Guidance Overseas business risk for Belarus Updated 12 March 2024

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Information on security and political risks which UK businesses may face when operating in Belarus.

Political and economic context

POLITICAL

Belarus, with a population of 9.2m, is bordered by Poland, Latvia, Lithuania, Ukraine and Russia. It was a republic of the Soviet Union until it gained independence in 1991. Alexander Lukashenko has been in power since 1994 and is Belarus’ first and only directly elected president. Since coming to power, Lukashenko has consolidated his rule over all institutions.

All subsequent Presidential elections in Belarus have fallen short of international standards. The most recent Presidential election, in August 2020, was widely viewed as fraudulent, and led to mass protests. The UK and a number of other countries have not recognised the results of this election as valid. We have called on the Belarusian regime to organise new elections in line with international standards and under the monitoring of the Office for Democratic Institutions and Human Rights (ODIHR) of the Organisation for Security and Cooperation in Europe (OSCE).

The regime’s brutal crackdown of the post-election protests led to the imposition of sanctions – both sectoral and individual - by the UK, EU, US, Canada, and other international partners (see Sanctions section of this OBR).

Other significant political developments include the forced diversion to Minsk of Ryanair flight FR 4978 in May 2021 and the removal and arrest of a Belarusian dissident and his partner travelling on board the aircraft. In July 2022, the International Civil Aviation Organisation (ICAO) found this to be an act of unlawful interference with civil air traffic that endangered the safety of the aircraft, its passengers and crew and contravened Belarus’ obligations under the Chicago and Montreal conventions to which it is State Party. From mid to late 2021, the regime facilitated the mass entry of foreign nationals into Belarus in order to engineer a migration crisis intended to impact upon the neighbouring countries of Poland, Lithuania, and Latvia.

In February 2022 the Russian Federation launched its illegal invasion of Ukraine partially from Belarusian territory. Although Belarus has not committed its own armed forces in support of the invasion, the Belarusian regime is nevertheless facilitating Russian military operations. Apart from having permitted the use of Belarusian airspace, territory, and infrastructure by Russian forces to conduct offensive air and land operations against Ukraine, it continues to provide other support to Russian forces. Belarusian infrastructure such as the rail and road networks have been used to transport Russian military personnel and equipment. Injured Russian military personnel have been treated in Belarusian hospitals. Entities owned or controlled by the Belarusian regime have provided logistical support to Russian military forces based in Belarus. The Belarusian regime’s security and intelligence apparatus have identified, repressed, and arrested individuals in Belarus who have criticised Belarus’ support for Russian actions in Ukraine.

In response to Belarus’ support for the illegal invasion and its repression of opposition to the war, the UK and other close allies have imposed further sanctions on Belarus.

Following the failed mutiny by the Russian Private Military Company (PMC) Wagner in June 2023, the Belarusian regime permitted the relocation of Wagner mercenaries to Belarus. In March 2023, Russia also announced it would forward base Tactical Nuclear Weapons in Belarus.

ECONOMIC

Belarus has a mainly state-controlled economy where inefficient, state-owned enterprises (SOEs) dominate the market. The country’s economy has also been seriously weakened by sanctions, the scope of which is unprecedented in the independent history of Belarus. The Belarusian authorities report that 48% of the economy is under direct or secondary sanctions (November 2023).

In 2022, Belarus faced turmoil in the banking and financial sectors, disruption of trade, payment and logistics, withdrawal of international companies, restricted imports and the loss of markets. Belarus’ state-owned Belagroprombank, Dabrabyt Bank, Development Bank of Belarus, and Bel invest bank were all disconnected from the SWIFT international financial messaging system. Belarus’ GDP fell 4.7% in real terms in 2022, the biggest annual fall since the mid-1990s. The contraction took Belarus’ GDP back to its 2012 level, erasing ten years of economic development.

In 2023, to stimulate economic growth and domestic demand, the Belarusian authorities stuck to soft monetary policy. Huge efforts were also made to build alternative supply chains and reorient exports to Russia and new markets. Thanks to a strong demand in Russia, the Belarusian economy has adapted and secured a 3.9% year-on-year recovery growth of the GDP (exceeding an official forecast at 3.8%) after a 4.7% slump in 2022. However, this recovery growth is unstable as the economy is exposed to many risks. Consumer confidence, as well as the business and investment climate, have suffered severely because of the political crisis and remain weak. Business sentiment has been worsening, spurring a new wave of migration and the relocation of companies (in particular the IT sector) abroad. According to the methodology of the ILO (International Labour Organization), unemployment remained low at 3.5% in the fourth quarter of 2023, but the economy kept losing its labour force.

Due to ongoing strict price controls enforced in 2022, annual inflation was 5.8% y/y in December 2023. Growing domestic demand caused by the soft monetary policy and higher inflation in Russia are among the main pro-inflation factors. This inflationary pressure is expected to persist in 2024. However, price growth will be kept in check by the government, who plan to keep inflation below 6% in 2024.

The majority of macroeconomic trends that took shape in 2022, and the comprehensive state interventions in the economy continued in 2023. Belarus’ GDP growth is predicted to slow down in 2024. The economy will remain subject to many risks, and current growth remains heavily reliant on exports to Russian markets.

The World Bank (WB) forecasts a slowdown in Belarus’ GDP growth rate in 2024-2025 to 0.8%. The WB estimates that monetary and fiscal policies are approaching their limits, and dependence on Russia as the country’s main trade partner is growing. As a result, economic growth in the medium term will remain below potential.

The Eurasian Development Bank (EDB) is more optimistic, but expects growth to slow to 2% in 2024. According to the EDB, Belarus’ GDP growth may decline to 0.8% in 2025 and then grow to 1% in 2026. They believe growth of Belarus’ potential GDP will be limited to 1%–1.5% per year due to unfavourable demographic trends and restricted access to technology. External demand may also weaken as Russia’s growth slows and Russia’s own import substitution policy expands. The European Bank for Reconstruction and Development (EBRD) believes that the economy is unlikely to improve significantly in the short term. The EBRD forecasts moderate growth of 1.3% in 2024. The European Investment Bank (EIB) ceased activity in Belarus in the wake of the flawed elections of August 2020. The EBRD has made no new investments in Belarus since 2021. In April 2022, the EBRD’s Board of Governors decided to suspend Belarus’ access to the Bank’s resources in response to the regime’s facilitation of Russia’s illegal invasion of Ukraine. The EBRD has closed its offices in Minsk, but Belarus remains a shareholder. In early March 2022, the Asian Infrastructure Investment Bank (AIIB), which Belarus joined in 2019, froze lending to Belarus.

In April 2022, the Belarusian government and the National Bank of Belarus decided that public loans from the International Bank for Reconstruction and Development (IBRD), EBRD and Nordic Investment Bank (NIB) would be repaid in Belarusian rubles. In June 2022, the regulation was extended to Citibank N.A. London Branch to authorise payments on Belarus’ Eurobond obligations in Belarusian rubles. As a result, on 20 July 2022, Fitch Ratings downgraded Belarus’ Long-Term Foreign-Currency Issuer Default Rating to ‘RD’ (restricted default). In October 2023, Fitch withdrew Belarus’ ratingsdue to a lack of sufficient information. Fitch no longer provide ratings (or analytical coverage) for Belarus. Belarus was ranked 49 among the 190 countries surveyed in the last 2020 World Bank Ease of Doing Business Report. It has established preferential investment regimes in special economic zones such as the Hi-Tech Park and the China-Belarus Industrial Great Stone Park. However, the political crisis in Belarus, aggravated by the Russian invasion of Ukraine, has highlighted problems with the business climate such as weak rule of law and protection of property rights, lack of transparency, macroeconomic and financial instability, burdensome regulations with frequent changes and a shortage of affordable and long-term finance.

TRADE

Belarus’ economy has traditionally been export-oriented; about 65% of manufactured products are sent abroad. Belarus’ biggest export items and sectors are IT, transport services, oil, fertilisers, mechanical engineering, metallurgy, woodworking, light industry, dairy and meat products, furniture, glass, fiberglass, and cement. Belarusian imports primarily comprise energy resources (oil and natural gas), raw materials and components (metals and products from them, raw materials for chemical production, machine parts), and technological equipment. Many of these sectors are now under sanctions. In addition to the effects of sanctions, certain sectors, such as IT, have been heavily impacted by Belarus’ increased isolation and poor reputation. The openness of the Belarusian economy and its high dependence on foreign markets, in particular on Russia, make it sensitive to external sanctions pressure.

The geography of Belarus’ exports shrank from 172 markets in 2021 to 157 countries in 2022 and 2023. The main trade partners of Belarus were Russia, Eurasian Economic Union (EAEU) and Commonwealth of Independent States (CIS) countries. CIS countries (mainly Russia) accounted for 67.6% (59.8% in 2021 and 68.1% in 2022) of all exports of goods in 2023. Belarus is trying to expand its presence in the markets of Asia, America, Africa, and Oceania. Belarus imported goods from 186 countries in 2023 (191 in 2021 and 188 in 2022). The major share of all imports came from CIS countries – 56.2% in 2023 (62.1% in 2021 and 61.7% in 2022).

Russia is Belarus’ key trading partner and a major market for Belarus’ goods. The share of Russia in Belarus’ foreign trade in goods increased from 49% in 2021 to 58% in mid-2022 and more than 60% by the end of 2022 and into 2023. Belarus’ economy relies largely on oil and relatively cheap natural gas imports from Russia. With the launch of the Belarusian nuclear power plant Belarus has also become dependent on Russian nuclear fuel. The dependence of the Belarusian economy on Russia has markedly increased since the onset of the political crisis in Belarus and the war in Ukraine. Increasing cooperation with Russia and the implementation of import substitution projects jointly with Russia are at the top of Belarus’ government agenda. Russia is almost the only source of resources, investment, the main market, and a transit window for Belarus’ exports. Close linkages to Russia’s economy and any further negative shocks affecting Russia will hamper Belarus’ economic prospects.

Belarus is a part of the EAEU. Some products and equipment destined for Belarus must be certified under EAEU rules. This is not necessarily a barrier, but may deter companies who have no experience working in the EAEU or consider the Belarusian market not large enough to spend additional resources for certification.

Some foreign companies continue to operate in and with Belarus despite the political situation, sanctions, economic downturn, and geo-political tensions in the region; others have decided – including for reasons of reputational risk - to suspend their activities in Belarus, withdraw from the Belarusian market or stop trading with Belarus. The protracted crisis has discouraged British business, and companies need to take the necessary steps to ensure that they are compliant with sanctions regimes.

UK-BELARUS TRADE

Total trade in goods and services (exports plus imports) between the UK and Belarus was £91 million in the four quarters to the end of Q1 2023, a decrease of 63.3% or £157 million in current prices from the four quarters to the end of Q1 2022. Of this £91 million:

• Total UK exports to Belarus amounted to £40 million in the four quarters to the end of Q1 2023 (a decrease of 63.6% or £70 million in current prices, compared to the four quarters to the end of Q1 2022);
• Total UK imports from Belarus amounted to £51 million in the four quarters to the end of Q1 2023 (a decrease of 63.0% or £87 million in current prices, compared to the four quarters to the end of Q1 2022).

Belarus was the UK’s 152nd largest trading partner in the four quarters to the end of Q1 2023 accounting for less than 0.1% of total UK trade.

Sanctions

Following the flawed presidential elections of August 2020, the Belarusian regime has embarked on the systematic and egregious violation of human rights and civil and political rights in Belarus. This has included the violent repression, torture, rape and arbitrary detention by the regime and its security forces of civil society, democratic opposition, independent media and journalists, and the continued undermining of democratic principles and rule of law.

In response, the UK government and key international partners, including the United States, Canada and the European Union, have introduced sanctions against Belarus to encourage the government to respect human rights, democratic principles and the rule of law as well as to refrain from actions, policies or activities that repress civil society and the independent media.

In 2021, the UK imposed further financial, trade and aircraft sanctions measures. These included prohibitions on the export of equipment which could be used for interception and monitoring of communications, as well as the provision of related technical assistance; prohibition on the export of dual-use goods; prohibitions on the import of potash from Belarus; and the broadening of the list of activities which may give grounds for a person to be designated.

In 2022 the UK’s Belarus sanctions regime was amended to allow for designations related to Russia’s illegal invasion of Ukraine. In July 2022, measures were also introduced which extended Russian measures to Belarus in order to constrain Belarus’ ability to provide economic, military and in-kind support to Russia’s illegal invasion and occupation of Ukraine. This included the adoption of financial measures designed to undermine Belarus’ ability to raise revenue, and the expansion of export criteria to include additional goods such as luxury goods, goods and technology related to quantum computing and advanced materials and goods and technology related to oil refining. Another package of measures was introduced in June 2023 which further expanded the designation criteria and prohibited the import of gold, cement, rubber and wood from Belarus, as well as the export of machinery and chemical and biological-weapons-related goods and technology to Belarus.

There are currently (February 2024) 205 designations of Belarusian individuals and entities. Of these 23 entities and 125 individuals are designated under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019. Six entities and 48 individuals are designated under the Russia (Sanctions) (EU Exit) Regulations 2019, with three individuals designated under the Global Human Rights (GHR) Sanctions Regulations 2020.

Sanctioned entities include a number of Belarusian SOEs. It should be noted that according to the Belarusian National Statistical Office (Belstat) only communal or Republican Unitary Enterprises belong to the public sector. Belstat classifies all Joint Stock Companies (JSC) / Open Joint Stock Companies (OJSC) as privately owned. However, JSCs / OJSC’s where the state (either in the form of the State Property Committee or in the form of another SOE) is a majority or significant shareholder are very common in Belarus. According to some estimates, if an SOE in Belarus is defined as any enterprise of any legal form where a significant share of the assets remains in the hands of the state and/or where the managers are heavily controlled by the public authorities, then over 14,300 entities could be considered SOEs.

Under UK legislation, it is a criminal offence to contravene sanctions imposed on Belarus, whether they be related to the regime’s post-election repression or its support for the invasion of Ukraine.

A breach of the new financial sanctions introduced in July 2022 will be an offence that is triable either way (able to be heard before a Magistrates Court or a Crown Court) and carries a maximum sentence on indictment of 7 years’ imprisonment or a fine (or both). The Office of Financial Sanctions Implementation (OFSI) is responsible for monitoring compliance with financial sanctions and for assessing suspected breaches. It also has the power to impose monetary penalties for breaches of financial sanctions and to refer cases to law enforcement agencies for investigation and potential prosecution. OFSI works with other parts of government, supervisory bodies and regulators to consider all cases reported to it, sharing relevant information accordingly.

Offences of breaching the new trade sanctions measures introduced in July 2022 and June 2023 will be triable either way and carry a maximum sentence on indictment of 10 years’ imprisonment or a fine (or both). The Export Control Joint Unit (ECJU) administers the UK’s system of export controls and licensing in relation to trade sanctions. The Department for Business and Trade’s (DBT) Import Licensing Branch implements trade sanctions and licensing relating to imports.

Offences breaching the transport sanctions measures introduced in July 2022 will be triable either way and carry a maximum sentence on indictment of 7 years’ imprisonment or a fine (or both).

The UK’s restrictive measures are targeted so legitimate business may continue where sanctions do not apply. It is also possible to apply for licences from the UK government to undertake certain activities. Companies should consult the information about sanctions on GOV.UK. BE Minsk and FCDO cannot and will not provide legal advice on Belarus sanctions issues to companies, nor will they provide any advice on Belarus sanctions issues above and beyond that published by HMG and in the public domain.

It is important that companies research sanctions thoroughly, including, where applicable, taking advice from their own legal advisers, and to consult HMG advice. UK companies are obliged to stay strictly within the law. As outlined above the penalties for non-compliance can be severe.

SANCTIONS – REGIME COUNTER MEASURES

As a response to sanctions, Belarus has adopted a number of countermeasures. Starting from 1 January 2022, Belarus has implemented a food embargo for six months against a broad range of goods made in foreign countries “which pursue a discriminative policy and take unfriendly actions against Belarus”. The ban has been extended a few times since then, the last time on 26 December 2024 until 31 December 2024. The UK is subject to such restrictions.

Presidential Decree No 93 issued in March 2022 envisages measures aimed to protect the Belarusian economy against unfriendly actions. In April 2022, the regime published a list of foreign states, which commit unfriendly actions against Belarusian legal entities and individuals. The list includes inter alia the UK, US, Canada, and all EU Member States.

Presidential Decree No 137 “On Writs of Execution” issued in April 2022 suspends enforcement of all writs of execution (court rulings, notary writs of execution, etc.) issued in favour of the residents of “unfriendly” countries.

Resolution No 247 “On the Movement of Transport Vehicles” issued on 22 April 2022 banned the movement of EU-registered heavy goods vehicles in Belarus. Such vehicles are permitted to enter Belarus only at specific border crossing points and must travel to specially designated locations close to the border for semi-trailer swaps. From 22 January 2024, fees have been introduced for carriers entering at these crossing points. Transport connectivity with the EU has worsened. Restrictive measures introduced in response to the May 2021 forced diversion of Ryanair flight FR4978 led the UK to suspend the operating permit of the Belarusian flag carrier Belavia. UK and EU airspace is closed to all Belarusian registered aircraft. The Belarusian air traffic control operator (Belaeronavigatsia) is subject to UK and EU sanctions with Belavia sanctioned by the EU and US. The Belarusian authorities have closed Belarusian airspace to all UK and EU registered aircraft.

In February 2023, Poland and Lithuania introduced border crossing restrictions which intensified Belarus’ economic isolation. Lithuania closed a railway border crossing with Belarus, and Poland closed the Bobrovniki border crossing with Belarus. This triggered a Belarusian response banning Polish registered trucks from entering Belarus through Lithuanian and Latvian border crossings. A subsequent Polish decision banned non-EU-registered trucks entering Poland from Belarus through the only Belarus-Poland border crossing point open to trucks.

In June 2023, the Belarusian government extended the Resolution No 247 and introduced a ban on movement within its territory for trailers and semi-trailers registered in Poland, as well as passenger cars registered in Poland used for international transport. This followed the Polish authorities’ decision to expand the list of types of Belarusian and Russian cargo vehicles banned from entering Polish territory.

In August 2023, Lithuania suspended operation of two out of six automobile border crossings on the state border with Belarus. In September 2023, Latvia also suspended operation of one of two automobile crossings on the state border with Belarus. From 1 March 2024, Lithuania suspended operation of two further border crossings on the border with Belarus. However, two crossing points between Lithuania and Belarus remain open: the Medininkai-Kamenny Log and Šalčininkai-Beniakoni crossing points. Poland and Lithuania do not exclude the possibility of closing all remaining border crossing points. Currently (March 2024), there are two border crossing points in operation with Poland (one for passenger vehicles – Terespol-Brest and one for freight – Kukuryki-Kozlovichi, one with Latvia (passengers and freight) – Paternieki-Grigorovshchina. The situation at the border remains unpredictable. Border crossings may close, or restrictions may be implemented at short notice.

In July 2022, Resolution No 436 banned the sale of shares in 190 listed companies which had “unfriendly” investment. Some UK investors were affected. In January 2023, the list was expanded from 190 to 1849 entities. Foreign investors from “unfriendly” countries were prohibited from disposing of their interest (shares) in companies included on this list or to restructure such entities. In October 2023, the terms of transferring ownership for companies with capital from “unfriendly” countries changed. Requirements for obtaining a government permit and paying at least 25% of the asset market value were introduced. In January 2024, Resolution No 436 lost its force due to the adoption of the Resolution No 27, which approved a procedure for share/asset transaction permits for investments from “unfriendly countries”.

Law No 240-З “On Seizure of Property” issued on 3 January 2023 provided the Belarusian government with the right to issue a decision to seize property into state ownership. The measure may potentially be applied to “unfriendly” states committing unfriendly actions; legal entities and individuals linked with “unfriendly” foreign states; those under the control of such legal entities and individuals; and affiliated persons. The seizure may be applied to any property owned by the subjects of seizure and located on Belarusian territory, including funds, securities, and property rights.

Law No 241-З “On limiting Exclusive Rights to IP Objects” issued on 3 January 2023 allowed goods containing IP (intellectual property) objects to be imported to Belarus and placed on the Belarusian market without the consent of foreign right holders from unfriendly countries, provided that such goods are included in the special list of goods essential for the domestic market. The law also allows the use of a number of IP objects (software, audio visual works, musical works, programmes of broadcasting organisations) without the consent of right holders or collective management organisations from unfriendly countries, who prohibited or refused consent to use these lawfully disclosed objects in Belarus.

Human rights

Belarus is an FCDO Human Rights Priority Country (HRPC): we assess that the human rights situation in Belarus continues to deteriorate.

In the aftermath of the flawed presidential elections of August 2020, the human rights situation has significantly deteriorated. The regime, its security forces, propaganda outlets and judicial bodies have brutally supressed democratic rights, human rights and fundamental freedoms.

Over 30,000 people have been detained. There are currently over 1,400 political prisoners convicted under flawed trials. The security forces, acting with full impunity, have used excessive – including lethal – force against peaceful protestors, the democratic opposition, independent media, and civil society activists. There are credible reports of inhuman and degrading treatment (including sexual violence and rape) and torture perpetrated against detainees. Many political prisoners have limited or no access to proper healthcare and are subjected to relentless interrogation, intimidation and psychological pressure techniques that amount to torture.

The regime has deliberately targeted independent journalists, media organisations and civil society organisations – including independent trade unions - with the aim of “purging” these from Belarus. Independent media outlets and NGOs have been “liquidated” by the regime and in some cases designated “extremist organisations.” Some opposition politicians and others who protest against the regime have been listed as terrorists or charged with / convicted of treason against the state.

Belarus remains the only country in Europe to retain and use the death penalty (carried out by firing squad). The range of offences for which the death penalty can be imposed has recently been expanded. The UK opposes the death penalty in all circumstances as a matter of principle. However, we especially denounce failures to observe relevant minimum international standards, including prohibiting the use of the death penalty beyond ‘the most serious of crimes’.

Bribery and Corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a UK company can be liable for misconduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Belarus avows that it attaches significant importance to combating corruption. However, under the terms of law No 348-Z, adopted on 5 January 2024, Belarus withdrew from the Criminal Law Convention on Corruption of 27 January 1999; the Additional Protocol to the Criminal Law Convention on Corruption of 15 May 2003; and the Civil Law Convention on Corruption of 4 November 1999.

The law No 348-Z also terminates the 22 January 2010 agreement between Belarus and the Council of Europe on privileges and immunities for representatives of members of the Group of States against Corruption (GRECO) and members of their inspection teams. Belarus’ right of representation in GRECO has been suspended since 2022 due to Belarus’ facilitation of Russia’s illegal war of aggression against Ukraine.

Terrorism

Although there is no recent history of terrorism in Belarus (there was a terrorist attack in Minsk metro in 2011), attacks cannot be ruled out. You should be aware of the global risk of indiscriminate terrorist attacks which could happen in public areas, including those visited by foreigners.

Protective security advice

Belarus has very low crime rates, but you should be alert to the possibility of pickpocketing and theft from vehicles or hotel rooms.

You should maintain a high level of security awareness, particularly in public places, and avoid demonstrations. Business people also need to be conscious of the risk from the Belarusian security and intelligence services who are have well developed physical and technical surveillance capabilities. Belarusian legislation allows the security and intelligence agencies direct remote access to all communications and IT systems without the need for interception warrants nor to inform the provider (all communications providers in Belarus are state owned or controlled).

Intellectual property (IP)

IP rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets.

Belarus partially legalised parallel imports and put in place other IPR related measures, when it adopted Law No 241-З “On limiting of exclusive rights to IP objects” in January 2023 (see Sanctions - Regime Counter Measures section of this OBR for more information).

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