The European Council, which comprises the 28 EU countries’ foreign ministers, has elected to lift a number of sanctions in place against Belarus. The sanctions are primarily visa bans and asset freezes on individuals, including the Belarussian president. Three defense companies will also be relieved from the sanctions, although an arms embargo will remain in place.
The sanctions were imposed in response to suspicions of unfair elections and mistreatment of political opponents, including the imprisonment of a 2010 presidential candidate, released last August. Four members of the President’s security team implicated in the disappearance of political opponents in 1999 and 2000 remain on the sanctions list.
This permanent lift of the sanctions follows a four-month temporary lift that followed improved elections and the release of six political prisoners. However, the EU released a statement voicing concern “with the situation of human rights in Belarus,” and calling for the former Soviet state to abolish the death penalty and take further steps to meet international elections standards.
Business environment in Belarus
Although the largely personal nature of the sanctions has not had a marked effect on the ability of foreigners to do business in or with the country, this move does improve its reputation.
Surprisingly, the World Bank ranked Belarus as the 12th easiest place to start a business in its 2016 Doing Business survey, improved by recent updates to the online registration process. However, its overall rank is only 44, hindered by access to credit. However, foreign investors can typically tap their home markets for credit, somewhat alleviating this issue.
Although the country’s human rights record remains under scrutiny, business law is seen as being well governed. This has earned Belarus the 29th spot on the Doing Business survey for enforcing contracts.
These doubts about the rule of law have affected Belarus more significantly on the Heritage Foundation’s Index of Economic Freedom, on which it ranks 157th. This is primarily driven by the constitutional power given to the President, who may override the legislature and courts by decree.
Given this and that the government is apparently 70% government-controlled, the Heritage Foundation asserts that corruption is widespread thanks to the power of the executive branch. The Corruption Perceptions Index corroborates this view, ranking Belarus 115th.
Doing business in Belarus
Having a company in Belarus grants access to the Eurasian Economic Union, meaning free trade and free movement of labour with Russia, Kazakhstan, Armenia and Kyrgyzstan. Local companies have no residence or nationality requirements for shareholders and directors, nor do they have any minimum capital requirement. It is therefore possible to establish a business in the country with relatively little up-front cost, although all companies require an annual audit.
Belarus therefore makes a great export processing hub for the Russian market, which is helped by the countries’ close relationship and linguistic ties (Russian is one of the official languages of Belarus). The main type of company is an OOO, which is much like an LLC and requires only one director. These entities have at least two shareholders, although a single-owner company known as a PUE can also be used. Starting a company in Belarus usually takes around three months.
Photo by Mitchel Jones, available under a Creative Commons Attribution 2.0 Generic (CC BY 2.0) license.