EU seeks to stop Russia’s imports of western luxury cars via Belarus

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The EU is preparing to tighten sanctions against Belarus and close a loophole that has allowed Moscow to import luxury cars and other western goods banned in Russia in response to the war in Ukraine.

The bloc has already imposed several rounds of sanctions on the regime of Belarusian leader Alexander Lukashenko for supporting Russian President Vladimir Putin’s full-scale invasion of Ukraine. But restrictions on Belarus have been weaker than those on Russia, allowing the Kremlin to use its ally as a backdoor for western goods for use in the war effort as well as luxury items.

The new curbs being discussed by EU member states aim “to minimise the risk of circumvention”, according to a draft seen by the Financial Times.

The fresh sanctions would ban exports to and via Belarus of technology and goods that can have military uses, as well as liquefied natural gas. The EU would also stop importing diamonds from Belarus, mirroring a recent ban on stones of Russian origin.

If adopted by the bloc’s 27 member states, one of the major flows that would be stemmed by the new sanctions would be luxury cars. Under the current system, European carmakers can still sell their high-end vehicles to Belarus but not Russia.

“The folks around Lukashenko who had ties to Russia were big beneficiaries of this. They were enriching themselves . . . We also know this is how luxury goods get into Russia — through Belarus,” said Vytis Jurkonis, project director at Freedom House think-tank in Vilnius.

The monthly flow of vehicles and vehicle parts from EU states to Belarus surged from $50mn in January 2022 to $268mn in January 2024. This is now the largest single component of EU-Belarus exports, largely originating from Germany and Poland.

The largest export rises were recorded in the most expensive categories of cars — those targeted by EU sanctions on Russia. EU customs officials believe that Belarusian companies have become a key part of Russian smuggling chains that supply the latest western cars in Moscow.

Russian filings reveal that one Rolls-Royce Cullinan Black Badge, built in late 2022, was recorded as coming into Russia via a Belarusian source. The car, listed as costing $630,000 in the filings, was in Russia within nine months of leaving the factory.

The same trade data also reveals that at least 28 Maybachs, a luxury brand owned by Mercedes-Benz, entered Russia via Belarusian suppliers in 2023. These cars had an average price of $217,000. 

“For a Russian to get a car in Belarus is not a problem,” Lithuanian Prime Minister Ingrida Šimonytė told the FT.

Lithuania’s small customs service was struggling to cope with the “complicated” system of banned goods when inspecting cargo bound for neighbouring Belarus, she said, and preventing sanctions circumvention was a “very heavy workload”.

Customs denied clearance 39,000 times in 2023, Vilnius said, and sent more than 15,000 risk reports to other member states citing potential breaches of sanctions.

The differences in the two sanctions regimes have left “very clear holes”, Šimonytė said.

Both Šimonytė and the foreign minister of Poland, Radosław Sikorski, are pushing for the EU to go beyond current efforts of negotiating alignment of sanctions sector by sector.

The best way to ensure Russia can no longer leverage the weaker Belarus sanctions was to fully align the two restrictive regimes, they said.

Sviatlana Tsikhanouskaya, the exiled leader of the Belarus opposition, told the FT that the new package was vital but did not go far enough. “Sanctions — imposed on Russia or on the Belarusian regime — cannot work effectively if they are not synchronised.”

She added: “Dictators use each other to circumvent sanctions and continue to trade. The Belarusian regime is buying military stuff, luxury cars . . . for Russia.”

Tsikhanouskaya also remained concerned about how little the EU had done to enforce them so far. “In Europe there is no mechanism for sanctions enforcement,” she said.

It was only last year that the EU appointed a sanctions envoy to tackle circumvention.

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