June 7, 2021 | Foreign Policy

To Get at Lukashenko, Punish His ‘Moneybags’

To impress the Belarusian dictator, go after his and his associates’ wealth.
June 7, 2021 | Foreign Policy

To Get at Lukashenko, Punish His ‘Moneybags’

To impress the Belarusian dictator, go after his and his associates’ wealth.

The European Union’s ban of the Belarusian state-owned airline from its territory, which went into effect overnight last Friday, is just the latest punitive measure by the West against Minsk. The EU and United States are rightly developing various new sanctions after Belarusian authorities hijacked Ryanair flight 4978 traveling between Athens and Vilnius, Lithuania, on May 23 in order to arrest Roman Protasevich, an independent Belarusian journalist who had fled the regime but was onboard the flight.

The problem is that minor reprisals are unlikely to impress Belarusian dictator Aleksandr Lukashenko. To be effective, the Western response must go beyond symbolic sanctions by inflicting real pressure on the regime while finding tangible ways to help the Belarusian people.

In addition to banning Belarusian airliners and calling on EU-based carriers to avoid Belarus, the European Union says it will also sanction those responsible for the hijacking and impose targeted economic sanctions to squeeze the Lukashenko regime’s finances. The White House likewise said it will suspend a 2019 air services agreement with Belarus and discourage travel to or through Belarus. The Biden administration is also coordinating with European allies to develop targeted sanctions against Lukashenko regime officials and will craft a new executive order expanding the administration’s authority to sanction “elements of the [Lukashenko] regime, its support network, and those that support corruption, the abuse of human rights, and attacks on democracy.”

The West must now follow through. As the European Parliament president said after the hijacking, a “strong, immediate, and unified” EU response is necessary “to show that the union is not a paper tiger”—that it can act decisively on the world stage to protect its interests and values. Likewise, the U.S. response will test the Biden administration’s promises to revitalize trans-Atlantic relations, restore U.S. global leadership, stand up for human rights, and defend the liberal rules-based order against authoritarian threats. Most important, of course, is the plight of the Belarusian people, who continue to face extraordinary repression at the hands of Lukashenko’s brutal regime.

Sanctioning the security, judicial, and other officials responsible for hijacking the plane and mistreating Protasevich would be a good start. But those kinds of sanctions are mainly symbolic. Lukashenko (and other authoritarians the world over, who will surely be watching closely) would likely see such a response as a mere slap on the wrist—a license to keep acting with impunity. Indeed, the West’s “nine months of wet noodle international responses to repressive moves since the stolen #Belarus election,” as a former Canadian ambassador to Ukraine, Roman Waschuk, put it, may have helped convince Lukashenko he could get away with the hijacking in the first place.

To make the regime pay a real price, the West should go after Lukashenko’s money.

To make the regime pay a real price, the West should go after Lukashenko’s money. It could start by heeding the opposition’s call to sanction Lukashenko’s “wallets,” as it calls the wealthy Belarusian businesspeople close to Lukashenko. The dictator has enabled them to boost their business interests in return for support to his regime, including by allegedly acting as straw men to hold large chunks of the Lukashenko family’s fortune. As former U.S. Assistant Secretary of State David Kramer has argued, targeting these “moneybags” and their companies could help “water down the thin ice on which Lukashenko stands.”

Washington, for its part, should begin by sanctioning Aliaksandr Shakutsin and Mikalai Varabei, two businessmen Brussels sanctioned back in December 2020, saying they are both “benefiting from and supporting the [Lukashenko] regime.” Varabei’s company Interservice is Belarus’s largest private petrochemical exporter and has expanded rapidly since 2012, not least thanks to a Lukashenko decree transferring state assets to him to create an oil refinery. Varabei is also co-owner of Bremino Group, a major logistics operator that has received tax breaks and other regime support.

Shakutsin, meanwhile, is reportedly “one of the persons who benefited most from the privatisation during Lukashenko’s tenure,” as the EU noted. He reportedly was one of a handful of businesspeople present during Lukashenko’s September 2020 inauguration ceremony, held in secret amid ongoing mass demonstrations against what is widely seen as a stolen election. Shakutsin has complained loudly about the EU sanctions, which is a good sign: It indicates the potential for further sanctions to foment resentment toward Lukashenko among the Belarusian elite.

Other worthy sanctions targets include former regime officials Aliaksandr Zaitsau and Aliaksei Aleksin, two additional co-owners of Bremino Group. Zaitsau and Aleksin have reportedly used offshore financial networks in the EU to move money, potentially making them vulnerable to targeted financial sanctions. Aleksin and others close to Lukashenko allegedly control the Belarusian cigarette smuggling industry, the main provider of contraband cigarettes in Europe and an important revenue generator for the regime. The EU should finally get serious about cracking down on this illicit trade.

Robust sanctions enforcement will be key. Alongside Shakutsin, Varabei, and others sanctioned in December 2020, the EU targeted the top Belarusian real estate and construction firm Dana Holdings and its subsidiary Dana Astra, both owned by the family of Serbian businessman Bogoljub Karic. The Karic family has long-standing ties to Lukashenko, whose daughter-in-law allegedly has held a high-ranking position at Dana Astra. The regime has handed roughly $1 billion in prime Minsk real estate to Karic-owned construction companies. Yet just days before Brussels imposed sanctions against the companies last December, an unsanctioned offshore company reportedly replaced Dana Holdings as the owner of multiple construction firms, allowing them to continue doing business in Europe. That company should also face sanctions—and so should the Karics themselves.

Proper enforcement will also require designating family members and other fronts who hold sanctioned businesspeople’s assets. For example, data from the 2016 Panama Papers investigation revealed that family members of Belarusian businessman Vladimir Peftiev owned roughly $25 million worth of London real estate through a web of offshore shell companies. Most of that real estate was purchased while Peftiev was under sanctions imposed in 2011 by the EU, which called him a “key financial sponsor of the Lukashenko regime.” (Those sanctions were later annulled.)

Furthermore, sanctions targeting not just the national airline but also the Belarusian financial sector and vital oil, petrochemical, and potash exports, which EU foreign ministers have been discussing, would offer a particularly powerful source of leverage. While many observers rightly note that such sanctions would risk harming ordinary Belarusians and making Minsk even more reliant on Moscow, implementing sanctions gradually—with successive rounds contingent on Lukashenko’s behavior—could mitigate these risks while pushing the dictator to ease repression. Indeed, the specter of further losing his autonomy vis-à-vis Russia, something Lukashenko has tried stubbornly to avoid, could incentivize him to reduce Western pressure. Certain Western sanctions could even undermine Russian economic influence in Belarus: After the United States announced in April that it would reimpose previous sanctions against Belarus’s Naftan oil refinery and eight other state-owned entities, large Russian oil exporters suspended supplies to Naftan, prompting Minsk to ask Kazakhstan to fill the gap.

The West has an opportunity to defend its interests and values by standing firmly with the Belarusian people.

But the West should not limit itself to sanctions. As the scholar Mark Galeotti has argued, for example, Western countries should coordinate mass expulsions of Belarusian KGB officers working under diplomatic cover. (Some KGB officers reportedly tailed Protasevich on his flight.) These expulsions, along with suspending Belarus from Interpol, could help curtail the regime’s ability to intimidate the many Belarusian journalists, activists, and opposition figures who’ve fled abroad. It was precisely this kind of intimidation that was Lukashenko’s likely goal in hijacking the plane.

At the same time, the West should increase support for and engagement with the Belarusian opposition, independent media, and civil society. While the EU has pledged up to 3 billion euros ($3.7 billion) to support Belarus following a potential democratic transition, the Belarusian people need help now. This is particularly important after Minsk announced new rules last week making it nearly impossible to flee the country. In the very near term, this support could include inviting opposition leaders to the G-7 summit this weekend, as French President Emmanuel Macron has suggested. The EU should also appoint a special representative for Belarus to help sustain the bloc’s focus and coordinate among member states.

Over the long haul, as the journalist Leonid Ragozin has argued, the EU should “provide people like [Protasevich] with safe havens and opportunities to do their work,” for example by “removing visa hurdles and simplifying residence rules for people who can influence their compatriots back home.” The West should also consider how it can help ordinary Belarusians circumvent the regime’s information censorship. This support can help the Belarusian people continue resisting Lukashenko’s ongoing crackdowns, while preventing his repression from severing EU engagement with the increasingly European-minded Belarusian population.

The West has an opportunity to defend its interests and values by standing firmly with the Belarusian people. It must not let this moment pass by.

John Hardie is a research manager and Russia research associate at the Foundation for Defense of Democracies. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.

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