Ukraine is severing economic ties with Belarus, but Lukashenko has found a way. He's exploiting Poland.

• Belarus was one of Kyiv's most important economic partners until the Russian aggression against Ukraine began. This ended after February 22, 2022.
• Belarusian companies directly linked to Lukashenko's regime were taken over by a specially appointed Ukrainian administration. Smaller companies with Belarusian roots sold assets to investors from other, unsanctioned countries.
• Some Belarusian companies tried to circumvent the sanctions regime by establishing their branches in Poland or Lithuania.

Based on a decree by Ukrainian President Volodymyr Zelensky , 118 Belarusian companies operating in Ukraine have been placed under sanctions . The Ukrainian authorities have the right to block assets located on Ukrainian territory, completely suspend trade and transit operations, withdraw capital abroad, suspend financial obligations, revoke licenses, cancel benefits, and prohibit participation in privatization, tenders, and technology transfers against the companies on the list.

Belarusian companies under economic arrest

Property freezes, i.e., depriving the right to manage assets, are a transitional step towards property seizure. At the initiative of the Security Service of Ukraine and other agencies , assets are transferred to the Asset Recovery and Management Agency for management, whose responsibilities include finding new owners.

In 2022-2023, such measures were applied primarily against Belarusian state property and local distributors with Belarusian state capital - oil products of the BNK-Ukraine company, railway wagons manufactured by BelZhD, fertilizers manufactured by Belaruskali, MAZ - a manufacturer of trucks and specialized vehicles, buses and trolleybuses, as well as trailers and semi-trailers, Belavtodor-Ukraine - a manufacturer of asphalt, and Service Oil, which exports oil products.

The Ukrainian side put the assets of these companies up for auction. Service Oil's assets, including its corporate rights, were acquired by one of the subsidiaries of Ukrainian oligarch Rinat Akhmetov . A similar fate befell the Ovruch crushed stone plant, based in Gomel.

The Ukrainian authorities' initial focus on the public sector gave Belarusian private entities time to restructure their operations in Ukraine. This typically involved the sale (transfer) of shares to owners from other countries, sometimes combined with rebranding.

Thus, the solar energy producer "Ecotechnika Velyka Dobron," which was owned by Oleksandr Moshensky until 2022, now has an Icelandic owner, while Vasily Smetanin's transport company "Avtomaz-Ukraina" is now controlled by a Georgian investor, and the local branch of the multinational company "Sodrugestvo Group" (a soybean and rapeseed processor, among other things), owned by Belarusian-Russian businessmen Alexander and Natalia Lutsenko, now has a Luxembourg-registered owner and has been renamed "Podolsk Trade Company."

Bankruptcies of Belarusian companies on the horizon

However, market closures and property confiscations often put Belarusian companies in Ukraine on the verge of bankruptcy .

The road repair and construction company "Belavtodor-Ukraine" is already undergoing this procedure. Trade House MTZ-Belarus-Ukraine (which assembles tractors from prefabricated parts imported from Belarus) is being liquidated after its Ukrainian partner withdrew. Last fall, the bankruptcy process began against the largest Belarusian company in Ukraine, the oil trader "BNK-Ukraine." However, in May, the process was suspended. It is possible that the company (which also owns numerous valuable real estate properties) will find a new Ukrainian or European Union owner.

Potential bankruptcy seems inevitable for many other Belarusian businesses in Ukraine. Most of them, after a two-fold decline in sales, ended last year with losses. However, some are seeing growth in both revenue and net profit. These are generally high-tech companies whose owners are not based in Belarus.

Trade under censorship. Intermediaries under sanctions.

With the onset of Russian aggression against Ukraine, official trade relations between Belarus and Ukraine were severed. Not entirely, however. At a meeting organized by the administration of the Gomelsteklo glass factory with its employees, General Director Pyotr Maksimchikov announced a complete severance of relations with Ukraine in the spring of 2022.

Gomelsteklo is one of the largest glassware manufacturers in Belarus and Eastern Europe. However, goods from this factory were still finding their way to the Ukrainian market via Poland . The Gomel-based manufacturer opened a sales office in Białystok, from where glass could be legally exported to Ukraine. These exports included glass sheets, double-glazed windows, and other products for the construction, automotive, and household industries.

Gomelsteklo, like other large enterprises in Belarus, is under state control. This means that its management is obligated to fulfill tasks assigned by the government and Lukashenko personally. Therefore, establishing a branch in Poland was also a political decision by the Belarusian president's entourage. Similar situations have also occurred in other industries. Belarusian companies have particularly frequently established representative offices in Lithuania, all in an effort to circumvent EU sanctions.

However, this practice collapsed in June 2024, when the European Union expanded its sanctions package against the Lukashenko regime . Among other things, it imposed a ban on the import of glass-related goods into the European Union. Furthermore, the sanctions also covered companies that located their subsidiaries in the European Union.