For nearly two decades, Lithuania’s biggest port on the Baltic Sea has been receiving long trains filled with a kind of reddish-brown sand. The cargo acts as an economic lifeline for Aleksandr Lukachenko, the autocratic dictator of neighboring Belarus.
The board, however, will be removed from this Tuesday (1st). The Lithuanian government has decided to bar the arrival of wagons that bring Lukachenko’s biggest source of money: potash (a material that is a component of fertilizers) exported through the port of Klaipeda to Europe and other destinations.
The dictator’s opponents applaud the decision, but others fear it will have an unintended consequence. The suspension benefits Russia, which must take over the transport of the Belarusian product and thus control a substantial part of the world supply of the little-known but indispensable commodity.
Also produced by Russia, potash may not seem like much, but it is highly valued as a vital agricultural nutrient for world food security. It has more than doubled in price in the last year, generating billions of dollars of additional income for Lukachenko and other producers. The closure of what was the only Baltic export route is likely to drive the price even higher.
Much of the revenue for the Lithuanian state railway and the port of Klaipeda comes from potash. Discussions among Lithuania’s political and economic elite over what to do about the trade restriction got so hot that in December the government proposed to step down. The disagreement erupted when the chairman of the Parliament’s Foreign Relations Committee, Zygimantas Pavilionis, accused the government of betraying the United States — Lithuania’s key ally that last year imposed sanctions on Belarus’ state potash producer — and favoring a dictator.
A former ambassador to Washington, Pavilionis said the issue was very tense “because it involves a lot of money.”
In a December letter to the Lithuanian state railway, the US Treasury explained that sanctions on a major Belarusian potash producer do not apply to entities in other countries, but urged a “risk-based” approach to compliance, suggesting the possibility of future problems.
Belarusian opposition leader Svetlana Tikhanovskaya, exiled in Lithuania and who has long fought to stop the transport of the product, said she was very pleased to see the end of what she described as an immoral business, which will help to empty “the deepest pocket of the dictator”. In this case, the large state-owned Belaruskali, Lukachenko’s golden egg. The country’s largest exporter and largest source of taxes, the company is responsible for 20% of the world’s potash supply.
But the US-led effort to bankrupt Lukashenko is also worrisome, given the resulting benefits for Russia. Canada, the world’s largest producer of the commodity, should also benefit from the expected rise in prices, but the benefits for Moscow go much further.
“Russia is applauding,” says Algis Latakas, director of the port of Klaipeda. More likely, he says, Belaruskali will simply switch to Russian trains and ship the product to Ust-Luga, a Russian port near St. Petersburg whose development has long been one of President Vladimir Putin’s pet projects.
Over the past year, as the European Union and the US have imposed several rounds of economic restrictions on Belarus, the value of trade between Europe and the country has nearly doubled. This was largely due to the rise in prices of commodities exported by Lukachenko, mainly potash and oil products, whose value has soared thanks in part to increasing supply uncertainty resulting from the sanctions.
“Lukachenko is simply making more money,” says Laurynas Kasciunas, chairman of the Lithuanian Parliament’s Committee on National Security and Defense.
Instead of being persuaded to release political prisoners, as expected, the dictator detained even more people. According to the group Viasna, which monitors human rights in Belarus, today there are 980 people behind bars in the country for political activities. That’s more than double what was reported in June, when a Ryanair commercial jet crash-landed in Minsk carrying a young dissident, who was immediately detained — the incident followed the current round of sanctions.
Tikhanovskaya acknowledged “the paradox that sanctions imposed, but Belarus’ revenue grew”. For her, the squeeze on Lukachenko needs to be reinforced, with the use of “unbearable pressure” that manages to end the loyalty of officials and businessmen on whom the dictator depends to stay in power. A crucial element for Lukashenko’s economic survival is potash. Together, Russia and Belarus produce 40% of the world’s supply of fertilizer.
For years, producers in both countries have competed strongly for export markets. But now, with Belaruskali likely to become dependent on Russian railways and ports, Moscow will gain great influence over the Belarusian state-owned company. This will enable him to use huge reserves of natural gas to manipulate the market and put pressure on Europeans.
“Everyone has a nice speech about democracy, but the result will be the exact opposite of what they want,” says Igor Udovickij, a shareholder in a cargo terminal at the port of Klaipeda that is partly owned by Belaruskali. “Whoever controls the potash controls the world’s food supply. We are delivering a nuclear weapon into Putin’s hands, but one that he can actually use.”
Udovickij has a clear interest in keeping Belarus freight trains going to Klaipeda. But others, with no economic interest at stake, also fear that Russia will be the biggest beneficiary of efforts to stop the product from passing through Lithuania – a country that was once part of the Soviet Union, against its will, and is now a member of the European Union. and NATO.
“We need to be very careful when we impose sanctions, not to simply create opportunities for others,” says Kasciunas. For him, as an unconditional ally of the US, Lithuania has a duty to support sanctions imposed by the US Treasury on Belarus, but the country also has other reasons for concern – namely Russia. “No one here is in favor of Lukashenko, but everyone is concerned above all about Russia. There are very complex geopolitical issues at stake.”
Russia has struggled for years, so far in vain, to gain control of Belaruskali, the “crown jewel” of Lukashenko’s decrepit industrial base. Unlike Belarus’ other main source of revenue (petroleum products based on Russian crude supplies), the state-owned company does not depend on Moscow to operate. Or at least it didn’t until this month.
Having asked the Kremlin for help in quelling massive popular protests sparked by the rigged August 2020 election, Lukashenko has since lost the ability to resist Moscow’s demands. And now Belaruskali looks increasingly vulnerable.
Tikhanovskaya dismisses fears that the sanctions will only bring her country closer to Russia, saying they are an argument Lukashenko promotes to try to stop principled actions. “It’s all just a bluff.”
Even so, Lithuania will lose hundreds of millions of dollars for interrupting the passage of Belarusian exports through Klaipeda. And, according to a government assessment of potential damages, the country could face legal action seeking damages of up to $15 billion for breached contracts. Udovickij, for example, says he intends to sue the government and ask for hefty damages.
But Transport Minister Marius Skuodis said that for a small country that depends on the US for security against an increasingly assertive Russia, there is much more at stake than just money. “It’s a very difficult geopolitical issue.”
Source: Folha
