New sanctions against the Kremlin will affect Belarusian subsidiaries of Russian banks and the whole economy of Belarus.
The expansion of the US sanctions against the Kremlin already have a negative impact on the Russian market. Russian stocks dropped 3-3.6%, Rosneft was down 5.6% and the ruble showed a significant slide against the dollar and the euro today.
It is important to note that restrictions also target the companies, in which VEB, Gazprombank, Rosneft and Novatek have a stake of 50% or more. Subsidiaries OAO BelVEB Bank, OAO Belgazprombank and TNK-BP Zapad work in Belarus. These companies will be barred from accessing American debt markets for loans of longer than 90 days maturity.
Will the US sanctions hit only the subsidiaries of the Russian companies? Can other Belarusian companies suffer? Charter97.org discusses it with independent experts.
“Of course, they will influence. They won't hit them right now, but it will be a gradual process that will take a year. Russian Gazprombank works in our country through its subsidiary Belgazprombank. So, bans imposed on Gazprombank can be applied to Belgazprombank. It will be excluded from the international payment system, won't be able to receive resources and so on. Some of our banks already faced it. But it seems Belarus will have another main problem. Barack Obama imposed broad sanctions on Russian defence enterprises. Our economy to a great extent depends on Russia's defence industry. So, sanctions may be expanded on our plants that work for the Russian defence industry. I think Russia's economy will slow down. Belarus's biggest source of export income in foreign currency is Russia. We will have problems with exporting our goods to Russia,” Stanislau Bahdankevich, the former chief of the National Bank of Belarus, says.
Economist Leanid Zlotnikau agrees with him.
“I do not expect much influence in the short term, because securities trade in Belarus is not so popular as in Russia and we can say that we do not have a stock market in actual fact. But fluctuations in the real sector will have consequences in the long term. Stagnation is expected in Russia this and next year. No economic growth is expected. If further sanctions are applied, the economic situation can worsen: currency incoming and flows of foreign investments will reduce, problems with Russian oil sales are possible. We can also expect in the middle term that energy prices will fall regardless of sanctions and Russia's financial state will worsen in whole. All these tendencies, expectations and sanctions complete each other. We can say that in the middle term, Russia's aid to Belarus will fall, and Belarus's export to Russia won't grow,” he suggests.
Vadzim Iosub, a financial analyst at the official partner of Alpari in Minsk, underscores that “the impact on Belarusian subsidiaries of the Russian banks and Belarusian partners of Russian companies depends on details of the sanctions”.
“It is yet not clear in details whom exactly and how these sanctions will target. The list of Russian companies subject to the sanctions was published, but we don't know the details whether their subsidiaries and other companies working with them will be hit. The details will show how much Belarusian subsidiaries and partners of Russian companies will be hit. However, we already can say for sure that the sanctions will be a blow to Russia's economy. Taking into account the fact that Russia is the main sales market for Belarus, demand for our goods may fall and export to Russia may drop. We can already forecast it,” the expert is confident.