potash, will enter service in 2023.

So, last November, while Vilnius announced the forthcoming prohibition of Belarusian potash transport via its territory, Minsk did face a problem. But it also had a solution literally under construction. In fact, the Lithuanian government acted on its own initiative—US and EU sanctions at the time did not require such measures from Vilnius.

After the problems with potash exports, Minsk then encountered increasing limitations and bans on other types of cargo. By early 2022, Belarus found itself semi-blockaded by all neighbouring states except Russia. It is reported that since March, the Estonian government has banned all transit—even for Belarusian oil products not included in EU sanctions—via Estonia.

In March, Belarusian dictator Alexander Lukashenka announced (and Russian President Vladimir Putin later confirmed) that in two years Belarus would have its “own ports” on Russia’s Baltic shores. Minsk plans to concentrate its imports and exports via these seaports. Construction is reportedly already underway. This case suggests the Belarusian government is working to maintain its agency, rather than simply capitulating to directives from Moscow. Not only has Minsk avoided going to war for Putin, but it also proactively seeks to relieve political and economic pressure from Russia by taking the initiative.

Everyone’s Problem

However, the ports of North-Western Russia may not provide a full-fledged alternative for Belarusian firms. Indeed, in a few months, they may lose up to 90 per cent of container cargo volumes, warn Russian logistics experts. These losses would result from the newest round of Western sanctions, decisions taken by European trade hubs, and global container shipping lines, which all aim to stop working with Russia. Of about twenty major container shipping lines, fourteen have already refused to work with Russia. It appears the rest are about to do so, too. Only one, China’s COSCO, appears ready to keep moving Russia-related goods. At the same time, large oceangoing ships (especially from South-East Asia) cannot reach North-Western Russian ports, because of the shallowness in the Baltic Sea. Instead, cargo must be reloaded on small feeders in some European havens to be then brought to Russia.

Image: A map, produced by the United Transport and Logistics Company, showing Belarusian physical trade flows.

In this grim situation, Belarusian state media like to emphasise that neighbouring countries, by cutting the links with Belarus, are making this region of Europe into a dead end. Decreasing transit and trade will generate poverty for all involved.

For example, with the loss of the Belarusian potash business, cargo turnover at Lithuania’s Klaipeda port is forecast to fall by almost a third. In addition, Latvian railways are set to lose about a third of total freight turnover (last year, Belarusian freight made up 27 per cent).

However, Belarus itself is also becoming a dead-end. Its significance for both its closest allies, Russia and China, is rapidly fading. The main cause is the ongoing disruption of links between Belarus and its neighbours. Belarus is central to the region between the Black and Baltic seas. The entire area faces a decline with dim prospects for development.

This article cites just some of the numerous instances illustrating how general sanctions imposed on Belarus, and upon entire branches of its economy so far failed to make the regime capitulate. Instead, they drive the region into poverty and Belarus into Putin’s hands. Even worse, many of these sanctions were imposed on Belarus for actions taken by Russia. In a paradox, they further limit any autonomy of Belarus from Russia and at the same time punish it for Russia’s actions. Future efforts to promote democracy and prosperity in the region require revising this approach.

Siarhei Bohdan
Siarhei Bohdan
Siarhei Bohdan is an associate analyst at the Ostrogorski Centre.
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