16 May 2021, Sunday, 19:21
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Expert: The Regime Was Cut Off from External Funding

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Expert: The Regime Was Cut Off from External Funding

The flow of foreign investments to Belarus has already been stopped.

The United States renewed sanctions against Belneftekhim and eight other Belarusian state-owned enterprises. How hard will these sanctions hit the regime? Charter97.org spoke with energy expert Tatstsiana Manionak.

- Previously, the sanctions meant problems with settlements in dollars. The enterprises, which fell under these penalties, tried to get away from settlements in the American currency and switch to euros. I believe that in this situation, this tactic will continue if some sanctions from the EU do not follow. The opportunities for selling Belarusian products will become more complex. Naturally, problems with the purchase of imported components and equipment for the continuation of modernization will become more complicated.

In order to be more specific, you need to know how much the status of the sanctions will change. Yesterday, the director of the IPM Research Center said that the key point of the sanctions is the image effect. Today the world has changed, many companies will simply shy away from working with enterprises that fall under these restrictions. This is a really serious problem that already exists. Sanctions from the European Union blocked access to foreign financing and investment in Belarus. The flow of foreign investments has already been de facto stopped.

- How tangibly can such sanctions hit the entire Belarusian economy? How do they differ from previous restrictions imposed by the United States?

- Earlier, experts said that in fact, any enterprise that cooperates with companies on the sanctions list may be subject to sanctions. If this status is extended, there will be certain problems.

Many factories continue to modernize, they are interested in importing modern equipment and technologies that are available in the West today. Attracting new technologies will be a very tangible challenge. Especially when the development strategy of "Naftan" until 2030 assumes a shift to petrochemicals, and for this, it is necessary to purchase foreign technologies because today there are no domestic ones. This will be a difficult task for the same Naftan and enterprises in the petrochemical industry, which are planning modernization and re-equipment projects in order to adapt to new challenges in the global market.

- Experts note that Belarusian enterprises will be prohibited from making payments in US dollars. How much will this affect the export and competitiveness of our products?

- Of course, today the settlements of oil products are in dollars. This will affect competitiveness. Perhaps the sanctions will force enterprises to reduce their export volumes and sell more on the domestic market. There was a certain period when enterprises sold their products on the Russian market, including oil products. It is possible that in this situation, supplies may grow to the Russian market, although there are also problems there.

It all depends on the effect of the sanctions, how much they will be expanded, whether other countries will support this campaign. The losses incurred by the Belarusian economy will depend on this.

- Many experts note that even the announcement of such sanctions makes the economy "toxic." Can we say that the US sanctions are working without even taking effect?

- I would not say that yet, we need to monitor the situation. But there is already a European package of sanctions. It is already working in the sense that Belarus has already found itself cut off from external financing, primarily foreign investments.

If we are talking about creating a negative image of the Belarusian economy for potential investors, then, of course, the factor of “toxicity” is at work, although, this is not only the sanctions themselves but the generally unstable political situation, macroeconomic uncertainty, and distrust of the legal system. The deterioration of the image of the investment background is already working, even since the introduction of European sanctions.