KLAIPEDA, Lithuania — For almost twenty years, lengthy freight trains laden with reddish-brown grit have rumbled into Lithuania’s principal port on the Baltic Sea, offering an financial lifeline for Aleksandr G. Lukashenko, the autocratic president of neighboring Belarus.
That lifeline is to be minimize on Feb. 1 after a choice by the Lithuanian authorities to halt the wagons carrying Mr. Lukashenko’s largest supply of money: potash fertilizer for export to Europe and past by way of the port of Klaipeda.
Mr. Lukashenko’s opponents applaud the transfer, however others fear about an unintended consequence: It advantages Russia, which is predicted to take over the transport of Belarusian potash and will acquire a stranglehold over a considerable portion of the world’s provide of the obscure however indispensable commodity.
Potash, which Russia additionally produces, may not seem like a lot, however, prized as a crop nutrient important for international meals safety, it has greater than doubled in worth over the previous yr, producing billions of {dollars} in additional earnings for Mr. Lukashenko and different producers. The closing of what had been Belarus’s solely export route for the commodity by way of the Baltics will drive costs even larger.Lithuania’s state-owned railway and the Klaipeda port earn a big chunk of their income from potash. Arguments amongst Lithuania’s political and financial elite about what to do in regards to the commerce restrictions have been so heated that the federal government in December provided to resign over the difficulty. The ruckus erupted after the chairman of Parliament’s international affairs committee, Zygimantas Pavilionis, accused the federal government of betraying the United States, a key ally that final yr imposed sanctions on Belarus’s state-owned potash producer, and of enabling a dictator.
Mr. Pavilionis, a hawkish former Lithuanian ambassador to Washington, stated in an interview that the difficulty had develop into so tense as a result of “it is about very big money.”
In a December letter to Lithuania’s state-owned railway, the U.S. Treasury defined that American sanctions on an enormous Belarusian potash producer didn’t apply to international entities, however it urged what it referred to as a “risk-based approach” to compliance, suggesting there may very well be issues in future.
The Belarusian opposition chief Svetlana Tikhanovskaya, who lives in exile in Lithuania and who has lengthy lobbied to cease the potash shipments, stated she was delighted to see the tip of what, in an interview, she referred to as an “immoral” enterprise whose termination will assist empty “the dictator’s deepest pocket.”
That pocket is Belaruskali, an enormous state-owned potash producer that serves as a money cow for Mr. Lukashenko’s authorities. Belarus’s largest taxpayer and largest exporter, the corporate accounts for round 20 % of world potash provides.
But the American-led drive to bankrupt Mr. Lukashenko has stirred alarm in regards to the ensuing windfall for Russia. Canada, the world’s largest potash producer, may even acquire from an anticipated surge in costs, however Russian beneficial properties go far past simply worth.
“Russia is applauding,” Algis Latakas, the director of Klaipeda port, stated in an interview. Belaruskali, he stated, will probably merely change to utilizing Russian trains and transport the commodity to Ust-Luga, a Russian port close to St. Petersburg whose improvement has lengthy been a pet mission of President Vladimir V. Putin’s.
Mr. Latakas stated he understood his authorities’s want to “fight nondemocratic forces” however cautioned that the tip outcome on this occasion may nicely be that “Russia gets a big economic advantage” and the “power to control food prices.”
Whether sanctions work has lengthy been a subject of educational and political debate, however within the case of these imposed on Belarus, the outcomes have thus far been notably meager.
Over the previous yr, throughout which the European Union and the United States imposed a number of rounds of financial restrictions on Belarus, the worth of commerce between Europe and the East European nation has almost doubled. That is essentially due to sharp will increase within the worth of the commodities that Mr. Lukashenko exports, primarily potash and oil merchandise, whose worth has soared thanks partly to rising, sanctions-induced uncertainty over provides.
“Lukashenko is just making more money,” lamented Laurynas Kasciunas, the chairman of the Lithuanian Parliament’s nationwide safety and protection committee.
Instead of being persuaded to free political prisoners as had been hoped, Mr. Lukashenko has arrested solely extra individuals, with round 980 now behind bars for his or her political actions, in keeping with Viasna, a gaggle that displays human rights in Belarus. That is greater than double the quantity reported final June when the present spherical of sanctions started after the pressured touchdown in Minsk, the Belarusian capital, of a Ryanair passenger jet carrying a younger dissident, who was promptly arrested.
Ms. Tikhanovskaya acknowledged “the paradox that sanctions have been imposed but Belarus’s income has increased” and stated the squeeze on Mr. Lukashenko wanted to be tightened in order to use “unbearable pressure” to shake the loyalty of officers and businesspeople Mr. Lukashenko is dependent upon to remain in energy.
Crucial for his financial survival is potash, of which Russia and Belarus collectively produce round 40 % of the world’s provide.
The two international locations’ producers have for years competed fiercely for export markets, however, with Belaruskali now more likely to develop into depending on Russian railways and ports to promote its merchandise overseas, Moscow will acquire highly effective leverage over the Belarusian firm. That would put it able to make use of potash a lot in the identical method it makes use of its management of big reserves of pure fuel to skew the market and put strain on European international locations.
“Everyone throws around pretty slogans about democracy but the result will be exactly the opposite of what they want,” predicted Igor Udovickij, the bulk proprietor of a bulk cargo terminal at Klaipeda port half owned by Belaruskali.
“Whoever controls potash controls the supply of food around the world,” he stated. “We are just giving Putin a nuclear weapon, but, unlike the weapons he already has, this is one that he can actually use.”
Mr. Udovickij has a transparent curiosity in protecting freight trains from Belarus operating to Klaipeda. But others with no cash at stake additionally fear that Russia would be the principal beneficiary of efforts to halt the potash visitors by way of Lithuania, previously a part of the Soviet Union — towards its will — however now a member of the European Union and NATO.
“We need to be very careful in imposing sanctions not to just create opportunities for others,” stated Mr. Kasciunas, the nationwide safety and protection committee chairman. As a stalwart American ally, he stated, Lithuania has an obligation to assist sanctions imposed on Belarus by the U.S. Treasury, however the nation additionally has different considerations, particularly Russia.
“Nobody here is pro-Lukashenko, but everyone worries most about Russia,” he stated. “There are very complicated geopolitics at play with potash.”
Russia has been pushing for years, thus far in useless, to get management of Belaruskali, the crown jewel of Mr. Lukashenko’s in any other case largely decrepit industrial base. Unlike Belarus’s different principal income, petroleum merchandise that depend on provides of crude oil from Russia, the potash firm doesn’t depend upon Russia to do enterprise. At least not till this month.
Mr. Lukashenko, having referred to as for assist from the Kremlin to place down large avenue protests set off by a presidential election broadly seen as rigged in August 2020, has steadily misplaced his skill to withstand Russian calls for. And Belaruskali is now trying more and more weak.
In current weeks, the corporate has not solely misplaced its export route by way of Lithuania but additionally its largest European buyer, Yara, a partly state-owned Norwegian firm.
Yara introduced on Jan. 10 that it was phasing out all purchases from Belaruskali and would cease shopping for by April 1.
Ms. Tikhanovskaya dismissed considerations that sanctions would push her nation solely nearer to Russia as an argument promoted by Mr. Lukashenko and his supporters “to try and stop principled action — it is all a bluff.”
Still, Lithuania will lose lots of of thousands and thousands of {dollars} from halting Belarus exports by way of Klaipeda, and, in keeping with an inside authorities report assessing potential injury, it may face authorized claims of as much as $15 billion over damaged contracts. Mr. Udovickij, for one, says he plans to sue the federal government for hefty damages.
But for a small nation depending on the United States for safety towards an more and more assertive Russia, much more is at stake than simply cash, the minister of transport, Marius Skuodis, stated in an interview. Potash, he added, “is a very difficult geopolitical question.”
Tomas Dapkus contributed reporting from Vilnius, Lithuania.