Belarus-EU: Frozen Sanctions and a Failed reboot

Arseny Sivitsky

Summary

At the start of the year, Minsk tried to revert to “business as usual” in its relations with the West and on its own terms. However, its complicity in Russia's aggression against Ukraine marked another point of no return, especially after the unprecedented crisis in relations following 2020. The EU vehemently condemned the unprovoked invasion of Ukraine and Belarusian regime's involvement, imposing sanctions on both Moscow and Minsk. Yet, in an attempt to prevent the direct involvement of the Belarusian army in the Russian-Ukrainian conflict, the EU allowed some leeway for official Minsk. The EU opted not to synchronize its anti-Russian and anti-Belarusian sanctions, excluding Belarus from the new sanctions packages in the latter half of 2022. By the end of the year, Belarus tried to position itself as a peacemaker, hoping to barter its non-participation in the war and a few other initiatives for a relaxation or even removal of EU sanctions. However, the only concession Minsk was able to get was a halt in the increase of sanctions pressure following the sixth round of sanctions.

Trends:

Trying to Turn Back Time: Negotiating Sanctions Removal

The onset of 2022 saw the full implementation of EU sanctions, introduced in response to the events of 2021. These included the forced diversion of the Ryanair flight, the migration crisis, and ongoing repression. These sanctions affected various sectors of the Belarusian economy, including oil, potassium, tobacco, the banking and logistics sectors. On February 1, Lithuania prohibited the rail transportation of Belarusian mineral fertilizers, a ban that Ukraine followed on February 16.

In spite of these measures, the Belarusian government remained hopeful about rebooting EU relations on its terms. Belarusian diplomats attempted to negotiate the lifting of EU sanctions in exchange for "a constitutional referendum”.1 Foreign Minister Vladimir Makei announced Minsk's willingness to engage in dialogue with European nations, but on the regime’s own terms, which included the EU abandoning dialogue with opponents of the regime. Minsk ramped up its efforts to identify potential intermediaries for dealings with Western countries and held discussions with past such partners, such as the Vatican, the Order of Malta, and Italy. However, the efforts of Belarusian diplomacy fell short, largely due to Lukashenko's anti-Ukrainian and anti-Western rhetoric and Belarus' evident involvement in the war.

After failing to engage the EU and other Western nations, Minsk intensified its efforts to showcase its military and political allegiance to the Kremlin. Meanwhile, the EU started contemplating new restrictive measures to address gaps in the current sanctions against Belarus. They also initiated preparations for sanctions, should the Belarusian army participate in Russia's invasion of Ukraine.2

Complicity in war: EU sanctions and Belarus' reactions

After Russia's invasion of Ukraine, executed in part from Belarusian territory, a strong response from the West was inevitable. Although the Belarusian armed forces did not directly engage in the conflict, the Belarusian regime's decision to grant Russian troops access to its land and airspace became a primary reason for the EU to intensify sanctions. The European Union not only extended the previous sanctions packages, imposed due to the political crisis, for another year but also began formulating new restrictive measures.

Kyiv eventually accepted Minsk's proposal for negotiations between the Ukrainian and Russian delegations on the Belarusian-Ukrainian border in the Homyel region on 28 February. This time, however, Minsk’s mediation in the Russian-Ukrainian conflict failed to translate into the removal of European sanctions, unlike the previous peacemaking attempts in 2014-2016.

In early March, the EU introduced additional sanctions against Belarus in retaliation for its complicity in the Russian invasion of Ukraine. European businesses were urged to fulfill or otherwise end all previously signed contracts by June.3 The new sanctions targeted military and dual-use products, timber, cement, rubber products, steel, and iron. The National Bank of Belarus, along with state-owned institutions such as "Belagroprombank," "Dabrabyt Bank," and "Development Bank," were disconnected from SWIFT. The EU banned trading shares of Belarusian state-owned enterprises on European platforms, selling euro-denominated securities to Belarusian clients, and supplying euro banknotes to Belarus. Furthermore, Belarusians were prohibited from depositing more than EUR 100,000 in the EU and from opening accounts in the EU's central securities depositories.4

In April, following the failure of the Russian blitzkrieg and their subsequent retreat from northern Ukraine regions back into Belarus (which unveiled Russian war crimes in places like Bucha), the EU introduced its fifth sanctions package. While most of the restrictions targeted Russia, the EU also imposed a ban on Belarusian road transport, including transit, within its borders. Exceptions were made for pharmaceutical, medical, agricultural, and food products, including wheat.

Minsk responded by formulating a list of countries it deemed unfriendly, which specifically included EU member states. Belarus then paused payments to foreign entities based in the "unfriendly" countries and began settling debts with international financial institutions, including European ones, in Belarusian rubles, contrary to prior agreements. Lukashenko's Decree 93 introduced measures that complicated the process for foreign investors looking to divest from Belarusian enterprises and repatriate capital out of the country.

Concurrently, Belarus granted visa-free access to citizens from neighboring EU nations. In a letter dated April 6, Foreign Minister Makei urged European counterparts to reinitiate dialogue with Minsk. He emphasized Belarus' intention to not get involved in the conflict and proposed a reevaluation of the "paradigm that will shape the future of Belarus-EU relations and European security in the upcoming years."5

The West stipulated several conditions for resuming the dialogue: the release of all political prisoners, substantive dialogue with the Belarusian populace, new elections under international oversight, and the cessation of support for the war. In response, Minsk only escalated its repressions within the country.

As anticipated, in early June the EU introduced the sixth round of sanctions against both Russia and Belarus, targeting oil, tobacco, and potassium companies, "Beltamozhservice", "Belkommunmash", as well as the regime’s propagandists (individuals and Belteleradiocompany collectively). Additionally, "Belinvestbank'' was cut off from the SWIFT system.6

Minsk-Brussels Maneuvers: Freezing Sanctions in Return for not Entering the War

As time passed, Belarus began to recognize the complexities of its situation due to the intensifying adverse effects of the sanctions on its economy. Minsk estimated that, as a consequence of the first five sanctions packages adopted by the EU, the volume of banned Belarusian exports to the EU and North America stood at $16-18 billion annually.7

In September, Minsk attempted to broker a deal with the EU using a pretense of amnestying political prisoners as a bargaining chip. The so-called amnesty scarcely impacted political prisoners and, as a result, failed to enhance relations with the EU. Subsequently, Belarus proposed a previously reliable asset - assistance in regional security. This encompassed the non-involvement of the Belarusian army in the war, refusal to recognize the September referendums in the occupied regions of Ukraine, and mediation between Russia and Ukraine. Makei emphasized that Minsk "supports a rapid resolution of the conflict through diplomatic channels."

Yet, the most promising avenue for Minsk might have been its contribution to global food security. Belarus expressed its willingness to transport Ukrainian grain to the ports of Lithuania and Latvia by rail. In return, Minsk sought permission to ship its goods via these ports, primarily focusing on Klaipėda. However, this proposition was dismissed by Lithuania, Latvia, and even Ukraine.

In the meanwhile, Minsk managed to sidestep its inclusion in the seventh, eighth, and ninth rounds of sanctions put forth by the EU and its Western allies in July, October, and December of 2022 respectively. This outcome can be attributed less to Belarusian initiatives and more to the absence of consensus within the EU. Certain European nations, presumably France and Hungary, were hesitant to further tighten the sanctions against Lukashenko, aiming to preserve his maneuverability. On the other hand, nations such as Poland, the Baltic countries, and Ireland pushed for a synchronized approach to sanctions against both Russia and Belarus. This approach failed to gain unanimous support at the EU level.

The news of Belarus' omission from the ninth EU sanctions package was met with considerable enthusiasm by Minsk. Lukashenko remarked on the reduced sanctions pressure, while Belarusian diplomats again endeavored to sway the global community. They argued that the sanctions imposed on Belarus were not in response to election fraud, repression, human rights violations, involvement in the Russian assault on Ukraine or orchestrating the migration crisis. Instead, they maintained that the sanctions were the result of Belarus' independent and peace-loving policy stance.

In 2022, the EU only imported €3.2 billion worth of Belarusian goods – marking a 43.4% decline from 2021's €5.6 billion. Conversely, exports to Belarus amounted to €6.6 billion, a decrease of 4.6% from the previous year. While the EU continues to be Belarus' second-largest trading partner, trailing only behind Russia (with trade percentages of 12% and 60% respectively), Belarus ranks 49th on the EU's list of trade partners, accounting for a mere 0.2% of the EU's total trade.8 This suggests that the EU has notably scaled back its trade relations with Minsk without encountering substantial repercussions for itself. At the same time, Belarus' reliance on imports from European nations remains despite the constraints imposed by EU sanctions and the reciprocal measures adopted by Belarus.

Conclusion

While the EU and the Western nations imposed new economic restrictions in response to Belarus' support of Russian aggression, official Minsk successfully managed to prevent an escalation of these sanctions. This outcome was influenced, in part, by the Belarusian army's non-participation in the Russo-Ukrainian war. A lack of consensus within the EU regarding a sanctions strategy against Belarus played a significant role as well.

Hesitant to provoke Minsk into entering the war, Brussels opted not to intensify the sanctions further, maintaining them at the level established by the sixth set of sanctions. With that said, previous rounds of sanctions had already significantly impacted Belarusian export flows to the EU. Any significant destabilizing move by the official Minsk might disrupt this precarious equilibrium, potentially pushing the EU to ramp up sanctions against Belarus at least to the level of Russia. Such actions could encompass an increased Russian military presence, stationing of Russian nuclear weapons, direct involvement in hostilities against Ukraine, or further provocations along the Belarus-EU border.