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Latvia looking for 1 billion euros compensation from the EU

Published on March 21, 2012 by   ·   No Comments

To agree on imposing economic sanctions against Belarus, Latvia may demand from the EU a minimal compensation of one billion euros.

The chairman of the Society on Promoting Latvian-Belarusian Economic Ties Alfredas Cepanis motivates his words by the fact that embargo on Belarus would painfully affect not only Latvian manufacturers who bring their goods into this country, but especially transit: railways, ports, motor transportation, as well as banks.

“A billion Euro a year would be a kind of compensation for the lost market, decrease of cargo turnover at ports, new unemployed, decrease in tax revenue,” Cepanis said. He admits that Latvia can demand more, as Belarus can make steps to meet. Expenses of transport operators would grow considerably, as Ukrainian goods would be transported via Russia, and not directly via Belarus.

According to the estimations of the Latvian Confederation of Employers, sanctions against Belarus and Latvia can bring about losses of about Euro 480.9 million (336.9 mln lats).

In case the sanctions are aimed against Belarusian enterprises related to transit of oil and coal, railway cargo turnover is to decrease. It is 57% of the general cargo turnover, 3% 0of the GDP and 8.1% of budget revenues of the country.

According to other estimations, losses can be even higher, 4.5% of the GDP. Belarus is the second most important partner of Latvia in transportation industry, to which an important role in transit from Ukraine, Russia, Kazakhstan and so on belongs. The turnover of cargo between Latvia and Belarus in 2011 was 33.8 mln tons and 57% of the total amount of transportations.

A letter about possible results of the sanctions has been written to the head of the government Valdis Dombrovskis. There is no answer yet, Cepanis confessed.

Latvian Economy Minister Daniel Pavluts also agrees that the losses of Latvia caused by sanctions against Belarus would be about half a billion dollars. He noted however that every figure should be confirmed by mathematical calculations. The minister has also agreed that Latvia has a right to demand compensation from the EU.

Finance Minister Andris Vilks for his part does not hide that sanctions against Belarus would negatively affect the budget revenues, though he has not given concrete figures, mentioning just “dozens millions lats.”

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