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EU Economic Sanctions and Vulnerability of the Eastern Partnership to Belarusian Precedent. Analysis by Dionis Cenușa


https://www.ipn.md/public/index.php/en/eu-economic-sanctions-and-vulnerability-of-the-eastern-partnership-to-7978_1082654.html

 

 

Like 'Brexit' for internal EU cohesion, Belarus' precedent must not become an attractive idea within the Eastern Partnership. Therefore, the EU's mission is to prevent the consolidation or emergence of the authoritarian regime in its eastern neighborhood...

 

Dionis Cenuşa, Senior Contributor
 


Almost a year after the start of the political crisis in Belarus, which began in the summer of 2020, the European Union (EU) is applying sectoral sanctions for the first time. Important sectors of the Belarusian economy are targeted, but not all. Due to the strong interdependence between centralized politics and the main sectors of the state-controlled economy, European sanctions are intended to make Alexander Lukashenko's situation vulnerable. The ultimate goal is to eliminate Lukashenko's still loyal entourage to force the Belarusian authorities to surrender. At the top of the list of concessions the EU would like to see is the release of Roman Protasevich, Sofia Sapega and several hundred other detained political prisoners accused of supporting the pro-democracy and anti-regime protest movement. The second key issue that Brussels insists on, articulating the voice of the Belarusian opposition in exile, is the holding of new free and fair presidential elections followed by a democratic and peaceful transition of power (EU, June 2021).

The economic sanctions introduced by the EU against Belarus in 2021 recall the European sanctions adopted against Russia in 2014. The EU then decided to sanction various sectors of the Russian economy (financial market, etc.) 8 days after the civil aircraft (MH17) became the target of Russian weapons (
BUK missile system) on July 17, 2014 (298 victims). This atrocity was committed on Ukrainian territory occupied by pro-Russian separatist paramilitaries and with the coordination of Russian military forces. As in the case of Russia in 2014, European actors switched from individual sanctions to economic ones against Belarus after the latter crossed a dangerous red line involving European citizens. Specifically, the Belarusian authorities hijacked the Ryanair flight from Greece to Lithuania, while it was crossing Belarusian airspace (May 23, 2021), under the pretext of a false terrorist threat. Although it caused a dangerous situation for the safety of the passengers of that flight, Lukashenko would have approved this operation to arrest the journalist Roman Protasevich, accompanied by his partner Sofia Sapega. Several EU leaders, such as Lithuanian President Gitanas Nauseda and Polish Prime Minister Mateusz Morawiecki, have compared Minsk's actions to "state terrorism".

The need for economic sanctions against Belarus has been on everyone's lips since 2020. However, the incident with Ryanair has become a catalyst for the EU to overcome its internal reluctance and reach a consensus between the Member States. As a result, almost 5 weeks after the incident, the EU adopted the first wave of economic sanctions against Belarus, together with the fourth package of individual sanctions (
EU, June 2021).

Although sectoral sanctions initiated by the EU have economic consequences, their political impact varies depending on the internal resources available to the target subject (the case of Russia) or the compensation of limited resources through external aid (the case of Belarus). Initially, before the final adoption of the sanctions, Belarusian officials transferred Roman Protasevici and Sofia Sapega to house arrest (
Reuters, June 2021). But after the sanctions materialized, Minsk responded harshly and disproportionately, with major political and diplomatic consequences, by withdrawing from the Eastern Partnership (Belta, June 2021). At the same time, Belarus is abandoning the Readmission Agreement with the EU, which entered into force in 2019, threatening the activity of preventing illegal migration from Belarus. This could also alter the EU visa facilitation regime for Belarusian citizens, approved in 2020.

Unintended consequences of sanctions

The EU currently applies individual sanctions to 166 people under the command of Alexander Lukashenko. At the same time, some 15 entities close to the regime are subject to individual EU sanctions (travel ban, freezing of financial resources) and, more recently, sectoral sanctions. At the request of the governments of Member States (European Council), the EU adopted the first economic sanctions against Belarus (EU, June 2021), affecting three categories of products exported to the European market: tobacco, oil and potassium fertilizers. Three state-owned financial institutions (Belarusbank, Belinvestbank, Belagroprombank) were also subjected to restrictions and the European Investment Bank (not the EBRD) was expressly ordered not to finance public sector projects. Furthermore, the financing of the sovereign debt of Belarus has been restricted. In addition to these restrictions, there is a ban on European companies from commercializing IT surveillance equipment (interception, etc.) and restrictions on the export of goods for military use.

In 2020, the value of total Belarus exports to the EU amounted to around € 3.8 billion (
EU-Belarus trade). In the same year, European imports reached 6.2 billion euros. Although about 18% of Belarusian exports reached the EU in 2020, more than 45% of its products were exported to Russia. Statistics show that up to 30% of Belarusian exports, especially oil and chemical (potassium) production, could be affected by European sanctions. The same data suggests that Lukashenko could foresee an act of revenge against certain categories of products and EU companies that supply Belarus with agri-food, chemical or mechanical production. In this regard, anti-Belarusian sanctions against the EU, if they emerge, could copy the style of the EU food embargo, introduced by Russia in response to sectoral sanctions in 2014. The first step in this direction may be to suspend Belarusian exports through the Lithuanian port of Klaipeda and redirect them to the Russian port infrastructure in the Baltic and Black Seas.

The Russian authorities have already pledged to support Belarus "
even at the most critical moments." Russia recently allocated a second tranche of the $ 1 billion loan after Lukashenko's meeting with Vladimir Putin in late May (Belta, May 2021). To survive European sanctions, vulnerable sectors of the Belarusian industry could gradually integrate into the Russian economy by strengthening trade ties. Nor can the merger of companies be ruled out. Other measures that Belarus can use are export diversification. Its reorientation would be possible to China, which received only 2.6% of Belarusian exports in 2020, but also to other global markets in Africa, Asia or Latin America. However, identifying and entering new markets requires political contacts, logistical capabilities, and additional costs, respectively. In theory, it could take at least a year or two to replace the EU market.

Despite the punitive nature of EU sanctions against Lukashenko, they may accelerate some integration between Russia and Belarus within the Union-State project (economy, transport). On the other hand, albeit unwantedly, the EU sanctions became Lukashenko's lever to attack the image of the Eastern Partnership initiative. The latter is the "poster child" of the eastern dimension of the EU's neighborhood policy. Through the Eastern Partnership, the EU sought to counter Russian influence in the six post-Soviet states in Eastern Europe (including Belarus). Thus, with Lukashenko's hands, Moscow will try to undermine the relevance of the Eastern Partnership, inducing the idea that this format risks disintegrating. The magnitude of this political decision in Belarus indicates that Minsk is capable of resorting to other measures, including economic counter-sanctions if they do not affect Belarus' economic interests.


Sanctions against Belarus in the context of the Eastern Partnership

The EU can use other instruments of pressure, in addition to individual or sectoral sanctions, in the case of hybrid regimes in the Eastern Partnership region, to change the attitude of governments and promote democratic reforms. Meanwhile, the economic sanctions applied against Belarus, and so far against Russia, appear to have great destabilizing potential, as evidenced by Minsk's decision to limit its participation in the Eastern Partnership to the maximum (down to the expert level).

The EU introduced the conditionality mechanism in all iterations of macro-financial assistance allocated to states with association agreements (Georgia, Moldova and Ukraine) since in 2014 (
IPN, September 2018). In other words, the allocation of the aid is conditioned to specific requirements, the fulfillment of which is verified before moving on to the next tranche. At the same time, conditionality is an indispensable part of the financial support that Armenia can receive during the implementation of the Comprehensive and Enhanced Partnership Agreement with the EU, effective in 2018.

However, the situation is completely different in the case of Azerbaijan, which, although similar in many respects to Belarus, has structural conditions that benefit the authoritarian regime and may protect it from future European sectoral sanctions.


First of all, the geographical distance from European borders prevents the active socialization of Azerbaijani actors and of society as a whole with the democratic values ​​implemented in the EU. For the citizens of Belarus, the European reality is only a few hours from the border with Belarus. The intensity of the public diplomacy of Azerbaijani dissidents in the EU is incomparable to that of Belarus, which strongly promotes the democratic movement in Belarus, operating from Poland, Lithuania and other EU countries. Following the 2020 protests violently repressed by the Belarusian regime (IPN, August 2020), representatives of the Belarusian opposition led by Svetlana Tikhanovskaya became the main drivers of the dissident Belarusian movement operating in the EU. They also actively supported the introduction of sectoral sanctions, arguing that they were directed against the Lukashenko regime and not against the population.

The second limitation to the hypothetical response of economic sanctions to the authoritarian regime led by Ilham Aliyev in 2003, in the absence of democratic elections, is Azerbaijan's rapprochement with Turkey in the political, economic and cultural spheres. The two countries recently signed the “Shusha Agreement” (June 15, 2021), by means of which they agreed to intensify multisectoral strategic cooperation, at the regional and international level, including in the military sphere (OC-Media, June 2021).

The third important consideration preventing the Belarusian precedent from affecting Azerbaijan is the EU's dependence on Azerbaijani gas imports. Belarus depends on the European market and does not have Russia's permission to stop the flow of hydrocarbons, which also passes through the territory of Belarus. In contrast to the low energy relevance of Belarus, the EU needs Azerbaijan for its energy sector to reduce dependence on Russia, from where it imports between 40 and 45% of its natural gas needs (Eurostat, 2020). Brussels' dependence on Baku has increased considerably, especially since the launch of the Southern Gas Corridor in late 2020, whereby the EU will import around 10 billion cubic meters of Azerbaijani gas annually (Forbes, January 2021). Therefore, the EU's arguments on energy security could overcome any debate on the application of sectoral sanctions to Azerbaijan to promote democracy in that country.

Things can only change in relation to Azerbaijan in the long term and only if the EU reduces its consumption of hydrocarbons, including natural gas, in the next 10-15 years or more, through a successful transition to a green economy. However, the EU sectoral sanctions that have ended Belarus' withdrawal from the Eastern Partnership show that this European Neighborhood Policy initiative is vulnerable to similar reactions from authoritarian regimes in the future. In other words, the Belarusian precedent may encourage similar reactions from Azerbaijan if the EU applies sectoral sanctions. Therefore, the safe instruments that the EU can continue to use could be the conditionality over financial assistance. At present, they allow the EU to speak from a firm stand with the hybrid regimes of the associated countries (Georgia, Moldova and Ukraine) and Armenia, which are too dependent on the EU or have too strong internal democratic elements to join the autocratic club.


In lieu of conclusions …

The economic sanctions against Belarus could be a unique case in the Eastern Partnership because, due to certain strategic weaknesses, the EU cannot replicate them in its relationship with Azerbaijan, which is similar to the Belarusian model. The other countries in the region are quite susceptible to the conditionality mechanisms actively used by the EU in exchange for financial assistance. In the long term, Belarus' revenge shows that authoritarian regimes, even with limited resources, can have damaging political consequences for the EU. Furthermore, that can become favorable precedents for authoritarian and hybrid regimes in the region.

Although EU economic sanctions take effect over time, target regimes develop survival and adjustment capabilities, provided they have the necessary local resources or external assistance. However, Belarus demonstrates that the imagination of authoritarian regimes goes beyond the EU's forecast framework. The political costs of withdrawing Belarus from the Eastern Partnership have not yet been assessed, but the first step the EU needs to take is to ensure the cohesion and attachment of the five remaining states in this format. In practical terms, it will also be necessary to update the multilateral organization chart of the partnership and future intra-regional interconnection projects planned until 2030. Even after its withdrawal from the Eastern Partnership, Belarus will be the central topic of Eastern European policy, intensely discussed at the Partnership Summit in the fall of 2021.

Like "Brexit" for the EU's internal cohesion, the Belarusian precedent must not become an attractive idea in the Eastern Partnership. Therefore, the EU's mission is to prevent the consolidation or emergence of authoritarian regimes in its eastern neighborhood.


 
Dionis Cenuşa, Senior Contributor
Dionis Cenușa is a political scientist, researcher at the Institute of Political Sciences at Liebig-Justus University in Giessen, Germany, MA degree in Interdisciplinary European Studies from the College of Europe in Warsaw.
Areas of research: European Neighborhood Policy, EU-Moldova relationship, EU's foreign policy and Russia, migration and energy security.
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