EU to impose more sanctions on Belarus; Russia signals cheaper grain exports to ‘friendly' countries

3 Aug 2023

The European Union (EU) backed more sanctions on Belarus with further export bans for its support of Russia’s invasion of Ukraine. Lithuanian President Gitanas Nausėda said the Baltic nations and Poland should be prepared to shut the border with Belarus amid security warnings over the presence of Russian mercenaries there.

German Defence Minister Boris Pistorius reiterated that it’s too early to make a decision on supplying Ukraine with the Taurus cruise missiles it has requested. In its support for the government in Kyiv, Germany is focusing for now on areas including air defence and armoured vehicles, Pistorius told reporters during a troop visit in Bavaria.

Latest developments

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Russia signals cheaper grain shipments to ‘friendly' countries

Russia may offer cheaper grain exports to countries that have not imposed sanctions, the latest sign that Moscow is using the nation’s food superpower status as a political tool.

The government could get the power to lower duties on commodities exports including grain and fertilisers to “friendly” countries, Prime Minister Mikhail Mishustin said in a televised speech on Thursday.

Russia is the world’s top wheat exporter and is shipping record volumes again this season, while its fertiliser deliveries are recovering to pre-war levels. It already adjusted the way its wheat-export tax is calculated in May, lowering the levy. The tax is currently at about $30 a ton, while traders sold Russian wheat to Egypt at $264 a ton — including freight — in the latest tender.

President Vladimir Putin last week promised to send free grain to six African countries that have strong ties with Moscow.

Navalny says he faces ‘Stalinist’ sentence at closed trial

Russian opposition leader Alexey Navalny said he’s expecting a “Stalinist” sentence when a court is due to give its verdict Friday in an “extremism” trial held inside a strict-regime prison.

“It’s going to be a huge sentence, what they call a ‘Stalinist’ sentence,” Navalny said in a statement posted on his website. “They asked for 20 years so they’ll give 18 or something around that.”

President Vladimir Putin’s most outspoken critic faces almost certain conviction on charges of founding an “extremist” group and six other related criminal counts. Navalny (47) said he expected a further case accusing him of “terrorism” to begin soon as well, aimed at keeping him in prison for a further 10 years.

Putin, poison and the importance of Alexey Navalny: QuickTake

He’s already serving a nine-year term for fraud and contempt of court that was imposed after he returned to Russia in early 2021 following treatment in Germany for a nerve-agent poisoning in Siberia that he and Western governments blamed on the Kremlin. Russian authorities denied responsibility. Navalny and his supporters have continued to face a relentless crackdown by the authorities since Putin ordered the February 2022 invasion of Ukraine.

Russia to prolong cut in crude oil exports

Russia will prolong a cut in its crude exports into September, while tapering the size of the supply reduction, according to Deputy Prime Minister Alexander Novak.

“Within the efforts to ensure the oil market remains balanced, Russia will continue to voluntarily reduce its oil supply in the month of September now by 300,000 barrels per day,” Novak said in a statement on Thursday. The nation pledged to cut its overseas supplies by 500,000 barrels a day in August.

Russia’s decision follows Saudi Arabia’s unilateral extension of its production by one million barrels a day through September.

EU backs more sanctions on Belarus over aiding Russia’s war

The European Union agreed to impose more sanctions on Belarus with further export bans, as it cracks down on efforts to bypass restrictions on Russia over its war in Ukraine.

Under the new measures agreed on Thursday, the EU backed plans to expand a ban on exports of highly sensitive goods and technologies that boost Belarus’s military and technological development. It also added export bans on firearms, ammunition and on goods and technology used in the aviation and space industries, the European Commission said in a statement.

The new sanctions are tailored to align with those already imposed on Russia in reaction to Belarus’s involvement in Moscow’s war in Ukraine. The restrictions also aim to ensure that measures targeted against Russia can’t be circumvented through Belarus, Moscow’s closest ally, the commission said.

What sanctions on Russia have and haven’t achieved: QuickTake

The EU’s executive arm proposed the measures on Belarus in January, but their adoption was delayed by differences between member states over food and agricultural exports. President Alexander Lukashenko allowed Vladimir Putin to use his country as a launchpad to invade Ukraine.

Polish and Baltic authorities have in recent weeks increasingly warned of a mounting security threat in Belarus over the presence of Russian mercenaries in the country. Lithuanian President Gitanas Nausėda said on Thursday that Baltic nations and Poland should be prepared to shut the border with Belarus.

Russia to restart buying currency, gold as energy income revives

Russia will start buying foreign currency and gold as a recovery in energy revenue brought it above the target set in the budget.

The Finance Ministry said on Thursday it would purchase 40.5 billion roubles ($433-million) during the 7 August to 6 September period under a budgetary mechanism designed to insulate the economy from the volatility of commodity markets.

Since purchases were halted in late January 2022, followed by the programme’s suspension after the invasion of Ukraine the following month, the Finance Ministry has only sold foreign currency this year as part of the revamped fiscal mechanism.

With the bulk of its currency reserves frozen by US and European sanctions, the yuan is the main asset Russia can still use for such operations. Russia gets around a third of its budget revenues from the oil and gas industry.

War-weary Ukraine farmers curb plantings in blow to food supply

Major Ukrainian farm companies are curbing winter crop plantings after Russia blocked the main Black Sea export route, hitting world food supplies for the next two years.

The options for farmers who made Ukraine a global breadbasket are narrowing as the economics of their business deteriorates. They have limited storage space as this year’s harvest piles up, while an alternative shipping corridor along the Danube is expensive and lacks capacity. Grain ports on the river are also being attacked by Kremlin drones.

Decisions taken over the next few weeks in Ukraine — for wheat, barley and rapeseed — will have repercussions for the 2024 harvest. That will hit both Kyiv’s precious wartime revenues and global supplies of key food staples.

“With grains it’s a full disaster,” said Roman Slaston, head of the Ukraine agribusiness club. “We definitely might see a decrease of winter wheat and barley and winter rye as well.”

Ukrainian agribusinesses IMC and HarvEast are already cutting back on wheat plantings, with the former planning to grow almost one-third less. IMC also won’t plant winter rapeseed, said Chief Executive Officer Alex Lissitsa, while Astarta has cut its plantings of that crop.

“Currently it’s not possible to sell any grains because the prices are below the cost of production,” Lissitsa said.

Traditionally Ukraine shipped grains across the world from its deep Black Sea ports. While Russia initially blocked that route after it invaded last year, a safe-corridor deal brokered by the United Nations and Turkey allowed exports to resume.

After a year of shipments that were repeatedly disrupted by Moscow, Russia exited the deal last month. Since then, the Kremlin has escalated assaults on grain infrastructure in Ukraine, including attacking key Danube ports and firing missiles that damaged equipment at a cargo terminal in the Odesa region. DM

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