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Economist: Sanctions Hit The Most Important Areas Of Belarusian Exports

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Economist: Sanctions Hit The Most Important Areas Of Belarusian Exports

Political prisoners "trade" will not save Lukashenka.

In early August, Petr Parkhomchyk, who was the Minister of Industry, said that the BelGee plant would not be able to meet last year's car production volumes. One of the reasons was the problem of the supply of components.

How did the sanctions pressure affect the Belarusian economy and will the authorities start trading in political prisoners following the example of the post-election events of 2006 and 2010?

The Charter97.org website talked about this with the well-known Belarusian economist Leu Marholin.

— Mechanical engineering has historically been one of the most important branches of the Belarusian economy. In Soviet times, Belarus was called the assembly shop of the Soviet Union, there were factories that worked for the whole country. They remain today: the MAZ and the tractor plant. True, today their importance has decreased. But I think that their problems are the problems of not reforming the economy to a greater extent than the problems of components. First of all, it should be noted that sanctions against Belarus, unlike Russian sanctions, primarily concern the export of Belarusian goods. That is, there were no serious restrictions on imports.

Another thing is that a number of Western companies have voluntarily terminated or limited cooperation with Belarusian companies. There are problems with logistics when transport routes have to be reconfigured. But the main problems of the Belarusian mechanical engineering are still its lack of reform. After the collapse of the Soviet Union, it was worth trying to integrate Belarusian machine-building enterprises into world chains. Because a plant that produces 10-20 thousand cars, of course, cannot compete in price and quality with a plant that produces tens or hundreds of thousands. But this was not done, and, accordingly, mechanical engineering in Belarus began to deteriorate.

As for the current situation, it is still uncertain and unstable. If it is possible, using the example of the BelGee, to resolve the issue with China, which, apparently, is currently hesitating with the supply of a vehicle kit, and the supply of other components, then the issue with BelGee will be resolved positively. Moreover, the sales market may even expand, because Russia faces even worse problems with cars than Belarus. If China nevertheless tends to support sanctions against Russia and limit cooperation with Belarus, it may turn out that the situation in the engineering industry, in particular in the vehicle industry, will worsen.

— This year, European countries have abandoned Belarusian timber, and timber export to the European Union last year amounted to almost $1.5 billion. What is happening to the reorientation of exports of timber and wood products in Belarus?

— The problem is that Russia does not need our timber. As far as I know, there have been attempts to reorient our exports to some extent towards Kazakhstan. It is difficult to make assessments now. At the end of the year, it will be possible to try to draw some conclusions if the Belarusian statistics are not completely classified, because now, unfortunately, many indicators are not available for analysis.

In any case, it is clear that the sanctions affected the most important Belarusian exports: potash fertilizers, the oil industry, woodworking, rubber, metal, and so on. So the problem exists. It will only get worse, because in fact, the sanctions have only recently come into full force. Prior to that, there was a so-called transitional period, when it was possible to execute existing contracts.

— One of the most painful topics for the Belarusian regime is sanctions against Belarusian potassium and oil products from what you have listed. What are the prospects for Belaruskali and Belarusian refineries?

— There are no prospects. As for potash fertilizers, Russia is our direct competitor. It is possible that part of the Belarusian fertilizers will be redirected through Russian ports, in particular through St. Petersburg or by rail somewhere in the Far East, to be sent to China or other countries of Southeast Asia. But there are more problems with logistics because potash fertilizers are bulk products that require large transport capacities. Even those consumers that we had, Brazil, China, India, would gladly take Belarusian potash, but it is difficult to deliver it there.

Two major export flows, north to Klaipeda and south through Ukraine, have now been shut down, dimming the prospects. I think the Belarusian authorities will look for some way out. I'm even sure that part of the problem can be solved. Of course, they will not be able to restore the pre-sanction volumes, and this will be the case until the sanctions are lifted.

— Can the amnesty recently announced by Lukashenka be a signal that the Belarusian authorities can no longer hide the negative effect of the sanctions and will try to start trading in political prisoners, following the example of the post-election events of 2006 and 2010?

— The fact is that these sanctions are targeted. Those restrictions that were introduced in 2020, after the events of August and subsequent months, will be possible issues for consideration. But there are other sanctions: those that were introduced after the well-known incident with the plane landing at the Minsk airport, there are sanctions that were introduced because the Belarusian regime actually takes part in hostilities against Ukraine. No one will talk about these sanctions until the obstacles that caused them are removed.

Earlier sanctions are quite insignificant compared to those introduced in 2020. If there is a sufficiently significant amnesty, then negotiations can begin. Although, the question is whether there are iconic figures that Western countries were interested in, as it was when the sanctions were lifted in 2011 when the leaders of political parties and public associations were released. Therefore, there will probably not be any serious progress instead of sanctions.

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