Gavin Irwin and Merry van Woodenberg explore recent developments in the field of financial and trade sanctions
Belarus sanctions: the political context and likely future development
The government of Belarus finds itself, again, the subject of international condemnation. On 23 May 2021, a military jet was used to effect the forced landing of Ryanair flight FR4987 from Athens to Vilnius at Minsk. The reason: to arrest a passenger, the dissident journalist, Roman Protasevich.
The evolution of the Belarus sanctions regime
The European Union, and through it the UK, first imposed restrictive measures against President Lukashenko and a number of Belarus officials in May 2006 and, in October 2010, after a disputed election, expanded the sanctions regime. The regime has been amended, suspended and reactivated at various times since then and has comprised an arms embargo in addition to travel bans and asset freezes on persons: said to be responsible for serious human rights violations; whose activities have seriously undermined democracy or the rule of law in Belarus; or, who have benefitted from or supported President Lukashenko’s political apparatus.
Following the latest disputed Belarussian presidential election of August 2020, the EU took some months to impose further sanctions (with comparable measures being deployed by a post-Brexit UK under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019).
However, EU member states could not agree on the extent of further sanctions which, while intended to undermine President Lukashenko and his supporters, could not be so smartly designed as to avoid hurting ordinary Belarussian citizens. An additional complicating feature in the realpolitik is the spectre of forcing Belarus further into the arms of its only remaining ally, Russia.
Roman Protasevich has been an outspoken critic of the Belarus government since 2011 and added a loud and persistent voice to the 2020 and 2021 anti-government protests, the suppression of which has been declared by the United Nations Security Council to have involved rampant human rights abuses.
Further changes expected
Mr Protasevich’s arrest has galvanised the international community. Following the events of 23 May, the US issued a travel advisory and the EU issued guidance effectively requiring aircraft to alter their usual flight paths to bypass Belarus, thus depriving its government of fly-over fees. The UK government informed all UK based airlines to cooperate with the EU guidance and, in an apparent show of support for President Lukashenko, Russia then refused permission for some diverted flights to enter its airspace.
In Portugal, on 27 May, EU foreign ministers gathered to discuss further financial and trade sanctions against Belarus, hinting that restrictive measures may: target Belarus’s main exports (agri-minerals and oil); and, prohibit lending to Belarusian banks. There has been a suggestion that capital markets restrictions may follow and the UK foreign secretary has stated that the UK will again coordinate with the EU.
Across the Atlantic, on 28 May, the US announced a series of restrictive measures, including: the re-imposition of sanctions on nine Belarusian state-owned enterprises; the suspension of the agreement which allows reciprocal air space access; and, ‘other actions’, as yet unannounced. The US sanctions package is expected to come into effect on 3 June.
EU officials will meet again in Luxembourg on 21 June with the aim of reaching final agreement as to the terms of any further measures and are likely to be influenced by the US sanctions that should by then be in place. As a carrot beside the sanctions stick, the EU has agreed to provide Belarus with €3billion through grants and loans if the country ‘changes course’.
The government of Belarus maintains that the diversion flight FR4987, in Belarussian air space, became necessary as a result of a bomb threat by the Palestinian militant group Hamas. This claim has been challenged by Hamas and derided by many other governments.
President Luskashenko has pre-emptively signalled an intention to retaliate against sanctions by unconventional means, stating that he would allow drugs and illegal migrants to flood western Europe and substitute Belarus’s trade with ‘mercilessly old’ Europe for ‘rapidly growing’ Asia.
It is a criminal offence for any person to engage in prohibited conduct with a designated person, as defined in Regulation 6. It is likely that a broad view will be taken in relation to ‘the provision of financial services, or making available funds or economic resources, that could contribute to the commission of a serious human rights violation or abuse, the repression of civil society or democratic opposition, or other actions, policies or activities which undermine democracy or the rule of law in Belarus’.
Consequently, all businesses should ensure that they are familiar with updates to the Consolidated List and those with any exposure to business in Belarus or with Belarussian nationals, whether or not they are currently ‘politically exposed’, should take stock and be alive to heightened risk and the possibility of rapidly changing designations.
Given the likely effect of sanctions on the agri-minerals and oil markets, together with President Lukashenko’s declaration that this will not be a ‘clean fight’, those in the UK energy and agricultural sectors may have the greatest exposure and should have a renewed focus on supply chain integrity.
UK banks and financial institutions will of course be keeping a careful eye on new restrictive measures, not least the prospect of capital markets restrictions that, to date, have only meaningfully been deployed in relation to Russia after the annexation of Crimea in 2014.
In addition, whilst not a ‘travel ban’ in the financial sanctions sense, the prohibition on accessing Belorussian air space, and to a lesser extent Russian air space, will have an impact on an industry already ravaged by the pandemic. The ban will inevitably, if less profoundly, affect demand, scheduling and insurance within the travel sector, with knock-on effects for secondary and support services.
The human cost of the continuance of President Lukashenko’s government in stifling dissent for the benighted people of Belarus may be obvious, the outcomes of the raft of likely new restricted measures are much less so.
Gavin Irwin and Merry van Woodenberg
 Council Regulation (765/2006)
 Council Regulation (369/2010)
Categories: Blog | Newsletters