EU imposes broad economic sanctions on Belarus over Ryanair incident

By Robin Emmott

BRUSSELS (Reuters) -The European Union imposed wide-ranging economic sanctions on Belarus for the first time on Thursday, targeting its main export industries and access to finance a month after it forced a Ryanair flight to land in Minsk.

The measures include banning EU businesses from importing goods or doing business with Belarusian companies in sectors including banking, petroleum products and potash, a salt used in fertiliser that is the country's main export.

The sanctions are far stricter than measures imposed in the past, which mainly consisted of blacklists of Belarusian officials and had little or no impact on the behaviour of President Alexander Lukashenko, in power since 1994.

In the most significant measure for the Belarusian economy, the new sanctions ban EU companies from transporting potash. Belarus will now need to find other countries and ports to ship its top export via the Baltic Sea.

Russian President Vladimir Putin is Lukashenko's closest ally but Russia does not have enough port capacity to handle Belarusian fertilisers or its own, data showed.

EU leaders were outraged by the interception of the Ryanair plane flying between Athens and Vilnius on May 23. Belarusian authorities arrested a dissident journalist and his girlfriend after the plane landed, in an incident which Western countries branded state piracy. Lukashenko said the interception was justified to prevent a rebellion in Belarus.

With Lukashenko so far impervious to foreign pressure over a presidential election which opponents say was rigged last August, and was followed by a crackdown on street protests, the EU had said it wanted to increase pressure.

Diplomats said the decision to impose harsher sanctions was taken unusually quickly, reflecting the seriousness with which governments viewed the Ryanair incident.

'NO OTHER CHOICE'

Under the new sanctions, Europeans may not "directly or indirectly sell, supply, transfer or export to anyone in Belarus" communication equipment, technology or software that could be used for monitoring or repression.

Trade in petroleum products, potash and tobacco products is banned. Access to EU capital markets is now limited, the EU said, with a ban on trading Belarusian securities with maturities of more than 90 days.

European banks may not provide insurance or re-insurance, or new loans or credit to the Belarusian government or public bodies and agencies. The European Investment Bank will halt lending to the country.

Since the Ryanair incident, the EU has also banned overflights of Belarusian territory by its airlines and banished Belarusian carriers from its air space.

The EU, the United States, Britain and Canada also expanded blacklists this week, with the EU now banning 166 people from travelling or doing business in the bloc, including Russian businessman Mikhail Gutseriyev, Belarus's largest foreign investor.

EU states can grant Belarus sanctions exemptions for humanitarian assistance, environmental projects and nuclear safety, the EU's official journal said.

One of six former Soviet republics the EU has offered money, technical assistance and market access to, Belarus is being sidelined until Lukashenko agrees to new elections and releases political prisoners.

Despite concern that economic sanctions could push Belarus closer to its ally Russia, EU foreign ministers said they had to respond to what they saw as unacceptable, repressive behaviour.

"I do not foresee any democratic transition soon in Belarus," Ukrainian Foreign Minister Dymtro Kuleba told Reuters. "But the EU had no other choice if it wants to stand up for its values."

(Reporting by Robin Emmott, Editing by Gabriela Baczynska, Peter Graff and Timothy Heritage)