Lukashenko tries to outwit EU and Russia

Belarus is finding ways to make a living despite being squeezed by the EU and Russia.

Selling arms firms from yourself to yourself, mobilising friends in the EU Council, re-labelling petrol as solvents then as petrol again - Belarus is finding ways to make a living despite being squeezed by the EU and Russia.

Legal experts in the European External Action Service (EEAS) are scratching their heads at what to do about the latest move by Belarusian oligarch Vladimir Peftiev to avoid EU sanctions.

The close friend and alleged "bagman" of President Alexander Lukashenko, who is on an EU blacklist along with one of his firms, Beltekh Holding, which owns the country's main arms trader, Beltechexport, has sold his controlling stake in the holding firm to one Dmitry Gurinovich.

The company says Gurinovich is an alumnus of the Russian Presidential Academy of National Economy and the Public Administration and part of the Russian presidential personnel reserve - a pool of people qualified to work in the Russian leader's chancellery.

He does not show up in the published lists of either body, however.

An EU diplomatic source told this website he is in fact a former "advisor or aide of Peftiev or maybe he still is." He added that the sale is an attempt to evade EU sanctions: "Formally if the company does not belong to sanctioned person any more, it should be delisted."

A contact in the Berlin-based NGO, the German Marshall Fund, said the transaction means "Peftiev actually sold the company from itself to itself."

The sale is Peftiev's latest attempt to beat the EU ban: he and three of his firms, including Beltechexport, have four ongoing lawsuits at the European Court of Justice trying disputing EU claims that they feed the Lukashenko regime.

Another Lukashenko-linked oligarch, Yuriy Chizh, earlier this year saw one of his companies, Elite, stay off the EU register after Slovenia intervened to salvage a hotel deal involving Elite and Slovenian firm Riko Group.

The move saw Latvia cite Slovenia as a precedent to also keep Chizh firm Belneftegaz off the list.

According to Belarusian Tribunal, an NGO based in The Hague, Belneftegaz is part of a family of companies involved in a scam worth $880 million a year to export Russian oil products into the EU.

Belarus imports Russian oil at domestic Russian prices. But if it wants to refine it and sell it to Europe it has to pay Russia a duty of between $300 and $500 a ton, depending on the type of oil product involved. The arrangement does not stretch to solvents and thinners made using the oil, however.

The NGO says Belneftegaz exports the petrol as solvent to Estonia, Latvia, Lithuania and the Netherlands, where it is bought by offshore companies linked to the Belarusian regime, relabelled as petrol, then sold on to EU consumers.

When Russia's President Putin visited Lukashenko on Thursday (31 May), he told media: "The very fact of my first foreign visit to brotherly Belarus certainly reflects the special nature of our relations."

A joint statement by the two leaders said: "Russia and Belarus will coordinate efforts to counter attempts to interfere in the internal affairs of [Belarus] and apply pressure through the introduction of restrictive measures or sanctions."

But in reality, Putin's embrace is potentially more harmful to Lukashenko than the EU's rebuff.

The Kremlin has in recent years put pressure on Belarus to fully implement a state union with Russia which would reduce it to a de facto province of Russia and make Lukashenko into a kind of regional governor.

Meanwhile, Kemlin loans to Minsk, have seen it take control of Belarus' main strategic asset - the gas transit pipelines of Belarus' Beltransgaz, which ship Russian gas to Poland and Germany - in return.

The Belarusian Tribunal report noted that "Russian authorities [are] perfectly aware" of the solvent scam "but for some unknown reason have ignored it. It is possible the fact of oil smuggling could be used by the Kremlin against Lukashenko in future."

Andrew Rettman, EUobserver