While Lithuanian businesses in Belarus took the threat by Alexander Lukashenko to close the borders as a bluff, the uncertainty has been affecting their work and they are now considering moving to Lithuania.
“We are tired of constant uncertainty in Belarus,” said Jurgis Adomavičius, head of the customs mediation company Monolit Prom Invest in Belarus
According to the businessman, the Belarusian government often issues orders hastily, so the possibility of the border closing sometime soon could not be ruled out.
If this happened, Lithuania’s trucks travelling to Russia would have to go through Latvia. Adomavičius’ company has been preparing for such an event.
But even with Plan B, the firm would only survive for two to three months with closed borders, Adomavičius said. It would then have to fire some of its employees or transfer them to the company’s Russian branch.
According to Adomavičius, most Lithuanian firms were also considering transferring their businesses to their home country.
“For the past three days, we have been talking only about this,” he said.
Julijus Glebovas, Lithuania’s Commercial Attaché in Belarus, told LRT.lt that 575 Lithuanian capital firms operated in Belarus, including firms like Audimas, Kauno Grūdai, SBA, and Eugesta which have branches in the neighbouring country.
According to businessman Tautvydas Barštys, his agricultural processing company Kauno Grūdai had two subsidiary companies in Belarus. He said that the current business environment in Belarus was not favourable due to high risks.
The greatest risk was to the movement of goods, as Kauno Grūdai imports materials from Belarus to Lithuania, while its subsidiaries export most of their production to other countries, according to Barštys.
Representatives of other Lithuanian firms said that their operation in Belarus has not been interrupted yet.
Harm to Belarus
Aleksandr Izgorodin, Chief Economist at SME Finance, said that if Belarus closed its border, Lithuania’s export would not be greatly affected because the country transports mainly non-Lithuanian goods.
“Belarus takes up 4 percent of Lithuania’s exports. But 86 percent of exports to Belarus are re-exports from other countries,” Izgorodin explained. “In terms of the Lithuanian goods’ export, Belarus is only the 21st largest partner.”
Nevertheless, Lithuanian firms importing goods from Belarus could be negatively affected by the border closure.
“Metal and wood make up 37 percent of imports from Belarus. If the country closed borders, the import would be interrupted and the companies would face production difficulties,” Izgorodin said.
However, Lithuania’s firms could overcome the problem by importing raw materials from other neighbouring countries, such as Ukraine, he added.
Lithuania’s Klaipėda port would also be hit by Belarus’ border closure, Izgorodin said. Belarusian cargo makes up 30 percent of the port’s activity. Nevertheless, Belarus itself would be the greatest loser in such a situation, according to the economist.
“[Belarusian] economy has already been hit by the protests and coronavirus,” Izgorodin said. “It is now vital for them to continue exporting to bring in foreign currency into the country. The stability of the country’s economy depends on it.”