The authorities are in a difficult situation.
On June 10, the European Parliament approved a resolution on Belarus, which, in addition to political statements, also deals with sectoral economic sanctions.
The loudest names from the new EU sanctions list became known yesterday. Among them are businessmen from Lukashenka's close circle, who are engaged in the export of fuel and potassium.
Also yesterday, the European Union agreed on a package of tough economic sanctions that would cut off the Lukashenka regime from earnings in hard foreign currency. Europe will ban purchases of oil, oil products, and potash fertilizers in Belarus. The package of sanctions will also include restrictions on the financial sector - a ban on loans, operations with securities, and investment services. A specific list of Belarusian companies that will fall under the new EU sanctions has also appeared.
Charter97.org spoke with Doctor of Economics, Professor Barys Zhaliba about how the sanctions will affect the Belarusian economy.
- How will the sanctions against the main export industries and the financial sector affect budget revenues?
- It will have a negative effect, however, it will not be right away. All such export and economic systems are rather inertial. Personal sanctions against well-known businessmen, for example, Aleksin or Zaitsau, work not only against them but also against the companies they head. Such sanctions will gradually, let's say, oppress the activities of these organizations.
The most dangerous thing for the regime is the so-called sectoral sanctions against export positions. These are oil products, first of all, Naftan, potash fertilizers - Belaruskali, as well as Hrodna Azot. For these enterprises, the sanctions will be most sensitive if they are introduced.
Once the sanctions take effect, they will hit exports. Although the “prime minister” Halouchanka said that they counted no more than 3% of GDP losses, and they allegedly can somehow reorient the flows of Belarusian oil products and fertilizers that go to the European Union to the east. However, this is easy to say and difficult to do.
The authorities may have losses from the reduction in exports, which now looks good. Foreign exchange earnings will be the first to suffer. If a shortage of currency begins to be felt, which we do not have (but we can see it in 2-3 months), then this will create tension in the currency market, demand for currency, and so on. Potash fertilizers are purchased from us by three main states - China, India, and Brazil. Again, the American sanctions are also at play here, which have a secondary factor. They act against any partners who purchase our products. This can also lead to a reduction in exports.
The first thing we will see as an indicator is the accelerated devaluation of the Belarusian ruble. If this happens, then we must understand that this is a consequence of these sanctions.
On the budget, how will it go? The budget receives income from foreign economic activity. First of all, these are customs duties on our fertilizers, oil, and oil products. This means that the budget will not receive additional revenues. And how many state employees do we have in the country? These are doctors, teachers, officials, and security officials. Of course, this is where the problems begin. As it always happens in our country, it is not officials who will suffer, but doctors and teachers.
- What other consequences can the new sanctions from the EU lead to, considering that there are still restrictions from the United States against the enterprises of the Belneftekhim concern?
- I read that they will coincide in terms of time, that is, the Americans will also add something else on June 23-24. There are already the first signs of the consequences: some banks refuse to carry out dollar payments, the ports in the Baltic Sea do not want to accept cargo that is sent to Belarus, and so on. If the sanctions have secondary actions, they may also hit dollar settlements. Of course, Americans can add something else. I think that the air blockade, which brings losses, will also continue in the near future. As they say, for the Belarusian economy, it will not pass without a trace.
- Many experts point out that the main enterprises will have to work for the warehouse due to the sanctions. And what will happen after the warehouse is full?
- Our warehouses seem to be dimensionless, because one of the officials in the economy said that everything is fine, warehouses are being unloaded, but we always had them with an excess of the standard balance. The general rule is that no more than 50% of the monthly production of a particular enterprise should be in the warehouse. We have always exceeded these standards, so to speak. As far as I know, there were 60% and more recently. How they will unload it - let's look at the statistics.
Of course, capital will be frozen, which will disrupt the circulation and slow it down. This will again cause a drop in revenue and wages. Prospects, as they say, are known. This has already happened before. For example, our light industry can be stocked for many months, and sometimes for a year or more, depending on the industry. Their products are not perishable - clothes, shoes, and so on. If products are perishable, then everything is much worse.
- The EU resolution also spoke about disconnecting Belarusian banks from SWIFT. How strong will it be for the country's economy?
- You know, most of the experts, whom I join, say that this will not happen. There were only two such cases in the world - Iran and North Korea. Of course, "experts" from the authorities are calculating how to live without SWIFT. There are statements that we will make payments through Russian banks, somehow we need to move away from international card payment systems, but, probably, everyone has a VISA or Mastercard. This will not stop the economy, but it will affect the speed of settlements. As the former head of the National Bank Stanislau Bahdankevich said recently: "The calculations will be carried out, but they will be carried out extremely slowly." If SWIFT gives results in minutes, then without it, they will go for weeks. This will worsen the state of the economy and enterprises.
- How can economic sanctions affect the country's finances, the ruble exchange rate, and the income of the population? Could this increase people's discontent with the authorities?
- Of course, it can. I repeat, many people think that sanctions are somewhere out there, against specific enterprises, only they will get worse. The economy is interconnected and interdependent. We are threatened with a decrease in the population's already low standard of living, this is a fact. The change will affect everyone.