EU Sanctions Russian Billionaire as U.S. Joins Action on Belarus

The U.S., the U.K. and the European Union sanctioned dozens of Belarusian individuals and organizations on Monday in a coordinated response to last month’s forced landing of a Ryanair flight and the government’s ongoing crackdown on President Alexander Lukashenko’s political opponents.

In a joint statement, the governments, along with Canada, expressed deep concern about steps taken by Lukashenko since his discredited declaration of victory in last year’s presidential election, including continuing attacks on human rights, fundamental freedoms and international law.

EU governments also agreed to sanction several sectors of Belarus’s economy including industries connected to petroleum and the soil nutrient potash, as the bloc increases pressure on Lukashenko. Josep Borrell, the EU’s foreign policy chief, said that officials also discussed the separate package of economic sanctions and it will be presented to EU leaders at a summit later this week.

“Certainly, there is not a magic wand, but this is the tool we have,” he told reporters in Luxembourg, adding that another round of sanctions is still possible.

Belarus’s $750 million of bonds due in 2031 plummeted, sending the yield up about 70 basis points, the most since the debt was issued a year ago. The rate advanced to 8.35%, the highest on record.

EU Sanctions Russian Billionaire as U.S. Joins Action on Belarus

The bloc nearly doubled the number of individuals and entities previously sanctioned, adding 86 people and entities to its existing list. The new additions are mostly judges and high-ranking law enforcement officers. It added several top businessmen with close ties to Lukashenko, including Alexei Oleksin, whose interests range from oil trade to tobacco business. The EU also sanctioned Russian billionaire Mikhail Gutseriev, describing him as a long-time friend of the president.

EU Sanctions Russian Billionaire as U.S. Joins Action on Belarus

The Biden administration sanctioned the top prosecutor in Belarus, as well as Lukashenko’s top spokeswoman, other associates and a prison where the U.S. alleges Lukashenko’s regime has tortured political opponents.

U.S. Secretary of State Antony Blinken said in a statement that action was taken in response to the Ryanair diversion and “the continuing repression in Belarus, including attacks on human rights, democratic processes, and fundamental freedoms.”

The U.S. also sanctioned Natallia Kachanava, chairwoman of Belarus’s upper house of parliament, and several people and organizations alleged to have been involved in the August election and a violent crackdown on protesters afterward.

They include Andrei Shved, the prosecutor general, who has issued arrest warrants and extradition requests against Lukashenko opponents, including Raman Pratasevich, the journalisted arrested from the Ryanair fligth forced to land in Minsk.

The most significant of the economic sanctions could be the restrictions imposed on potash sales. The soil nutrient is one of Belarus’s major exports and the country’s only abundant mineral resource. The specific segments that will be targeted by the sanctions are expected to hit about a quarter of the EU’s potash imports from Belarus, according to a person familiar with the proposals, but legal work on the measures needs to be finalized before the package is formally adopted. Last year, potash shipments netted Belaurs $2.4 billion, according to the national statistical committee..

Austrian Foreign Minister Alexander Schallenberg told reporters that the economic sanctions will affect seven sectors, including phosphate potassium, finance, telecom surveillance technology, and a further strengthening of the arms embargo.

The EU is also expected to impose trade restrictions in the petroleum and petrochemical sector and export restrictions on supplies to the tobacco industry, as well as prohibit EU operators, including insurance companies, from providing services and new lending to the government in Belarus, the central bank and several majority state-owned entities, according to the person familiar with the proposals.

The bloc is seeking to halt new lending from multilateral development banks, said the person, who asked not to be identified because the plans are private.

Russian Billionaire

The EU had previously sanctioned seven Belarusian entities and 88 individuals, including Lukashenko himself, and was working on adding more people to the list even before the detention of the journalist Pratasevich. Other additions to the list includes ministers and other lawmakers, air force officers, business executives and companies supporting the regime, with Gutseriev being the most notable name on the new list.

The majority of Gutseriev’s $3.2 billion fortune is derived from the energy sector where his family controls Neftisa, Russian petroleum products maker, and Russneft, country’s sixth largest oil company by crude oil production, according to Russneft’s website. The billionaire also owns a group of business centers, hotels and warehouses in Moscow and the surrounding area. His Safmar Group holds 60% stake in M.video PJSC, Russia’s biggest consumer electronics retailer.

Gutseriev, 63, took his first steps in business at the end of the 1980s when he opened a private banks from an old police building in the Chechen capital, Grozny. After the Soviet Union collapsed, he opened another bank in Moscow and started a chain of stores selling gold jewelry. By the early 2000s, the billionaire founded his first business in the oil industry, creating Russneft in partnership with Glencore Plc.

Gutseriev fled Russia in 2007, selling the business to a Kremlin-friendly oligarch for almost $3 billion after Moscow tax officials began raiding his offices amid a tax fraud probe. He returned three years later when the charges against him were dropped and repurchased Russneft. The billionaire also controls the Minsk-based company Slavkaliy that was created for exploration of the potash mine at the Starobin deposit in Belarus.

In 2016, Gutseriev spent millions of dollars on his younger son’s wedding, which featured performances by Jennifer Lopez, Enrique Iglesias and Sting.

©2021 Bloomberg L.P.

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