The Belarusian regime hopes to mediate between Russia and the West while demanding security guarantees in the face of new sanctions

The West is preparing a new package of sanctions against Russia and Belarus in response to the ongoing military aggression against Ukraine. The prolonged conflict and attendant economic costs push the regime to distance itself from Russia, at least at a rhetorical level. Minsk claims to be the mediator who best understands the motives of the Kremlin and calls on NATO to negotiate.

The sixth package of EU sanctions following the Russian attack on Ukraine may include Belaruskali, BPC and Naftan. Some sanctions have already been imposed on the Belarusian potash industry, banning importation and transit, though not restricting potash fertilisers. Belaruskali and BPC were not previously directly targeted by the EU though the United States has imposed restrictions. In addition, Dmitry Mazepin, the majority shareholder of Uralchem and Uralkali, is subject to personal sanctions.

Due to previous restrictions, potash exports from Belarus and Russia fell by 20% yearly. The two countries account for about 40% of world production. In addition, Ukraine has seized 33 thousand tons of mineral fertilisers from Russia and Belarus following a tax evasion investigation.

Fitch confirmed Belarus’ foreign currency long-term credit rating as CCC, signifying “Significant credit risk with a meagre safety margin and a real possibility of default.” Nevertheless, the agency considers Eurobond interest payments in 2022 feasible. Repayment difficulties are likely to arise regarding the USD 800 million of Eurobonds due by February 2023. The bond issue terms specify settlements exclusively in dollars, thus conflicting with Lukashenka’s recent decree. Fitch will treat the redemption of bonds in local currency as default and believes that the Belarusian economy will shrink by 5% in 2022 and 1.2% in 2023. The outlook for investment looks bleak as the planned reorientation of trade towards Asia will take time, and public debt will increase from 42.5% to 52.9% of GDP.

Taiwan has imposed export controls on 57 categories, including telecommunications equipment, processors, memory chips, variable frequency drives for dual civilian and military purposes, and equipment for the production of semiconductors. Similar measures were introduced against Russia previously.

As sanctions tighten, the Belarusian regime is trying to distance itself from the Russian war. Lukashenka believes that Western sanctions against Belarus should be lifted because the country is not involved in the war and has no intention of becoming involved. Belarus is doing everything possible for peace, including organising negotiations between Ukraine and Russia. Lukashenka also tries to pose as a mediator who understands the motives of the Russian leadership better than anyone else, calling on NATO to negotiate with Putin, who, unlike the Russian military, does not want a global confrontation with the alliance.

Foreign Minister Vladimir Makei once again spoke of the need for Belarus to participate in peace negotiations, stressing that any solution must reflect a balance of interests, which implies considering security guarantees for both Belarus and Ukraine and Russia.

The Belarusian regime is gradually resigning itself to the idea that Russia will not be able to win this war. However, attempts to distance Belarus from Russian aggression have little impact on relations with the West, which intends to continue to strengthen sanctions.