Multinational firms under pressure to break ties with Belarus

Multinational firms under pressure to break ties with Belarus
The West has imposed sanctions on Belarus' elite, but they are not enough to oust President Alexander Lukashenko. Increasingly the opposition and its supporters are targeting international companies doing business with Belarus.
By Ben Aris in Berlin March 15, 2021

International multinational firms are coming under increased pressure to break business ties with Belarus as opposition leaders apply a "name and shame" campaign as part of their struggle to oust incumbent President Alexander Lukashenko.

German heavy engineering firm Siemens and Norwegian agricultural company Yara have found themselves in the firing line in recent months, as both have significant business with Belarus.

Since the end of February of this year, Siemens has been caught up with what the German press has dubbed a “shitstorm” after German Chancellor Angela Merkel made the English word popular in German after she used it in a public address last year.

Siemens has come under relentless criticism online for its continued business with Brestenergo, a regional utility company. Siemens enjoys a massive business in eastern Europe which is almost entirely reliant on its supply of turbines that are not produced anywhere in the region to power stations.

Social media such as Facebook have been swamped with comments in English, German and Russian along the lines of: "Stop co-operation with the dictator Lukashenko!", "Do not support violence and torture in Belarus!", "The contract with Brestenergo is bloody money."

The German bank Commerzbank has been hit with a similar protest campaign, albeit to a lesser extent, as it too has business with Belarus. Commerzbank took part in lending to facilitate the supply of gas turbines manufactured by the Swedish company Siemens Industrial Turbomachinery AB to the Belarusian state enterprise Brestenergo. The deal was concluded in February, although no official announcement was made. The Belarusian activists found out about the deal and have launched a protest as a result, reports the German state-owned media Deutsche Welle.

Belarus has been wracked by mass demonstrations since last year’s disputed August 9 presidential elections, which were massively falsified, and saw Lukashenko returned to office by a landslide, according to the official results. According to independent observers, the elections were actually won by opposition leader Svetlana Tikhanovskaya, who now lives in exile in Lithuania.

The opposition has already successfully forced the International Ice Hockey Federation (IIHF) to cancel plans to hold the world ice hockey championship in Minsk this year after protests unnerved the event’s sponsors, who threatened to withdraw their support.

Car manufacturer Skoda, a 100% subsidiary of Germany’s Volkswagen, cosmetic firm Nivea Men and the manufacturer of motor oils and auto chemicals Liqui Moly all announced in January they were cancelling their sponsorship of the championship, afraid of a reputational backlash following the outbreak of violence in Minsk last summer.

Part of Siemens' business in Belarus is to supply turbines to the new Ostrovets (aka Astravets) nuclear power plant (NPP) that was built and financed by Russia last year and went into full production at the start of this year.

Tatiana Manenok told DW that "Siemens won the tender [to supply turbines] before the August events and the political crisis. It was a good choice; it is the leading manufacturer of such equipment in the world."

The first turbines were delivered in December and a second batch is due to be delivered in March, as work on the second nuclear-powered unit is ongoing. In total Belarus has ordered 16 gas turbines in addition to advance Ostrovets, which will be delivered to Brestenergo.

Lukashenko has been investing heavily in Belarus’ power generation capacity in the hope of weaning the country off Russian gas imports and also in an effort to make a little more money on the side from power exports to the country’s western neighbours: in January Belarus exported more power to the Baltic states and Ukraine than it did in all of 2020, as temperatures plunged just as Ostrovets came online.

More equipment orders may be on the way after the Eurasian Development Bank (EDB), headquartered in Almaty and part-owned by the Belarusian government, signed an agreement with Minskenergo in the Belarusian capital to open a long-term credit line for the amount of €101.2mn to finance the supply of a part of the turbines ordered from Siemens. 

The EDB, which was set up as a joint venture between Russia, Kazakhstan and Belarus to invest into things like infrastructure, funded its credit line by raising financing from the German state-owned banks KfW IPEX Bank and Landesbank Hessen-Thüringen (Helaba), while the loan was insured by the state export credit agency of Sweden (EKN). All of these institutions are now in the firing line.

The press service of Commerzbank, in response to a request from DW to comment on the situation, noted that "the mentioned energy project serves to modernise energy supply in Belarus and thereby energy security of the population." In general, the bank does not conduct business in Belarus itself and concentrates on financing German exports to this country, the Commerzbank press service told DW.

While the bank pointed out that it doesn't have any direct contact with Belarus or the authorities, it highlighted the fact that “the EU did not impose any sanctions on the supply of energy equipment to Belarus.”

Likewise, Siemens’ press service insists it is not breaking any laws. The company "strictly follows, of course, all applicable national and international regulations and orders,” the company told DW. "We are, of course, very closely watching how people in Belarus demand more democracy, and the current development of events."

 

Belaruskali

The situation with Belaruskali, the Belarusian potash producer, is a bit different, as it is a very large state-owned enterprise and one of the country’s cash cows.

Belarus is home to some very large deposits of potash, one of the most effective fertilisers. It exports a large part of its produce to China, but is present as a big player in most of the markets of the world. Belaruskali sells more than 10mn tonnes per year (tpy) of potash and says it controls 20% of the global market, making it one of the biggest companies in the fertiliser world.

During the mass demonstrations some of the workers at Belaruskali joined the general strike that began in the first week after the elections and 50 were promptly fired by the company or even arrested and harassed by the authorities. But in January, management at the company based south of Minsk announced what it cast as a change of heart, saying it was willing to take back striking workers.

It came after Yara, a Norwegian-based agribusiness giant, called for the Belarusian firm to take fired workers back and sent senior company officials to Belarus to make the point face-to-face with Belaruskali management.

Yara was under pressure from Tikhanovskaya amongst others to stop doing business with Belaruskali as a way to put pressure on the Lukashenko regime.

"Yara continues to engage with and seek advice from stakeholders inside and outside Belarus to evaluate how it can have the most positive impact. Yara's main concern remains the health, safety and well-being of Belaruskali workers," Josiana Kremer said in e-mailed comments to RFE/RL, adding that the company has the backing of independent Belarusian trade unions.

"In Belarus, Yara's approach of seeking influence has been supported by both the Belarus Independent Trade Union (BITU) and the Belarusian Congress of Democratic Trade Unions (BKDP)," Kremer said.

The political crisis has already hurt the company’s business and Belarusian potash exports fell by 16% year on year, to $2.2bn in January-November, Interfax reports, citing the country's statistics service.

Overall, more than 100 workers at Belaruskali are reported to have taken part in strike action. Dozens were arrested and at least 55 were fired, according to reports. In August, a strike leader at Belaruskali was sentenced to 15 days in jail, reports RFE/RL.

On January 20, Belaruskali said that workers who had been fired could return if they filed an application and that financial penalties imposed on employees as a disciplinary measure would be discontinued. It also said it was prepared to co-operate with Yara on industrial safety and accept specialists from Yara to monitor the production process.

But while welcome, these concessions are small. Tikhanovskaya gambled in October when she issued a “People’s Ultimatum” and called for a general strike in the hopes of bringing intolerable economic pain and toppling the government. The strike was met with a lukewarm response and the gambit filed.

Nevertheless, the opposition is keeping up the pressure and hoping to bring pressure on Lukashenko by browbeating the big companies that work with Belarus and making life for Minsk as hard as possible.

Belaruskali’s climb-down came nine days after Tikhanovskaya urged Yara chief executive Svein Tore Holsether "to consider pausing or not prolonging the contract with its Belarusian partner at this stage."

"It is crucial that Yara conditions collaboration with Belaruskali unless the repressions of workers stop," Tikhanovskaya wrote in a letter to Holsether posted to her website on January 11, as cited by RFE/RL.

The pressure being brought on international businesses is an extension of the initial efforts to rally the international community to support the Belarusian people by the opposition leaders. Tikhanovskaya has been tirelessly touring Europe to lobby for sanctions on and support. While the EU has imposed sanctions on the Belarusian elite, including Lukashenko himself, with Russia’s support Lukashenko has been able to easily shrug off tough talk from Brussels.

Increasingly Tikhanovskaya and her colleagues in the Coordinating Council have been slowly upping their game and targeting Belarus’ economic interests. That means trying to cut off the state’s export revenues.

"As Belaruskali management continues intimidating workers, we believe that signing a new potash supply contract between Yara and its Belarusian business partner will not be considered as a sincere commitment to the UN's guiding principles on business and human rights as stipulated in the internal Yara regulations," Tikhanovskaya wrote to Holsether.

Belaruskali has not stated whether anyone who was fired has actually returned to their job. The Belaruskali strike committee has stated repeatedly that they would only go back once their political demands are met, among them the resignation of Lukashenko.

 

 

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