Page 8 - bne monthly magazine October 2022

8 I Companies & Markets bne October 2022
Belarusian officials prefer to play down the negative effects of Western sanctions and attempt to make out that the Minsk government’s import-substitution programme is running smoothly. However, its reorientation towards the domestic market quite obviously requires a major restructuring of the market, with losses in profitability and heightened adminis- trative costs hanging over the heads of regional governors.
On September 5, Belarusian Deputy Prime Minister Piotr Parkhomchik told state Belarusian media that Belarusian forest companies would attempt to exploit the EU’s energy crisis by exporting pellets to the EU market.
Parkhomchik thought that “there will be private companies that will build bridges so that the products we produce
could enter the European market,” perhaps with the hope that the EU would reconsider its sanctions on Belarusian products classified under HS chapter 44 in light of its energy crisis. Compared to Belarus' First Deputy Prime Minister's statement on finding a new paying agent for Belarus’ Eurobonds, Belarusian officials may also be hoping that Western companies will find ways to circumvent the existing sanctions to loosen the sanction’s pressure on the country.
Simultaneously on September 5, Kerch also announced “updated rules for the sale of wood will simplify the mechanism for obtaining it for individuals” in accordance with Lukashenko’s presidential decree on August 22, which simplified “the procedure for the sale of industrial timber for individuals.”
The updated rules will allow individuals to purchase up to 70 cubic metres of roundwood for the construction,
EC proposes suspending two thirds of Hungary's cohesion funds
Tamas Csonka in Budapest
The European Commission has proposed to the European Council a suspension of 65% of three cohesion funds due to Hungary, amounting to an estimated €7.5bn. The council will now have one month to approve the Commission's proposals with a qualified majority, which can be extended by a further two months under special circumstances.
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reconstruction and overhaul of residential buildings provided that the individual has submitted an application confirming the start of construction and ownership of real estate which are subject or construction or repair. Moreover, the wood will be sold at below market prices.
In fact, state Belarusian media are encouraging the sale of wood products, citing the Kopyl forestry company as a good example which had implemented a 15% sale on firewood with an additional 50% discount for pensioners. The same article mentions Kopyl’s product diversification into wicker baskets, wooden hangers for towels and clothes, phone stands, cutting boards, birdhouses, including DIY set-designs in a positive way.
This new way of marketing domestic forest products, as well as the decision to lower prices on industrial timber and other wood products, is a direct result of Western sanctions.
According to Kerch, "during the implementation of the action plan to find alternative markets against the background of the imposed sanctions by the collective West, as well as to stimulate sales of wood and products from it in the domestic market, the Ministry of Forestry has taken a number of actions.”
If a government encourages industrial export products to
be sold at below market price to individuals, it’s a sign that it is having major problems with offsetting its exports. While of course beneficial to the average Belarusian wishing to build a home, it’s a clear sign that Western sanctions are working and are having a significant effect on Belarus’ domestic market.
Johannes Hahn, the Commissioner for Budget and Administration, announces the decision of the EC in the conditionality mechanism against Hungary. / bne IntelliNews
If Hungary fails to adopt relevant legislation it could lose two-thirds of funds from the Operational Programmes for Environment, Transport and Rural Development. The amount in question amounts to 5% of the country's estimated 2022 GDP and a third of the funds the country is eligible for under the 2021-2027 budget.