While the EU is working out new sanctions against the regime of ruler Alexandr Lukashenko in view of the conflict on the Polish-Belarusian border, the punitive measures imposed so far seem to have little effect.

In June, the EU imposed sectoral sanctions on Belarus for the first time because of the forced landing of a Ryanair flight from Minsk.

Katharina Wagner

Business correspondent for Russia and the CIS based in Moscow.

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In particular, they are intended to hinder the trade in oil products and potash salts, which is one of the most important sources of income for Belarus - Belarus is the world's third largest producer of potash, which is used for the production of fertilizers.

But of all things trade with the EU, Belarus' second most important trading partner after Russia, has really flourished this year: In the first three quarters of this year, Belarus exported 96.1 percent more goods to the EU than in the same period, according to the Belarusian statistical office Belstat 2020. According to EU data, imports from Belarus increased significantly from January to August compared to the same period in the previous year, but only by 58 percent, probably due to different counting methods.

Are sanctions ineffective?

The large increase is partly due to the low level of the pandemic year 2020; But even in comparison with the first half of 2019, Belarusian exports have increased by a total of 10 percent. As a result, the gross domestic product grew by 2.7 percent by the end of September - much more than most experts had expected in view of the crisis in which Lukashenko plunged the country after the falsified presidential election in 2020.

So have the EU's economic sanctions been ineffective so far? The economist Katerina Bornukowa from the Minsk economic institute Beroc does not see it that way. The measures just haven't worked, says Bornukowa, because, for example, for potash and oil products, they relate to supply contracts that were concluded after the sanctions came into force. Most current contracts are not affected. In addition, there are many exceptions: So far, only about a fifth of potash production is subject to sanctions. And wood products and metals, which are in high demand worldwide and in the EU in the economic recovery after the pandemic, have not even been taken with measures.

But Bornukowa already sees indications of the effect of secondary sanctions: For example, a Chinese investor has withdrawn from the construction of a new potash combine and the rating agency Fitch has withdrawn its rating of two Belarusian state banks, which could result in considerable problems for them. Companies from the tobacco and auto industries are also likely to have lost profits because they are no longer supplied from the EU. Because Belarus has not published any data on the economic sectors affected since the imposition of the sectoral sanctions, such consequences are not yet visible.

Like Bornukowa, the World Bank assumes that the EU's economic sanctions will only take full effect in the next few months.

At the beginning of December, new American punitive measures will also come into force, for example against the largest Belarusian potash producer, Belaruskali.

The World Bank is therefore expecting the Belarusian economy to decline by 2.8 percent next year.