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Lukashenka threatens to shut Belarusian-Baltic transit routes: Who will suffer most?

Author : Alla Hurska

Source : Jamestown Foundation

Belarusian President Alyaksandr Lukashenka threatened to redirect all of his country’s trade flows as well as the transit of foreign goods across its territory from Lithuanian ports to Ust-Luga and Primorsk, in Russia’s Leningrad Oblast, if Europe were to impose anti-Belarus sanctions
23:12, 14 September 2020

Open source

On August 28, Belarusian President Alyaksandr Lukashenka threatened to redirect all of his country’s trade flows as well as the transit of foreign goods across its territory from Lithuanian ports to Ust-Luga and Primorsk, in Russia’s Leningrad Oblast, if Europe were to impose anti-Belarus sanctions (Belta.by, Interfax, August 28). In particular, Belarus would stop utilizing the Lithuanian port of Klaipeda to ship its exports (mainly potassium chloride and oil products) to global markets (Minprom.ua, August 28). Indeed, on September 7, the Belarusian state petrochemical concern Belneftekhim confirmed that negotiations are apparently underway on the re-direction of export flows of Belarusian refined oil products from Lithuania to Russian ports (Belta.by, September 7).

Situated in the geographic heart of Europe, Belarus is criss-crossed by major international transit corridors that connect the European Union, Russia, Central Asia and China, as well as link the Baltic, Black and Caspian seas. The closure of those transit routes through the country or their redirection to Russian ports will affect many regions. And the geo-economic and geopolitical impact of such a policy will extend well beyond Belarusian-Lithuanian relations.

Among the most affected third countries might be Ukraine—a fear explicitly expressed by the Ukrainian Ministry of Infrastructure (Minprom.ua, August 28). Ukraine notably depends on access to Lithuanian ports for a significant portion of its trade with the EU, which is today the country’s largest economic partner. In 2019, the share of trade in goods and services with the EU amounted to 40.1 percent of Ukraine’s total trade volume: $20.8 billion in exports and $25.0 billion in imports. Ferrous metals, grain crops, electric machines, ores, slags, fats and oils, oilseeds crops, wood and wood products, and energy materials were major Ukrainian export goods to Europe. The main imports were nuclear reactors, boilers, machinery and vehicles, chemicals, pharmaceutical products, plastics, polymeric materials, raw materials, food, drink and energy (Me.gov.ua, August 25). Last year, Ukraine was also among the three largest exporters of agricultural products to the EU, gaining $8.6 billion (Lb.ua, January 12, 14).

Related: Polish Foreign Ministry believes that Lukashenko lost legitimacy as president of Belarus

All of the above-listed goods were at least partially transported across Belarus to or from the Port of Klaipeda (Lithuania), which has become the leader in the Baltic States in terms of annual cargo volumes. To Klaipeda, Ukraine mainly transports ferroalloys from the Nikopol Ferroalloy Plant (controlled by Ihor Kolomoisky); while polymers, fertilizers, recyclables, fish, coke, clothing (“second-hand”) travel in the opposite direction (Info.uz.ua, August 7, 2018). The Viking Train—a transportation corridor connecting the Baltic (Klaipeda), Black (Odessa and Illichivsk), Mediterranean and the Caspian seas—is the fastest and cheapest route with access to Klaipeda. Ukraine, Belarus and Lithuania launched this project in 2003. During the first seven months of 2020, more than 7,000 containers were transported along the Viking railroad, via Ukrainian territory (Mtu.gov.ua, September 7).

Additionally, Lithuania continues to be Ukraine’s largest trading partner among the three Baltic States. The volume of bilateral trade hit a record $1.653 billion in 2019. Ukraine mainly exported agricultural products, food, mechanical engineering products, wood products and ferrous metals, while importing from Lithuania petroleum products, land vehicles and fertilizers (Lithuania.mfa.gov.ua, May 8).

Kyiv is not entirely beholden to Minsk when it comes to those trade flows, however. In 2019–2020, Ukraine managed to organize four additional international rail transit routes that do not traverse Belarus: 1) Nizhnodniprovsk-Vuzol (Ukraine)–Sławków (Poland)–Gdańsk (Poland), 2) Russia–Ukraine–Poland, 3) China–Kazakhstan–Russia–Ukraine–Poland and 4) Belarus–Ukraine–Romania. In January 2020 alone, five of such cargo trains passed through Ukraine (Info.uz.ua, February 25). These new freight trains to Poland are three times faster and at least 20 percent cheaper than previous routes across Belarus (Uz.gov.ua, April 4, 2019). From Xi’an (China) to Sławków (the beginning of the Trans-Caspian International Transport Route), a train managed to arrive at its destination in just 12 days (UNIAN, January 9). By utilizing these routes, Ukraine will be able to better secure its trade and transit to/from the EU. Also, if Minsk decides to deprive Lithuania of its cargo, Ukraine could try to benefit from this by redirecting international transit to Klaipeda across its own territory and Poland. Obviously, there is inherent risk in relying more heavily on passage through the Suwałki Corridor, a 65-kilometer wide stretch of land between Belarus and Kaliningrad. But since the United States has been boosting its long-term troop presence in Poland, Russia might be discouraged from trying to undermine security in this region.

Related: Will Belarus follow Ukraine out of the Russian orbit?

By closing transit to Klaipeda, Belarus will certainly harm Lithuania, but it also risks hurting itself. First, relations with Ukraine—a strategic trade/economic partner—could be ruined. In the first quarter of 2020, total Belarusian-Ukrainian trade turnover between the two countries amounted to $1.926 billion (Belarus.mfa.gov.ua, August 31). Second, Belarus, whose main exports (oil products and potash fertilizers) were transited through Lithuanian ports, has itself invested in this route. Since 2013, Belaruskali has paid $30 million for 30 percent of the Biriu Kroviniu Terminalas (BKT) shipping terminal at Klaipeda (Baltnews.lt, September 3). Already the main port terminal handling Belaruskali products, the BKT notably plans to increase its capacity from 10 to 16 million tons of cargo per year (including investing in a 100,000-ton-capacity warehouse) (Cfts.org.ua, July 24). In contrast, the new trans-shipment complex in Russia’s Ust-Luga port may not become operable until 2024 (Baltnews.lt, January 22). The lower price of using the Klaipeda port is also a serious factor (Baltnews.lt, September 3). Third, Poland ranks seventh in the world and second in Europe in terms of consumption of Belarusian potash fertilizers; and it is a key market for Belarusian timber product exports (Logirus.ru, August 31). Fourth, Belarus receives oil from the United States via the port of Klaipeda (Cfts.org.ua, August 10); naturally, the US is unlikely to redirect these oil shipments to Russian ports. Finally, it is not quite clear how China would react to a Belarusian transit ban across its territory. All in all, five out of six of Minsk’s key trade partners (Ukraine, China, Germany, Poland, Lithuania) would be unhappy about Lukashenka’s reorientation away from Klaipeda.

Apparently, Lukashenka counts on some sort of compensation from Russia. But burdened by its own economic problems, Moscow’s ability to fully compensate Minsk for potential losses looks dubious. Still, if Lukashenka finds himself completely isolated from the West, he may have no other option but to turn to Russia—no matter the economic losses.

Read the original text at The Jamestown Foundation.

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