CEE states accused of protecting Lukashenko's bagmen

By bne IntelliNews March 26, 2012

Tim Gosling in Prague -

European Union foreign ministers agreed expanded sanctions against Belarus on March 23, but conspicuous by their absence are companies with strong business ties in CEE countries, say reports. EU sources say that Latvia and Slovenia in particular pushed to get them omitted from the blacklist, and that they will pay a political price for their blatant self interest.

According to the sanctions, 12 Belarus citizens will be denied entrance into the EU and have had their assets frozen. Sanctions were also imposed against 29 companies close to the regime in Minsk.

However, with a level of fudge that only the EU can achieve, several companies that work closely with major businesses in certain member states have been left off the list. The fact that before the new sanctions the list included around 200 individual Belarusians but just three companies tells a story, especially as the officials that dominate the list invariable control the bulk of the largely state-owned Belarusian economy and its companies.

Considered a bagman for Belarusian President Alexandr Lukashenko by some, Yuriy Chizh has a large array of businesses ranging from petrochemicals to health spas and soft drinks, many of which are active in EU countries. Those interests have come to the fore in recent weeks, prompting EU diplomats to complain that Latvia and Slovenia in particular have been trying to protect him from the new sanctions.

At the same time, both Lithuanian President Dalia Grybauskaite and Prime Minister Andrius Kubilis have both supported that line in recent weeks. Grybauskaite said sanctions wouldn't work, but only drive Minsk further into Moscow's arms. There may be more than a grain of truth in that view, but Lukashenko has been playing the West off against Russia for over a decade now, without offering any significant improvement in freedom for Belarusians. At least Latvia has been more open about its resistance to expanded sanctions, complaining that they could hurt its companies and calling for compensation.

The compromise in Brussels is to allow some of Chizh's companies to carry on business in the EU, whilst Chizh himself has been put on the list. According to EU Observer, Latvia and Slovenia refused to agree to the new sanctions unless selected Chizh companies are left alone. The highest profile example is the contract that Slovenia's Riko Group has with a Chizh company to build a luxury hotel and electrical sub-stations in Minsk worth €157m.

Meanwhile, Leta reports that three other companies, owned by an unnamed individual that is blacklisted but which work with Latvian peers, have also been let off the hook. However, Brussels appears less than enthusiastic to reveal the full list.

One of the major questions is the position of several companies belonging to Vladimir Peftiev, who is chairman of Beltechexport, the largest weapons manufacturer in Belarus.

Peftiev, who is already fighting a visa ban and asset freeze in an EU court, has been the subject of immense lobbying efforts according to EU sources. "You wouldn't believe how many [people] have come through here," a senior EU official told EU Observer, referring to NGOs, diplomats and companies that have been telling him why Peftiev should be let off.

The same website also contacted Lawin, a Lithuanian law firm which represents Peftiev in his EU court case, about a reported $1m reward the Belarusian is said to have put up for anybody who can get him de-listed, but it declined to confirm or deny the information.

Although Lithuanian Foreign Minister Audronius Azubalis was bullish on the new sanctions the day after the EU meeting on March 24, Grybauskaite reiterated two days earlier that Lithuania has an identical position to Latvia on the issue. "We are neighbors, and we have the same concerns," the Lithuanian President reporters on a visit to Riga, according to The Baltic Times.

However, if likes of Latvia, Lithuania and Slovenia have in fact managed to get Chizh and Peftiev off the hook, other EU countries plan to make them pay a political price. "They will be held publicly accountable for their decisions," an EU diplomat said.

The meeting of foreign ministers on March 23 was the second attempt of the week to add the new names to the blacklist, after a gathering in Brussels on March 21 failed to reach agreement. Diplomats claimed in February that Slovenia had blocked sanctions against Chizh.

The latest meeting issued a statement saying the targets include those "benefiting from and supporting the regime" of President Alexander Lukashenko, as well as people responsible for repression of the opposition.

"Our decision today comes in response to the negative developments we have seen in Belarus," said the EU's foreign policy chief, Catherine Ashton. "Instead of increasing repression, Belarus must release and rehabilitate all political prisoners and roll back its repressive policies."

Predictably, Minsk responded to the expanded sanctions with anger. Belarusian Foreign Ministry spokesman Andrei Savinykh harshly criticized the move on March 23, according to AP, saying that the EU has "fallen hostage to the logic of coercion and blackmail." He added that Belarus would retaliate, saying it "sees no need" for EU ambassadors, recalled in early March, to return.

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