The EU has agreed on broad economic sanctions against Belarus as a response to the forced landing of a civil flight to arrest an exiled dissident journalist.
While EU sanctions have so far been limited to travel bans and asset freeze measures against Belarus government officials and some key business persons, the EU has now imposed broader and more sophisticated restrictions on Lukashenko’s regime.
With the latest additions on Monday, a total of 166 persons and 15 entities are now subject to asset freeze measures (and travel bans on individuals).
Today’s sanctions against Belarus are aiming at key sectors that are central to the Belarus economy:
- Financial services:
- The sanctions prohibit: (i) dealing with transferable securities and money-market instruments with a maturity exceeding 90 days issued after 29 June 2021; and (ii) making new loans with a maturity exceeding 90 days, after 29 June 2021 to the Belarus government, public bodies and major state-owned banks (Belarusbank; Belinvestbank; Belagroprombank). It should be noted that certain grandfathering arrangements, exemptions and licensing possibilities apply.
- EU companies will be prohibited from providing insurance and/or re-insurance to the Belarusian government, public bodies and agencies.
- The European Investment Bank will stop any disbursement or payment under any existing agreements with the government of Belarus.
- Chemicals: the new rules also include a ban on importing potash, a potassium-rich salt used in fertilizer, and a major export and source of foreign currency for Belarus.
- Defence/Dual-use: while the arms embargo remains in place, there are additional restrictions and licensing requirements for dual-use goods as well as restrictions on the provision of financing and technical assistance.
- Energy: EU companies will face restrictions on importing petroleum and certain petroleum products from Belarus or providing related financing or technical assistance.
- Telecommunications: the new measures include a ban of EU exports of any equipment that could be used for spying/internal repression – specifically any equipment, technology or software that can be used for the monitoring or interception of internet and telephone communications.
- Tobacco: EU persons are prohibited from selling or exporting goods used for the production or manufacturing of tobacco products to Belarus.
As indicated in a joint statement on 21 June 2021, the UK and the US may follow with similar punitive measures against the Belarus regime.
The new restrictive measures increase the economic and political pressure on Belarus significantly. Belarus will probably start to feel the heat very soon – especially if the UK and US follow with similar rules.
Now would be a good time for companies with business ties to Belarus to review their stake and re-visit commercial and financing agreements and sanctions-related provisions in order to be on the safe side and shielded against sanctions risks.