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US sanctions on Belarus have been an exercise in collateral damage

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US sanctions on Belarussian potash have led to soaring fertilizer costs, fears of poor harvests, and consumer price inflation.  American farmers have demanded their immediate withdrawal. The Atlantic believes Putin’s Russia is using Belarus’ economic isolation to capture its key industries, writes Louis Auge.

Before a soldier throws a hand grenade, one would expect that they had surveyed the surrounding area, considered the location of their comrades, and imagined the situation post-explosion.

While such foresight is taught in basic training to US marines, it does not seem to have been embedded in the policymaking of the US Treasury.

The ramifications of American sanctions on Belarussian potash, for example, though well-intentioned, seem to have been deemed unworthy of due consideration, and as a result, unintended consequences abound.

Prices of potash fertiliser are at near 10-year highs in the US, the price of basic foodstuffs is surging as a consequence, and a hostile Russia looks to be on the verge of subsuming the Belarussian potash industry, and indeed Belarus, for good.

Not previously known to be keen foreign policy hawks, American farmers are up in arms, with the industry’s five main bodies writing to the Treasury to demand the immediate withdrawal of sanctions.

Their motivation is as much self-preservation as self-interest.  

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Farmers’ profit margins have been hammered by soaring fertiliser prices, cutting their incomes, and making poor harvests likely for the next two years.

Spotting a profitable opportunity to come to their rescue, potash firms in Norway and Canada have discussed increasing their output to fill the gap, but this won’t have any effect on prices in the short to medium term.

Why? Because Belarus accounts for a startling 20% of the world’s potash supply, specialising in high quality fertiliser - the type required to secure bumper harvests.

This has made Belarus the envy of the market and while Canadian and Norwegian firms may have bold ambitions to catch up, they have been pipped to the post by bolder, more underhand parties.

Indeed, there are reports that Dmitry Mazepin, a board member at Russia’s largest potash producer, Uralkali, allegedly actively funded pervasive social media activity encouraging sanctions on Belarus, alledgedly delivering his firm a competitive advantage in the process.

With Belarussian potash now banned from crossing Lithuania to be exported from the port of Klaipeda, Reuters have reported that shipments have been redirected to Russia and the port of Ust-Luga, not far from St. Petersburg.

In other words, advantage Uralkali.

Yet the destruction of the Belarussian potash industry is not only the result of commercial arbitrage, but thought to be part of a wider geopolitical project too.

In Russia, large firms tend to have good relations with the Kremlin and Uralkali is no different.

Sergey Chemezov, its Chairman, is an ally of Putin and it would be naïve to underestimate the President’s influence upon him.

Yet influence to what end?  

For the Atlantic Council, a think tank, Russia’s newfound control of the Belarussian potash industry is a development that gives them checkmate over their smaller neighbour.

With its industrial engine in the hands of Russia, Belarus would become entirely dependent on the generosity of Putin, making it a sovereign nation in name only.

US sanctions, therefore, have not only given the enemy control of a key commodity, but they have also eroded the independence of a nation they were intended to protect.

Compounding the issue is the limpet-like Lukashenko, who has clung to power in spite of sanctions and remains aggressive on the international stage, welcoming Russian troops to Belarus and menacing the EU’s borders.

A resolution is required.

Fortunately for the US, it can go some way to rectifying the damage of its sanctions policy.

A withdrawal of sanctions would re-energise the Belarussian potash industry by reconnecting it with Western markets, thus decreasing the country’s dependence on Putin’s Russia.

Cutting Russia’s vice-like grip on Belarus is a step towards a renewed balance of power in Eastern Europe and a military necessity for Ukraine, which is currently under threat from both the North and East.

In terms of the economics, the financial benefit of an end to sanctions for ordinary Belarussians is obvious, yet American politicians will be more interested in the clear upsides for their voters.

Renewed stability in the supply of potash will soothe the country’s agricultural sector, a politically powerful industry, providing a consequent bump to future harvests, and bringing down the price of basic foodstuffs as a result.

As such, the withdrawal of sanctions seems like a win-win, yet the US government has demurred, perhaps because it wants to keep up the pressure on the undeniably unsavoury Lukashenko.

While well-intentioned, this logic is flawed.

Lukashenko is still in power in spite of sanctions for one, while each day they’re in place increases his reliance on Russian support, support that Russia is all too willing to provide.

To get the upsides of an end to sanctions while keeping Lukashenko in check, the US could exchange the withdrawal of restrictions on Belarussian potash for democratic and humanitarian reforms in Belarus.

Reform in return for a pot of gold – a crude solution but one that will end this psychodrama for Belarussians and Americans alike.

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