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What Can Yara's Rejection of the Contract With Belaruskali Cost?

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What Can Yara's Rejection of the Contract With Belaruskali Cost?

The Norwegian campaign struck at the most painful point of the dictatorship and set a dangerous precedent for the regime.

On Thursday, Belaruskali announced that it is ready to accept back workers who were fired for participating in the strike. Since the beginning of the Belarusian protests, this is perhaps the first time that the authorities have clearly and unambiguously promised to roll back the repression. And, perhaps, the point is not only in fears of losing the contract with the Norwegian company Yara, tut.by writes.

Of course, this contract is beneficial for Belaruskali. For 11 months of last year, the export of Belarusian potash fertilizers to Norway amounted to $ 65 million. It would be a shame to lose such a contract, especially in the context of falling prices on the potash fertilizer market. But even for Belaruskali, this loss is not critical. Well, after all, there will be no record export volumes of potash fertilizers this year. Well. Things happen. And on a national scale - even more so: the loss of $ 65 million in exports can hardly be noticed.

The Belarusian authorities have never demonstrated their readiness to make even minimal concessions. Of course, it is not certain that after signing the contract, Belaruskali will fulfill its promise or that the reinstated workers will suddenly again accidentally break discipline a month later, giving rise to a new dismissal. But from the point of view of damage to the reputation of brutal guys, this will no longer matter. In badass guys' logic, $ 65 million is a perfectly acceptable price to continue to look the same badass.

What's really dangerous for the authorities nationwide is the precedent that Yara can set by reneging on a contract for moral or political reasons. Nivea, Skoda, and Liqui Molly have already created one such precedent by not wanting to sponsor the World Ice Hockey Championship if it is held in Minsk. Surely the companies understood that this moral position could potentially cost them the loss of the Belarusian market. But the companies assessed the risks and decided the game was worth it. Because, for none of them, the share of sales on the Belarusian market is, to put it mildly, significant. And it's better to lose it than to look like an unprincipled and soulless businessman in the eyes of all other buyers. And in Yara's case, the consequences of precedent could be far more painful. Rejecting a contract is more serious than rejecting sponsorship.

Now Tsikhanouskaya's office and the strike of Belaruskali are putting pressure on Yara so that it does not sign the contract. If they succeed, then, inspired by success, they will most likely choose a new goal for their efforts. And after the precedent has already been created, it will be easier to push. Because they will have an ironclad argument: "Are you worse than Yara?" Of course, not all Western companies are as concerned about workers' rights as Yara. Not everyone has as much socialism and many trade unions as Norway. But, frankly speaking, the Belarusian market is not critical for large Western companies either.

It is difficult to imagine that Western buyers of Belarusian fuel oil will refuse contracts for reasons of moral or political nature - simply because of the specifics of buyers and sales schemes. But the equipment suppliers for the Belarusian Amkodor are already refusing supplies. It is clear that they are doing this because of the EU sanctions, not moral considerations. But in fact, in this case, the presence of sanctions is rather an aggravating circumstance, an additional argument in favor of listening to the words of people who ask not to have any business with the Belarusian authorities.

Against the background of the sanctions already imposed by the European Union and the US Treasury Department and the new sanctions packages being prepared, contacts with the Belarusian authorities are already becoming toxic. Because to become an accidental victim of the raging American Ministry of Finance for the pleasure of selling some machine to the Minsk Tractor Plant is not a prospect. Doubtful from the point of view of optimization of commercial risks. And then, following Yara's example, you can minimize risks and improve your reputation.

Yara could set a very dangerous precedent with potentially dire consequences for the Belarusian authorities by sacrificing Belarusian supplies. Its contract rejection could set off a chain reaction, a parade of rejections, as was the case with the ice hockey world championship sponsorship when the example of Nivea was so contagious.

It is difficult to say whether the Belarusian authorities understand all the potential consequences. But, judging by their uncharacteristic readiness to yield, they at least feel it.

How the situation with Belaruskali and Yara developed

The Norwegian company Yara is the world's largest fertilizer producer and one of the main trade partners of Belaruskali. The Belarusian Potash Company traditionally works with it under five-year contracts. For example, under the 2011-2015 agreement, BCC supplied Yara with more than 1 million tons of potash fertilizers annually.

In September, Yara representatives came to Minsk for the first time for negotiations with representatives of the Belarusian Potash Company and trade unions. On the eve of this visit, Yara posted a message on its website expressing concern about the situation in Belarus and the fate of the miners who were dismissed or serve sentences.

In December, Yara CEO Svein Tore Holzeter and several other company representatives visited Belaruskali. At a closed meeting with the leadership of Belaruskali, they discussed the conditions that must be met in order to comply with the Code of Conduct for Yara Business Partners. On the eve of Svein Tore Holzeter's visit, his appeal on the situation in Belarus was published on the Yara website.

"Despite our constant efforts to achieve change through dialogue, we have not seen significant improvements in the position of Belaruskali employees. We are particularly concerned about the numerous reports of layoffs of workers who peacefully expressed their democratic rights. <...> We should see a significant improvement in conditions and relations with the personnel of Belaruskali, an end to repressions, as well as an improvement in labor safety conditions," the appeal said.

During their December visit to Belaruskali, Yara representatives also raised issues of labor protection, safety, and fatalities at the enterprise. In 2020, there were several similar cases at Belaruskali. In March, the car in which the workers were driving to the site crashed into a wall. The driver died, six people were taken to hospital in serious condition. According to a source at Belaruskali, the cause of the accident could be a malfunction of the car, complaints about this equipment have been received for a long time. A 21-year-old worker was fatally injured in June. At the end of October, an employee of Belaruskali was injured and was hospitalized with injuries; in early November, another employee died.

Belarusians also actively leave comments on Yara's social networks and ask them not to sign a new contract with Belaruskali.

On January 20, Belaruskali announced its readiness to lift disciplinary sanctions from employees and again accept previously dismissed employees if they submit appropriate applications. In response, the members of the strike committee recorded a video message in which they did not agree with this wording since no one "did not write a letter of resignation and did not commit deliberate absenteeism."