“The losses will be too great”: why does Lithuania intend to stop the transit of Belaruskali products through its territory

Vilnius is developing measures aimed at stopping the transit of Belaruskali products through Lithuania.

The Minister of Foreign Affairs of the Republic Gabrielus Landsbergis stated this in an interview with the Estonian TV channel ETV.

Such decisions must be prepared by January 31, 2022.

At the same time, the minister stressed the need to smooth out the reputational costs that have arisen due to the situation around Belaruskali.

“Reputational risks for the Lithuanian government should be minimized - that was her (Prime Minister of the Republic Ingrida Šimonyte. -

) request ... Yes, in fact, this (termination of transit. -

) is the idea, but like me I spoke openly more than once, a reliable legal and political justification is needed here, ”Landsbergis said.

He explained that the European sanctions in force against Minsk do not apply to the activities of Belaruskali, and Lithuania does not have the authority to introduce its own restrictions in the field of trade.

For this reason, Vilnius is looking for another way to prohibit the transportation of the products of the Belarusian company.

Earlier, the Ministry of Transport and Communications of Lithuania prepared a bill on the termination of all Belarusian transit.

The document is intended to create a legal foundation for the imposition of sanctions and blocking transactions for the supply of products from Belarus.

The statement by Landsbergis and the appearance of the draft law of the Ministry of Transport was preceded by the imposition of sanctions against Belaruskali by the United States.

After that, the authorities of the Baltic republic tried to block the transit of the company's goods, but the Lithuanian Railways (LZD) company said that the Belarusian company had made an advance payment in November, so the transportation could not be stopped. 

At the same time, the Ministry of Transport and the Ministry of Foreign Affairs of Lithuania did not have information about the November advance payment of "Belaruskali".

Against this background, Simonyte announced the possible resignation of the government, but later announced that the cabinet of ministers would continue to work in the same composition.

However, under the pretext of “de-escalating the situation” and “minimizing reputational risks,” the authorities insist on the resignation of the head of the Latvian Railway, Mantas Bartushka.

However, until he left his post.

In addition, the administration of the President of Lithuania stood up for him.

In particular, the head of the group of advisers to the head of state on foreign policy issues Asta Skaisgirite said that Bartushka should not become a scapegoat in this situation.

"Save the image"

Belaruskali is one of the world's largest producers of potash fertilizers.

Its products are imported to more than 130 countries of the world, including the countries of Europe, North and South America, Africa, China and India.

Belaruskali's cargoes mainly go through ice-free Klaipeda, where the company owns 30% of the port terminal of Biriu kroviniu terminalas CJSC.

This part of the Lithuanian harbor is the world's largest specialized terminal for transshipment of mineral fertilizers.

• Terminal "Biryu Krovinu Terminals"

• © JSC "Belaruskali"

The second route used by the Belarusian company passes through the Black Sea port of the Ukrainian Nikolaev.

Experts, in turn, remind that Belaruskali is an important source of foreign exchange earnings in Minsk and state budget revenues. 

So, in an interview with RT, Pavel Feldman, deputy director of the Institute for Strategic Studies and Forecasts of RUDN University, noted that the EU did not impose sanctions against the Belarusian enterprise due to its serious dependence on the supply of potash fertilizers.

However, according to the expert, Lithuania, apparently, still decided to "curry favor" with Washington. 

“Until recently, they tried not to touch Belaruskali in principle, but not out of compassion for Minsk, but because there are a lot of consumers of Belarusian products in Europe, and depriving them of raw materials today would mean a blow to our own business.

However, after the sanctions of Washington, Lithuania decided differently and decided to remind him of their loyalty, ”says Feldman. 

Analysts also remind that Klaipeda is the largest sea harbor in Lithuania.

As previously reported by the Latvian edition Dienas Bizness, the Lithuanian port is the main competitor to the sea gates of Latvia, which are now experiencing great difficulties due to a significant decrease in cargo turnover.

This, in turn, was caused by the COVID-19 pandemic and Russia's decision to modernize its own port terminals on the Baltic Sea and redirect part of the transit there.

Currently, the basis of a stable and fairly high volume of cargo turnover in Klaipeda is precisely the transshipment of Belarusian fertilizers, the journalists emphasize.

However, after the imposition of US sanctions, the situation may change in favor of Latvia.

So, on December 18, on his Facebook page, the leader of the main opposition party "Union of Peasants and Greens of Lithuania" Ramunas Karbauskis said that now the streams of goods "Belaruskali" will go through the neighboring republic.

“Landsbergis publicly admitted that Belarusian fertilizers, which caused hysteria in our government, can be transported by Latvian railways.

A logical question arises - why can they do what we cannot? ... The answer is that Landsbergis needed to save his image in front of someone from the United States, because his promises were not fulfilled, "Karbauskis wrote ...

He predicts that the ban on the transit of Belarusian potash fertilizers will result in the loss of hundreds of millions of euros.

Moreover, according to Karbauskis, compensation for the damage will be made by "every resident of Lithuania from his own account at the expense of increased taxes."

It should be noted that the head of the Lithuanian Foreign Ministry really admitted that in the event of a transit ban, the Belarusian enterprise would redirect flows through other states.

• Lithuanian Foreign Minister Gabrielius Landsbergis

• AFP

• © Gints Ivuskans

In addition, the minister pointed to the increased volume of oil products transshipment through Estonia and expressed the hope that the government of the country would pay attention to this.

In mid-December, the Estonian television and radio company ERR, citing data from the republic's statistics department, reported a record export of oil products and other Belarusian-made goods through the country's ports.

So, in the first 10 months of this year, $ 500 million worth of products were imported to Estonia. 

On December 18, in a comment to local journalists, former Lithuanian Prime Minister, Seimas Deputy Algirdas Butkevicius warned the current authorities of the country that Latvia and Estonia would not support Vilnius' policy towards Belaruskali and would most likely take the opportunity to increase the transshipment of Belarusian products through their infrastructure ...

“There has always been this competition: one thing is publicly said, but something completely different is being done.

If there is no written agreement that we will act in principle and will not carry certain cargoes, then it is not necessary to hope that oral statements will be observed - this has never happened, ”Butkevicius said.

Pavel Feldman also believes that the Belarusian transit, which Lithuania intends to refuse, can go through other Baltic states or modernized Russian ports, if it is economically feasible.  

“Estonia has always taken a more cautious, more pragmatic position in relation to Belarus and Russia.

Lithuania, on the other hand, is pursuing a much tougher line, acting to its own detriment.

I think that, apart from Vilnius, there will be no people willing to give up making money on the transit of Belarusian goods, ”Feldman said.

"There will be economic losses"

At the same time, experts say that the US sanctions against Belaruskali and the transit ban from Lithuania were quite predictable.

Back in August, the analysts of one of the largest banks in Northern Europe SEB (serviced the transactions of Belaruskali with the Latvian Railways) prepared a report in which they predicted the losses of the Lithuanian economy in the amount of up to 0.3% of GDP in case of refusal to transshipment of potash fertilizers.

Swedbank, through which the Belarusian company made an advance payment for the services of the Latvian Railways, estimated the potential losses of Vilnius at 0.3-0.5% of GDP.

Sergei Margulis, a lecturer at the Department of International Politics and Foreign Regional Studies at the Institute of Social Sciences, RANEPA, also believes that Lithuania will suffer significant losses as a result of such a policy.

In an interview with RT, he noted that not only the ports, but also the Lithuanian railways, along which Belarusian goods are now delivered to the coast, will be hardest hit.

• Port of Klaipeda

• Reuters

• © Ints Kalnins

As a result, the expert doubted that Vilnius would really decide to block the transit of Belaruskali products.

According to Margulis, Landsbergis made a "banal populist statement" in this case.

“Lithuanian politicians regularly make such harsh attacks to demonstrate their unwillingness to cooperate with the“ Belarusian regime ”.

I think it's not worth waiting for radical measures against Belaruskali.

First of all, it will be disadvantageous for Lithuania itself.

The economic losses will be too great, and it's hard for me to imagine that Vilnius will go for it, ”says Margulis.

Pavel Feldman takes the opposite point of view.

He agrees that Klaipeda and the Lithuanian railways will be "empty" without the transit of Belarusian potassium, but at the same time expressed confidence that the Lithuanian government will fulfill its promise to stop exporting Belaruskali products. 

“The Lithuanians will force the Belarusian company to deliver products to European consumers along longer routes.

However, in the long term, those who impose sanctions will certainly lose.

In this case, it is Lithuania, ”Feldman summed up.