2024-07-03 09:56:40
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Economist Anatoly Kharitonchik talks about how sensitive the new package of European sanctions can be for the Belarusian regime.
At the end of June, the EU increased the sanctions against Belarus for the complicity of the Lukashenko regime in Russia’s aggression against Ukraine. It is noted that these measures duplicate the sanctions already in place against Russia.
In particular, the new restrictions are aimed at preventing the circumvention of existing sanctions. The sanctions include a ban on the import of gold, diamonds, helium, coal and crude oil from Belarus, a ban on providing some services to Minsk, and the export of dual-use goods and technologies. The European Union also banned the transport of goods through its territory on transport registered in Belarus and introduced additional export control measures.
As to how effective these decisions will be in closing Russian loopholes to circumvent sanctions, and how sensitive they will be to the Belarusian regime, Owl speak to a senior researcher at BEROC Anatoly Kharitonchik.
“It’s a good question, but it’s very difficult to answer, especially now,” says the economist. – It should be noted that the package was prepared for a long time and carefully – and this means, probably, that it will be unpleasant for Belarus (and for Russia, which is aimed at closing the loopholes).
The package of sanctions, according to the economist, can be divided into several blocks: trade restrictions on goods, services, as well as some measures regarding transit and other restrictions – and each block can be considered separately.
— In terms of goods, many items were subject to sanctions in relation to supplies from the EU, especially industrial goods. This category includes goods that “help strengthen the capacity of Belarusian industry” and dual-use goods.
Here, it seems, there will be a negative impact – but it is difficult to estimate its scale in the short term. As the events of recent years show, the economies of both Belarus and Russia are highly adaptive. And, most likely, the patterns of supply of such goods to both the Russian Federation and Belarus will be restructured. The only thing is that this involves increased costs, both monetary and time.
All this will negatively affect the competitiveness of Belarusian producers and the final price of products for buyers.
Here we have to monitor imports into Belarus and exports of non-food and investment goods from Belarus to Russia. If we see any significant reduction, it means that the sanctions have had an impact.
But these effects may appear after a certain period of time and by that time they will be partly smoothed out by the formation of new supply chains.
Regarding the export of Belarusian diamonds, gold, and oil, I think the impact will be minimal, within the limits of statistical error, and we will not notice any special effect on the scale of the economy. And for the EU, banning Russian diamonds could do more harm than good for Russia.
The economist is also pessimistic about the restrictions on luxury goods supplied to Russia through Belarus:
“How such measures should affect Russia’s ability to continue military operations in Ukraine is a mystery to me.
These bans only make shipping luxury goods more difficult and expensive. But for rich people who are close to the leadership of the countries, this increase in the final price is nonsense; for supporters of the current course of the Russian authorities, these sanctions are also unlikely to be effective; before.
In general, sectoral and consumer sanctions, in my opinion, are harmful for everyone, because they do not take into account the cultural attitude or value of Belarusians and Russians, and are generally ineffective.
— And as for cargo transportation, after the “red light”, Belarusian vehicles will see, reasonably, more trucks with Kazakh license plates on European roads?
– It could be good. Again, transit sanctions are unpleasant, but hardly critical. Our freight turnover has already fallen significantly, it is 36% below the average level for 2021. In addition, workarounds will be sought and found. In the short term, we will see some effects from this ban, but then its scale will decrease.
Regarding the ban on the provision of various business services to Belarus, it is difficult to assess its importance, Anatoly Kharitonchik notes, since the National Bank has stopped publishing the export-import structure of services since 2022.
— For example, in 2021, the import of information, telecommunications, computer and other business services in Belarus amounted to about $1.2 billion, and from EU countries – about 40% of that amount, almost half a billion dollars. This clearly includes more services than were subject to sanctions, the economist says, and after 2021, many of them are likely to be replaced by Russian analogues, due to the increased toxicity of the oil market. Belarus.
To summarize the whole new package of sanctions, I would say that interaction with Belarusian counterparties is becoming more risky.
There are many prohibitions on sanctions for the Europeans, dealing with them thoroughly means attracting a large number of advisers and lawyers, and all this involves increased costs.
Therefore, European companies may stop interacting with Belarusian counterparts not because of the bans themselves, but out of caution, so as not to accidentally break something and incur financial losses.
However, macro-economically, I do not think that this package will have a significant and harmful impact on the economy of Belarus, or on Russia. This year, GDP growth in Belarus will be very good – the base range is 3-5%, depending on the implementation of certain risks.
But the EU is showing its eagerness to cut off oxygen, find loopholes and close them – and in the long term, all this is, of course, unfavorable for the economy of Belarus. Enterprises will operate under the pressure of sanctions and restrictions on technology, but will only be competitive in the greenhouse conditions of the domestic market; perhaps, but not necessarily, the Russian markets, the EAEU countries, and the less economically developed African and Asian countries.
— Belarus, through the mouth of the press secretary of the Ministry of Foreign Affairs, promised “asymmetric response” sanctions, tightening the conditions for imports and activities of entities from “unfriendly” countries. Wouldn’t this be a blow to the foot, worsening conditions for our own economy?
— I don’t really believe in “shooting yourself in the foot,” to be honest. There are smart enough people in the government agencies of Belarus who understand what they need in order for the economy to have at least some results.
If they introduce some measure, they can call it “asymmetric response”, “hard constraints”, or something else fancy. But really, I don’t think this will hurt us in the short term.
In the long term, the consequences are more uncertain and, probably, negative for the Belarusian economy: the rules of the game (institutions) are unstable, unpredictable and do not create incentives for active investment and disclosure of entrepreneurial initiatives.
The articles in the “Opinion” section represent the author’s point of view only. The site of the editors of UDFudf.name may not correspond to the author’s point of view. The editors are not responsible for the accuracy and interpretation of the information provided.
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