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25th Feb 2024

Austria blocking EU sanctions on Belarus banks

  • Raiffeisen Bank has a Belarusian subsidiary which loans money directly to regime firms (Photo: Valentina Pop)

Austria has been blocking new EU sanctions on loans to Belarusian banks so that Austrian lenders can keep making money with the oppressive regime there.

Austrian diplomats upheld their objections in the latest round of talks in the EU Council in Brussels on Thursday (17 June).

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"They [the Austrians] want to water down the language to such an extent that the banking sanctions have almost no real impact," a diplomat from another EU country told EUobserver.

"It's a clear case of putting financial interests before principles," a second diplomat added.

"It's 26 [member states] against one, so I think they'll have to capitulate in the end," a third EU source said.

When asked about the case by press in Brussels on Thursday, the Austrian finance minister, Gernot Blümel, claimed he knew nothing about it.

But the Austrian foreign ministry did issue a statement to this website.

"Sanctions should also cover the financial sector. Austria advocates, in this respect, a ban on securities trading and money-market instruments, which would represent a drastic measure," it said.

"It is of high importance for Austria that financial sanctions do not target the population of Belarus," it added.

"It is in our common interest that Belarus is not pushed even further into the sphere of influence of Russia," it said.

The new economic sanctions are also going to hit Belarus' oil, fertiliser, and cigarette industries and are meant to be ready before the EU institutions' summer recess.

They are likely to be mirrored by Canada, the UK, and the US, which are in close talks with the EU.

And Europe is preparing to blacklist another 78 Belarusian regime cronies and eight regime-linked firms next week.

The moves come after Belarus hijacked a passenger plane flying from Greece to Lithuania to kidnap an opposition activist.

But they are also a reaction to wider brutality, including torture of political prisoners, which Belarus president Aleksander Lukashenko unleashed after rigged elections last August.

Meanwhile, Austria's line - about the welfare of Belarusian people and pushing Belarus toward Russia - was described as a typical canard by one of the EU sources.

"It's impossible to impose any economic sanctions without causing some job losses and it's Lukashenko, not the EU, who is moving his country closer to Russia by his actions," the source said.

Whatever Austrian diplomats say, Austrian banks have, in any case, been keen to profit from Belarus' misery.

Even as banks from other EU states began to voluntarily pull out of the Belarusian market last year, Austrian ones increased their share, sources said.

Austrian banks are now responsible for some 90 percent of interbank loans in Belarus, two EU sources told this website.

Austria's Raiffeisen Bank, for instance, has a Belarusian subsidiary, called Priorbank, which also loans money directly to regime-owned enterprises.

When asked if it was worried about its reputation, a Raiffeisen spokeswoman told EUobserver: "We are very concerned about the developments in the country [Belarus] and hope for a peaceful solution".

"If the EU takes further measures, we hope that they are targeted and don't harm private companies and worsen the economic situation of the civilian population," she added.

When asked if Raiffeisen had been in contact with the Austrian government on Belarus sanctions, she also said: "Like any other international company of our size, we regularly communicate with the government".

And the bank has, in the past, been rather friendly with Austria's ruling ÖVP party, amid an ongoing investigation by Austrian prosecutors into allegations of improper party funding.

It is equally friendly with Lukashenko, given that the head of Belarus' top oil firm, Belarusneft CEO Alexander Lyakov, sits on Priorbank's board, in just one of several personal links to the regime.

And for all its "concern" for a "peaceful solution" to the Belarus crisis, Raiffeisen is hated by the opposition there.

"They [Raiffeisen] are the shit-flushers in the world of banks. They dive in shit for gold," one Belarusian opposition leader, who asked not to be named for the sake of his personal safety, told EUobserver.

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