The EU, US, Britain and Canada ratcheted up pressure on Belarusian President Alexander Lukashenko Monday (21 June) by imposing coordinated sanctions after the forced landing of a Ryanair airliner to arrest a regime critic.
“We are united in our deep concern regarding the Lukashenko regime’s continuing attacks on human rights, fundamental freedoms, and international law,” they said in a joint statement.
US Secretary of State Antony Blinken said the measures “demonstrated the steadfast transatlantic commitment to supporting the Belarusian people’s democratic aspirations”.
The EU and the US both targeted dozens of individuals and entities over a brutal crackdown on opposition since Lukashenko claimed victory in elections last August deemed fraudulent by the West.
The 27-nation bloc and London added seven officials — including the defence and transport ministers of Belarus — to their sanctions blacklists for the grounding of the Ryanair jet last month.
EU foreign ministers meeting in Luxembourg also backed broad-ranging sanctions targeting major revenue sources for the Belarusian regime: potash fertiliser exports, the tobacco industry, petroleum and petrochemical products.
EU foreign policy chief Josep Borrell said that the wider economic sanctions should be formally adopted in the coming days.
“Today we have confirmed and decided that sectoral sanctions will be taken against Belarus, which will have a severe impact on the Belarusian economy,” German Foreign Minister Heiko Maas said.
“We want the release of the political prisoners, an end to the violence against protesters and the opposition, and an inclusive dialogue that will lead to free and fair elections.”
Belarusian opposition leader Sviatlana Tsikhanouskaya, who insists she won last year’s poll, welcomed the joint moves from the “democratic community” to strike Belarus.
“Sanctions are more powerful when they are united,” Tsikhanouskaya told AFP in an interview in Brussels.
“It’s a clear message to the regime that we are continuing to work together against human rights violence, against lawlessness.”
Belarusian strongman Lukashenko sparked international outrage by dispatching a fighter jet on 23 May to intercept the Ryanair plane flying from Greece to Lithuania.
When the plane was forced to land in Minsk, Belarus arrested dissident journalist Roman Protasevich and his girlfriend Sofia Sapega on board.
The EU responded quickly by blocking Belarusian airlines from flying to the bloc and stopped carriers from its 27 nations from using Belarusian airspace.
The bloc had already slapped sanctions last year on 88 individuals — including Lukashenko and his son — over a brutal crackdown on protests since the veteran leader claimed victory at elections in August deemed fraudulent by the West.
The US imposed a slew of sanctions on Belarusian state-owned companies in May after authorities forced the Ryanair flight to land in Minsk by alleging a bomb threat.
The Belarusian authorities detained thousands during the demonstrations sparked by last year’s election and the EU says that some 500 political prisoners remain behind bars.
“We are clearly showing that Stalinism and state terror no longer have a place in the 21st century,” Luxembourg Foreign Minister Jean Asselborn said.
Lukashenko, ruler of Belarus since 1994, has so far shrugged off the pressure with backing from his key ally Russia.
Lithuania’s Foreign Minister Gabrielius Landsbergis complained that Belarus was hitting back by sending migrants, mostly Iraqis and Syrians, across its border.
He warned the flow could increase after sanctions were approved and that Lithuania “might need help and assistance from other European countries”.
Belarus bonds slump
Belarus’s government bonds tumbled on Monday (21 June) as the West imposed coordinated sanctions.
Belarus’s 2031 dollar-denominated bond slumped as much as 4 cents, or nearly 5%, in its biggest fall since the peak of global market COVID angst in March last year. A 2031 bond issued last June matched the fall to hit a record low before making a small recovery late on.
Hard-currency sovereign bonds make up nearly a third of Belarus’ $18.5 billion external debt. It has a relatively low debt-to-GDP burden of just over 40% but the worries are that sanctions may mirror those in Russia or even Venezuela, where international investors are banned from trading the bonds.
Tim Ash at fund manager BlueBay, which didn’t buy last year’s Belarus bond, said it was “hugely impressive and impactful” to see co-ordination between the EU, the United States, Britain and Canada.
“These sanctions are now definitely surprising on the hawkish front.”
“More and more investors will look at the relationship between Russia and Belarus,” said Trieu Pham, an EM debt strategist at ING.
“The more Belarus is isolated from the West, it will depend on more financial support from Russia and that will drive the pricing on Belarusian euro bonds.”
Restrictions on the Belarusian financial sector are set to include a ban on new loans, a ban on EU investors buying bonds on the primary market and a ban on EU banks providing investment services.
EU export credits will also end, although private savings will not be targeted. Securities in circulation and traded between fund managers are not expected to be hit, but sanctions on the secondary market could come at a later stage.
“Like in Russia you know sanctions are coming, you just don’t know how harsh,” said Aberdeen Standard Investment’s portfolio manager Viktor Szabo. “If it is secondary market sanctions then it’s game over”.