An obscure but crucial commodity is fueling the geopolitical struggle in Eastern Europe
KLAIPEDA, Lithuania — For nearly two decades, long freight trains laden with reddish-brown gravel rumbled through Lithuania’s main port on the Baltic Sea, providing an economic lifeline for Aleksandr G. Lukashenko, the autocratic president of the neighboring Belarus.
This lifeline is due to be cut on February 1 after a decision by the Lithuanian government to stop wagons carrying Mr Lukashenko’s biggest source of money: potassium fertilizers for export to Europe and beyond. through the port of Klaipeda.
Mr Lukashenko’s opponents applaud the move, but others worry about an unintended consequence: it benefits Russia, which is set to resume transporting Belarusian potash and could take over a substantial part of it. global supply of the obscure but indispensable commodity. .
Potash, which Russia also produces, may not seem like much, but considered a vital nutrient for global food security, its price has more than doubled over the year. sold out, generating billions of dollars in additional revenue for Mr. Lukashenko and other producers. The closure of what had been Belarus’ only export route for the commodity via the Baltics will drive prices up even further.
The Lithuanian State Railway and the Port of Klaipeda derive much of their revenue from potash. Disputes among Lithuania’s political and business elite over what to do about trade restrictions have been so heated that the government in December proposed to resign over the issue. The row erupted after the chairman of the parliament’s foreign affairs committee, Zygimantas Pavilionis, accused the government of betraying the United States, a key ally which imposed sanctions on the US-owned potash producer last year. Belarusian state, and to empower a dictator.
Mr Pavilionis, a hawkish former Lithuanian ambassador to Washington, said in an interview that the issue had become so tense because “it is about very large sums of money”.
In a December letter to Lithuania’s state-owned railway, the US Treasury explained that US sanctions against a major Belarusian potash producer did not apply to foreign entities, but urged that he called a ‘risk-based approach’ to compliance, suggesting there could be problems in the future.
Belarusian opposition leader Svetlana Tikhanovskaya, who lives in exile in Lithuania and has long lobbied to stop potash shipments, said she was glad to see an end to what she called in an interview of an “immoral” enterprise whose end will help empty “the dictator’s deepest pocket”.
That pocket is Belaruskali, a giant state-owned potash producer that serves as a cash cow for Mr Lukashenko’s government. The largest taxpayer and largest exporter in Belarus, the company represents around 20% of the world’s potash supply.
But the US-led campaign to bankrupt Mr Lukashenko has raised concerns about the resulting windfall for Russia. Canada, the world’s largest potash producer, will also benefit from an expected price hike, but Russia’s gains go far beyond just price.
“Russia applauds,” said Algis Latakas, director of the port of Klaipeda, in an interview. Belaruskali, he said, will most likely simply switch to Russian trains and transport the goods to Ust-Luga, a Russian port near St. Petersburg whose development has long been a pet project of President Vladimir V. Putin.
Mr Latakas said he understood his government’s desire to “fight undemocratic forces”, but warned that the end result in this case could well be that “Russia gets a big economic advantage” and the “power to control food prices.
Whether the sanctions work has long been a matter of academic and political debate, but in the case of those imposed on Belarus, the results so far have been particularly meager.
Over the past year, during which the European Union and the United States have imposed several rounds of economic restrictions on Belarus, the value of trade between Europe and the Eastern European nation almost doubled. This is largely due to sharp increases in the price of the commodities that Mr Lukashenko exports, mainly potash and petroleum products, the value of which has soared in part thanks to the growing supply uncertainty induced. by penalties.
“Lukashenko just makes more money,” lamented Laurynas Kasciunas, chairwoman of the Lithuanian parliament’s national security and defense committee.
Instead of being persuaded to release political prisoners as had been hoped, Mr Lukashenko has only arrested more people, with around 980 currently behind bars for their political activities, according to Viasna, a group that monitors human rights in Belarus. That’s more than double the number reported last June when the current round of sanctions began after a Ryanair jetliner carrying a young dissident crash-landed in the Belarusian capital, Minsk, and was promptly arrested.
Ms Tikhanovskaya acknowledged ‘the paradox that sanctions were imposed but Belarus’ revenue increased’ and said the pressure on Mr Lukashenko needed to be tightened in order to apply ‘unbearable pressure’ to shake the loyalty of the people. officials and businessmen. Mr Lukashenko depends on staying in power.
Potash is crucial to its economic survival, of which Russia and Belarus together produce around 40% of the world’s supply.
Producers from both countries have been engaged in fierce competition for export markets for years, but with Belaruskali now likely to become dependent on Russian railways and ports to sell its products abroad, Moscow will gain a powerful leverage effect on Belarusian society. This would put him in a position to use potash the same way he uses his control of huge natural gas reserves to distort the market and put pressure on European countries.
“Everyone is throwing nice slogans about democracy but the result will be exactly the opposite of what they want,” predicted Igor Udovickij, the majority owner of a bulk cargo terminal in the Belaruskali-owned port of Klaipeda. .
“Whoever controls the potash controls the food supply in the world,” he said. “We’re just giving Putin a nuclear weapon, but, unlike the weapons he already has, this is the one he can actually use.”
Mr. Udovickij has a clear interest in maintaining freight trains from Belarus to Klaipeda. But others, with no money at stake, also fear Russia could be the main beneficiary of efforts to stop potash smuggling through Lithuania, formerly part of the Soviet Union – against its will – but now a member of the European Union and NATO.
“We have to be very careful in imposing sanctions so as not to simply create opportunities for others,” said Mr. Kasciunas, chairman of the national security and defense committee. As a staunch US ally, he said, Lithuania has a duty to support the sanctions imposed on Belarus by the US Treasury, but the country also has other concerns, namely Russia .
“No one here is pro-Lukashenko, but everyone is mostly worried about Russia,” he said. “There is a very complicated geopolitics at play with potash.”
Russia has been pushing for years, so far unsuccessfully, to take control of Belaruskali, the crown jewel of Mr Lukashenko’s otherwise decrepit industrial base. Unlike Belarus’ other main source of income, petroleum products which depend on crude oil supplies from Russia, the potash company does not depend on Russia for business. At least not before this month.
Mr Lukashenko, after appealing to the Kremlin for help in suppressing huge street protests sparked by a widely seen rigged presidential election in August 2020, gradually lost his ability to resist Russian demands. And Belaruskali now looks increasingly vulnerable.
In recent weeks, the company has not only lost its export route through Lithuania, but also its biggest European customer, Yara, a Norwegian partly state-owned company.
Yara announced on January 10 that it was phasing out all purchases of Belaruskali and would stop buying by April 1.
Ms Tikhanovskaya dismissed fears that sanctions would bring her country closer to Russia, an argument promoted by Mr Lukashenko and his supporters “to try to stop principled action – it’s all a bluff”.
Still, Lithuania will lose hundreds of millions of dollars by stopping Belarusian exports through Klaipeda and, according to an internal government report assessing the potential damages, it could face lawsuits of up to $15 billion over broken contracts. Mr Udovickij, for his part, says he plans to sue the government for heavy damages.
But for a small country dependent on the United States for its security in the face of an increasingly assertive Russia, there is much more at stake than money, Transport Minister Marius Skuodis said in an interview. Potash, he added, “is a very difficult geopolitical issue.”
Tomas Dapkus contributed reporting from Vilnius, Lithuania.