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Lithuania Ready to Halt Exports of Belaruskali: How Much Will the Regime Lose?

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Lithuania Ready to Halt Exports of Belaruskali: How Much Will the Regime Lose?

The migration crisis created by the Belarusian authorities is returning to them like a boomerang.

Lithuania threatens to completely stop the export of Belarusian fertilizers through its port.

Foreign Minister Gabrielius Landsbergis said in an interview with Delfi that Lithuania has already formally submitted proposals to Brussels to extend sectoral sanctions, including Belaruskali fertilizers, which are exported mainly through Klaipeda.

Earlier, the Lithuanian Foreign Ministry warned the official Minsk about such a development of the situation if the flow of illegal migrants did not stop. Filin tried to figure out how real this threat might be and what it would mean for the regime in Belarus.

How much will Belarus lose?

Belaruskali occupies about 20% of the world's potassium chloride market. The export of potash fertilizers from Belarus in 2020 in value terms amounted to $ 2.41 billion. And this is a very large amount to be neglected.

The company exports its products through the Klaipeda port and the volume of this transshipment is 10-11 million tons per year.

What is it in reality?

Well, there is a nuance here. Even before the previous package of sanctions, it was expected that the measures against the potash industry would be the most painful. However, everything turned out to be not so dramatic.

The ban on transportation was adopted in a soft version for Belarus. Firstly, the sanctions did not apply to existing contracts concluded before June 25, 2021.

And secondly, the most popular position did not fall under it - potassium chloride with an active ingredient content from 40% to 62%. As a result, restrictive measures affected less than 20% of export sales of Belarusian potash fertilizers, which in monetary terms may amount to (when they become effective) about $ 500 million a year. And even that is not for sure. By that time, some of these volumes could be redirected for export through Russia.

Why has the EU previously delayed the adoption of potash sanctions?

In addition, there is a quite pragmatic reason to give the Belarusian authorities time to “change their minds.” The imposition of sanctions on Belarusian potash may provoke an increase in fertilizer prices on the world market and, as a consequence, food prices. The EU itself is not primarily interested in such a development of the situation. At least until the way out of this situation is announced.

Moreover, it is not clear what to do with the losses that the port of Klaipeda and Lithuania as a whole will incur as a result of the decrease in Belarusian cargo traffic.

So, will such a decision be made?

Considering that Lithuania, which in the first place is losing its revenue, insists on sanctions, then everything looks quite serious. It is not excluded that the migration crisis costs the Lithuanian neighbors much more expensive (not only in monetary terms) than the losses of the Klaipeda port.

But, on the other hand, it is still far from stopping exports.

- Complete termination is possible. I would say yes, it is real. Real negotiations have not yet begun, so it is too early to talk about it, - said the head of the Lithuanian Foreign Ministry on Wednesday before the government meeting.

According to him, the issue of expanding sanctions in the EU will not be discussed until September.