EU wants sanctions, but how big is trade with Belarus?

EU Member States want to quickly introduce economic sanctions against Belarus because of the arrest of journalist Roman Protasevich. He was on a flight between the EU countries Greece and Lithuania, when Belarus forced the plane to land and he was arrested.

Sanctions should include aviation and Belarusian companies that finance the regime, said Ursula von der Leyen, President of the European Commission. But how big is trade with Belarus and what kind of products and businesses are involved?

Second trading partner

The EU accounts for about 20% of goods trade between Belarus and abroad. Last year, the EU imported some EUR 3.9 billion from Belarus and exported for some 6.2 billion.

This makes the EU the second trading partner of Belarus. By far the largest trading partner is neighbouring Russia, which accounts for about half. We do not need to expect sanctions from Russia: it is defending Belarus‘s action.

SOEs

Much of the Belarusian economy and exports are owned by state-owned enterprises. According to the Belarusian Statistics Office, it accounted for about a third of all exports in 2019.

Should the EU ban trade with all Belarusian state-owned enterprises, it will soon be about more than EUR 1 billion that Belarus would miss. And possibly more, because exports by Belarusian state-owned companies have risen considerably in recent times.

IKEA Supplier

The main Belarusian exports to the EU are wood products such as furniture, fuels and metal products. For a large part, exports of wood go through state-owned Bellesbumprom. This has benefited from the shortage of wood lately. The Belarusian state agency says that exports at Bellesbumprom increased by around 15% in the first two months of this year to over 90 million euros.

Among other things, IKEA would import furniture from Belarus. According to the Swedish newspaper Dagens Nyheter, 7% of all wood for IKEA furniture comes from Belarus.

Earlier call for boycott

The export of metal is also largely owned by a state-owned company: BMZ. The export went well there too. In the first four months of this year, it rose 23%, to some 350 million euros.

State-owned enterprises are closely intertwined with the regime of President Lukashenko, who has been in power for more than a quarter of a century. DeccEit spoke to an ex-employee of BMZ in March, who was fired after participating in a demonstration.

Trade union FNV already called for a stop to trade with Belarusian state-owned enterprises that participate in the repression of trade unions and pro-democratic groups in the country. The independent trade union movement in Belarus also supports this appeal.

Belarus becomes paria

In addition to trade sanctions, the EU also comes with aviation sanctions. On Monday, airlines were already called to stop flying over and to Belarus. KLM, Air France and Lufthansa, among others, responded to this.

In addition, Belarusian airlines will soon have to be banned from European airspace and airports. The Belarusian airline Belavia will be severely affected.

According to Jaap de Wit, aviation economist, the measures make Belarus a pariah. โ€œThe country is much harder to reach and that has economic consequences.โ€ Belarus is also missing charges it receives for entering the airspace. According to Eurocontrol, the European Air Traffic Control Organisation, it was โ‚ฌ85 million in charges in 2019.

Weakening Economy

โ€œ Until now, sanctions against Belarus have not been aimed at weakening the economy, also because you do not want to hit the population too much,โ€ says Bob Deen of the Russia and Eastern Europe Centre at the Clingendael Institute.

โ€œ But now the EU wants to hit Lukashenko harder in his wallet, so that it becomes too expensive for him to continue misbehaving. However, this is quite difficult to do good; you also want to avoid pushing Belarus further into Russia’s arms.โ€

According to Deen, sanctions against specific SOEs can work in the long run. โ€œYou deprive Lukashenko than income in foreign currency. As a result, the Belarusian ruble and the state budget can be put under pressure. And products that he cannot sell to the EU, he cannot sell all of them to Russia.โ€