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Obscure however Essential Commodity Fuels Geopolitical Tussle in Japanese Europe

KLAIPEDA, Lithuania — For almost 20 years, lengthy freight trains laden with reddish-brown grit have rumbled into Lithuania’s predominant port on the Baltic Sea, offering an financial lifeline for Aleksandr G. Lukashenko, the autocratic president of neighboring Belarus.

That lifeline is to be reduce on Feb. 1 after a choice by the Lithuanian authorities to halt the wagons carrying Mr. Lukashenko’s largest supply of money: potash fertilizer for export to Europe and past via the port of Klaipeda.

Mr. Lukashenko’s opponents applaud the transfer, however others fear about an unintended consequence: It advantages Russia, which is anticipated to take over the transport of Belarusian potash and will acquire a stranglehold over a considerable portion of the world’s provide of the obscure however indispensable commodity.

Potash, which Russia additionally produces, won’t appear to be a lot, however, prized as a crop nutrient important for world meals safety, it has greater than doubled in value over the previous 12 months, producing billions of {dollars} in additional revenue for Mr. Lukashenko and different producers. The closing of what had been Belarus’s solely export route for the commodity via the Baltics will drive costs even larger.

Lithuania’s state-owned railway and the Klaipeda port earn a big chunk of their income from potash. Arguments amongst Lithuania’s political and financial elite about what to do in regards to the commerce restrictions have been so heated that the federal government in December supplied to resign over the difficulty. The ruckus erupted after the chairman of Parliament’s international affairs committee, Zygimantas Pavilionis, accused the federal government of betraying america, a key ally that final 12 months imposed sanctions on Belarus’s state-owned potash producer, and of enabling a dictator.

Mr. Pavilionis, a hawkish former Lithuanian ambassador to Washington, mentioned in an interview that the difficulty had grow to be so tense as a result of “it’s about very huge cash.”

In a December letter to Lithuania’s state-owned railway, the U.S. Treasury defined that American sanctions on an enormous Belarusian potash producer didn’t apply to international entities, nevertheless it urged what it known as a “risk-based strategy” to compliance, suggesting there might be issues in future.

The Belarusian opposition chief Svetlana Tikhanovskaya, who lives in exile in Lithuania and who has lengthy lobbied to cease the potash shipments, mentioned she was delighted to see the tip of what, in an interview, she known as an “immoral” enterprise whose termination will assist empty “the dictator’s deepest pocket.”

That pocket is Belaruskali, a large state-owned potash producer that serves as a money cow for Mr. Lukashenko’s authorities. Belarus’s largest taxpayer and largest exporter, the corporate accounts for round 20 p.c of world potash provides.

However the American-led drive to bankrupt Mr. Lukashenko has stirred alarm in regards to the ensuing windfall for Russia. Canada, the world’s largest potash producer, may even acquire from an anticipated surge in costs, however Russian positive factors go far past simply value.

“Russia is applauding,” Algis Latakas, the director of Klaipeda port, mentioned in an interview. Belaruskali, he mentioned, will almost definitely merely swap to utilizing Russian trains and transport the commodity to Ust-Luga, a Russian port close to St. Petersburg whose growth has lengthy been a pet venture of President Vladimir V. Putin’s.

Mr. Latakas mentioned he understood his authorities’s want to “struggle nondemocratic forces” however cautioned that the tip outcome on this occasion might properly be that “Russia will get an enormous financial benefit” and the “energy to manage meals costs.”

Whether or not sanctions work has lengthy been a subject of educational and political debate, however within the case of these imposed on Belarus, the outcomes have to this point been significantly meager.

Over the previous 12 months, throughout which the European Union and america imposed a number of rounds of financial restrictions on Belarus, the worth of commerce between Europe and the East European nation has almost doubled. That’s largely due to sharp will increase within the value of the commodities that Mr. Lukashenko exports, primarily potash and oil merchandise, whose worth has soared thanks partially to rising, sanctions-induced uncertainty over provides.

“Lukashenko is simply making more cash,” lamented Laurynas Kasciunas, the chairman of the Lithuanian Parliament’s nationwide safety and protection committee.

As a substitute of being persuaded to free political prisoners as had been hoped, Mr. Lukashenko has arrested solely extra individuals, with round 980 now behind bars for his or her political actions, according to Viasna, a group that monitors human rights in Belarus. That’s greater than double the quantity reported final June when the present spherical of sanctions started after the forced landing in Minsk, the Belarusian capital, of a Ryanair passenger jet carrying a young dissident, who was promptly arrested.

Ms. Tikhanovskaya acknowledged “the paradox that sanctions have been imposed however Belarus’s revenue has elevated” and mentioned the squeeze on Mr. Lukashenko wanted to be tightened in order to use “insufferable stress” to shake the loyalty of officers and businesspeople Mr. Lukashenko will depend on to remain in energy.

Essential for his financial survival is potash, of which Russia and Belarus collectively produce round 40 p.c of the world’s provide.

The 2 nations’ producers have for years competed fiercely for export markets, however, with Belaruskali now more likely to grow to be depending on Russian railways and ports to promote its merchandise overseas, Moscow will acquire highly effective leverage over the Belarusian firm. That will put it able to make use of potash a lot in the identical means it makes use of its management of giant reserves of pure fuel to skew the market and put stress on European nations.

“Everybody throws round fairly slogans about democracy however the outcome shall be precisely the alternative of what they need,” predicted Igor Udovickij, the bulk proprietor of a bulk cargo terminal at Klaipeda port half owned by Belaruskali.

“Whoever controls potash controls the provision of meals all over the world,” he mentioned. “We’re simply giving Putin a nuclear weapon, however, not like the weapons he already has, that is one which he can really use.”

Mr. Udovickij has a transparent curiosity in conserving freight trains from Belarus working to Klaipeda. However others with no cash at stake additionally fear that Russia would be the predominant beneficiary of efforts to halt the potash visitors via Lithuania, previously a part of the Soviet Union — towards its will — however now a member of the European Union and NATO.

“We should be very cautious in imposing sanctions to not simply create alternatives for others,” mentioned Mr. Kasciunas, the nationwide safety and protection committee chairman. As a stalwart American ally, he mentioned, Lithuania has an obligation to help sanctions imposed on Belarus by the U.S. Treasury, however the nation additionally has different issues, particularly Russia.

“No one right here is pro-Lukashenko, however everybody worries most about Russia,” he mentioned. “There are very sophisticated geopolitics at play with potash.”

Russia has been pushing for years, to this point in useless, to get management of Belaruskali, the crown jewel of Mr. Lukashenko’s in any other case largely decrepit industrial base. In contrast to Belarus’s different predominant income, petroleum merchandise that depend on provides of crude oil from Russia, the potash firm doesn’t rely on Russia to do enterprise. No less than not till this month.

Mr. Lukashenko, having known as for assist from the Kremlin to place down big avenue protests set off by a presidential election broadly seen as rigged in August 2020, has steadily misplaced his means to withstand Russian calls for. And Belaruskali is now trying more and more weak.

In latest weeks, the corporate has not solely misplaced its export route via Lithuania but additionally its largest European buyer, Yara, a partly state-owned Norwegian firm.

Yara introduced on Jan. 10 that it was phasing out all purchases from Belaruskali and would cease shopping for by April 1.

Ms. Tikhanovskaya dismissed issues that sanctions would push her nation solely nearer to Russia as an argument promoted by Mr. Lukashenko and his supporters “to attempt to cease principled motion — it’s all a bluff.”

Nonetheless, Lithuania will lose a whole bunch of tens of millions of {dollars} from halting Belarus exports via Klaipeda, and, in response to an inside authorities report assessing potential harm, it might face authorized claims of as much as $15 billion over damaged contracts. Mr. Udovickij, for one, says he plans to sue the federal government for hefty damages.

However for a small nation depending on america for safety towards an more and more assertive Russia, much more is at stake than simply cash, the minister of transport, Marius Skuodis, mentioned in an interview. Potash, he added, “is a really troublesome geopolitical query.”

Tomas Dapkus contributed reporting from Vilnius, Lithuania.

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