In the EU’s 2022 March sanction’s package against Belarus, sanctions were expanded to also cover all wood working products (i.e. everything under customs code 44). Moreover, the Forrest Stewardship Council (FSC) chose to suspend its trading certificates for Belarus, which made it even harder for Belarus to sell its products on the global market.
The including of products under customs code 44 in the EU sanctions has resulted in a drop of more than 30 times for the export of Belarusian wood products to the EU since June 2022.
Woodwork products are an important extra income for the Belarusian state budget and has previously been especially expanded during times when major income sources such as revenues from refined oil products falter. This year, Western sanctions have deprived Belarus of some major export revenues meant for its state budget such as those derived from fertiliser and oil product exports.
However, Minsk was not about to roll over and accept that its woodwork products had been shut out from the EU market. On September 5, 2022, Belarus’ Deputy Prime Minister Piotr Parkhomchik told state Belarusian media that “there will be private companies that will build bridges so that the products (woodwork products) we produce could enter the European market.” A few days later, the chairman of Belarus’ State Customs Committee, Vladimir Orlovsky, said that Belarus’ “old tricks” weren’t working anymore. Instead, Belarus would have to resort to “unconventional approaches” to get around Western sanctions.
In a recent investigation, Belarus’ Investigative Centre (BIC) has revealed how private companies in Central Asia, often set up by former Belarusian government officials, help customers to circumvent the EU sanctions.
Minsk’s new tricks
In late June 2022, Belarus classified its trade statistics not only with Western countries but also with the CIS countries; a convenient timing, as EU wood imports from Kazakhstan and Kyrgyzstan began rising rapidly immediately after the EU sanctions came into effect in June. By October 2022, the EU’s wood imports from Kazakhstan and Kyrgyzstan had risen by 74 and 18,000 times year on year respectively. In total, this amounts to €30mn in export revenues for the two Central Asian countries.
There’s certainly something fishy about this increase, since Kazakhstan and Kyrgyzstan only have 5% and 6% respective coverage in woodland area; Belarus’ forest cover, on the other hand, is 40%, according to Belarus’ Ministry of Forestry. In June and August last year, Kazakhstan’s government and Kyrgyz authorities also prohibited the export of certain wood products in order to protect their domestic wood industries.
Wary of Minsk’s new tricks, Lithuanian customs were the first to notice this sharp increase in wood imports from Central Asia. According to the deputy director of Lithuanian customs, Vygantas Paigozinas, “The tell-tale signs are absolutely undeniable. We find markings on packaging, extra sets of documents that directly show that the goods come from Russia or Belarus and not from the countries in which the declaration was made at the initial stage. There are such cases, we recorded it, and not just one.”
Supplying sanctioned products
The BIC found several companies that are engaged in the export of Belarusian wood products to the EU through Kyrgyzstan and Kazakhstan. The products are traded under forged certificates and their document claim that they originate in one of the Central Asian countries.
The BIC received a tip that the private Belarusian expert reviews centre “Quality Standard” was offering services for the re-export of EU goods to Belarus through Kyrgyzstan. Acting as a potential client, BIC journalists talked to the company’s manager and found out that it was also possible to get Belarusian wood products to the EU through Kyrgyzstan. Quality Standard offered the help of another company called “Certificate KG”, which helps Belarusian wood suppliers obtain Kyrgyz documents to re-label their products so they can pass EU Customs.
One of the founders of Certificate KG was Oleg Narchuk, who previously worked for Belarus’ State Standardisation Committee (Gosstandart). In October 2022, Narchuk spoke at a webinar organised by Belarus’ National Centre for Marketing and Price Studies about the “Imports of goods into the Republic of Belarus under sanctions.”
Other companies also engaged in delivering Belarusian products to the EU using forged documents were Agro KG, SK Grand and Admit company. The latter is engaged in wood waste processing, producing pellets, briquettes and various other wood-based fuels. On its website, (registered in July) it claims to receive 40, 000 tonnes of wood waste “yearly”.
Pretending to be potential customers, the BIC asked to have Belarusian pellets delivered to the EU. Admit agreed to this and said it would be done with the help of their production facility in Kyrgyzstan; they would send the Belarusian products along with their own products produced in Kyrgyzstan, that way the products would enter the EU on Kyrgyz certificates.
In Poland, the Polish registered import company “Belarusian Forest Company” (BLK) had by September 2022 transferred $17mn to its parent company, the Mostovdrev Belarusian state woodwork enterprise.
When reached for a comment, Mostovdrev told BIC that BLK did not receive the money for selling products subject to EU sanctions. However, information on the BLK’s website shows that it only trades in products under the prohibited customs code 44. When contacted by BIC journalists posing as potential buyers, the BLK seller said that while it did still have Belarusian wood in stock, it was going to run out of it soon. However, the BLK had apparently instead begun working with new suppliers from Ukraine and Kazakhstan.
These recent findings by BIC details how Belarusian suppliers use third countries to access the EU market and this circumventing sanctions. While several Western experts, custom’s offices and government officials have warned that Belarus and Russia circumvent sanctions through third countries, Belarusian officials have also themselves already hinted that they actively seek to do this. These findings puts the comments by Parkhomchik and Orlovsky in a new light and adds to the currently ongoing discussion in EU circles about the creation of an EU agency like the US’ OFAC.
Source : BNE Intellinews