Sanctions Targeting Belarus Petroleum and Potassium

Summary#

These are final amendments to the Special Economic Measures (Belarus) Regulations that add new economic restrictions on Belarus. They target finance, insurance, certain petroleum products and potassium chloride exports. The regulations were registered on August 6, 2021 and published in the Canada Gazette on August 18, 2021.

What it does#

• Bans dealing in transferable securities and money-market instruments issued by Belarus or by state-controlled banks such as Belarusbank, Belinvestbank and Belagroprombank.
• Prohibits transactions in debt instruments with a maturity longer than 90 days (for example, longer-term bonds or loans) for Belarus or the listed banks.
• Stops Canadian persons and Canadians abroad from providing insurance or reinsurance to Belarus or organizations controlled by Belarus.
• Bars importing, buying, shipping or otherwise dealing in certain petroleum products exported from Belarus and stops providing related financial, technical services or insurance for those goods.
• Bars importing, buying, shipping or otherwise dealing in potassium chloride and certain potassium-containing fertilizers exported from Belarus.
• Keeps some exceptions:
  • The rules do not apply to activities done before the amendments came into force.
  • Contracts signed before the amendments came into force are generally allowed to proceed.
  • The government can issue permits that authorize otherwise prohibited activities (under a related permit order).

Who's affected#

• The Government of Belarus and state-controlled banks and companies, including Belarusbank, Belinvestbank and Belagroprombank.
• Belarusian exporters of petroleum products and potassium chloride (and some fertilizers).
• Canadian banks, insurers and other financial institutions that handle securities, loans or insurance linked to Belarus.
• Canadian companies and individuals who import or trade the listed petroleum or fertilizer products, or who do business with Belarusian financial or state-controlled entities.
• It is unclear how many Canadian businesses are directly affected; the government says existing Canadian dealings with these sectors are limited.

Why it matters#

• These measures are meant to increase economic pressure on the Belarusian government in response to ongoing human rights violations and repression following the August 9, 2020 election and other incidents (including the diversion of Ryanair flight 4978).
• Practically, the rules cut off some longer-term borrowing, insurance and trade links that help fund and supply the Belarusian state and key industries.
• For most Canadians the direct impact should be small, since Canada’s trade with these Belarusian sectors is limited. Banks and insurers will need to update compliance systems.
• There are criminal penalties for willfully breaking the rules: a fine up to $25,000, imprisonment up to one year, or both on summary conviction; on indictment, imprisonment up to five years.