Minsk is using Budapest to block new mooted potash sanctions

Minsk is using Budapest to block new mooted potash sanctions
Minsk is using Budapest to block new mooted potash sanctions / bne IntelliNews
By bne IntelliNews April 19, 2023

Belarus and Hungary are forging closer economic ties as Minsk seeks to deflect new EU tough sanctions on its potash exports, one of the country’s biggest foreign exchange earners.

Poland and another ally are pushing hard for tough new sanctions against Belarus, but Hungary has been blocking them, undermining EU consensus on the issue. Sanctions need a consensus vote by all EU members to be adopted.

The fertiliser dispute has stalled work on new EU sanctions against Belarus. Some Western European countries want new restrictions against Minsk to be accompanied by easing restrictions on exporting potash fertiliser, which plays a vital role in EU agriculture. Russia and Belarus are major suppliers to the EU and potash is hard to source elsewhere.

Poland has suggested that the Belarusian authorities cease repression in exchange for “space for political and economic manoeuvre”. However, so far negotiations have not brought any results.

The government of Hungarian Prime Minister Viktor Orban has been largely pro-Russian, as it remains heavily reliant on imports of Russian oil, gas and commodities. Belarus is seen as a partner, as the Soviet-built Druzhba oil pipeline runs across Belarus to Hungary from Russia and is Hungary’s main source of oil.

Belarus, for its part, is proposing deeper trade and economic co-operation with Budapest, with a roadmap for developing such collaboration between Belarus and Hungary emerging from a meeting of the Intergovernmental Commission on Economic Co-operation in Budapest. Emphasis was placed on co-operation in agriculture, industry, energy, management of water resources, construction and tourism.

Hungary sees Belarus as a “reliable oil supply partner” and reaffirmed its intention to co-operate in the field of nuclear energy, both seen as critical to future Hungarian energy security. Minsk says trade with Hungary declined in 2022 and did not correspond to the potential for collaboration.

Belarusian Foreign Minister, Siarhei Aleinik, visited Hungary for a meeting of the Intergovernmental Commission on Economic Cooperation in Budapest. The delegates discussed agricultural cooperation with Agriculture Minister Istvan Nagy and held talks with his counterpart Peter Szijjarto, who visited Minsk in February.

Plans were also announced to open a Belarusian tractor assembly plant in Hungary, and collaboration in the pharmaceutical industry was discussed. The Hungarian pharmaceutical and biotechnology company Gideon Richter was singled out in this to allow Belarusian products to enter the European market, and Belarus to buy Western medicines through Hungary.

Budapest is trying to keep communication channels open while at the same time attempting to convince Belarus to do everything possible to lobby Russia to end the war in Ukraine. Belarusian President Alexander Lukashenko has recently called twice for a ceasefire in Ukraine. but to no avail.

Hungary has been under intense pressure from the US to break off commercial ties with Russia as part of its campaign to make sanctions work better. Orban appeared to do an about-face this week, when the government pulled out of Russian-controlled IIB bank and Orban called the US a “friend.” However, last week a Hungarian delegation travelled to Moscow to sign up for new energy deals and some analysts believe that Orban is only playing lip service to Washington as a way of taking the White House heat off his government.