Belarus is an important supplier of raw materials for Latvian timber industry. Kristaps Klauss, executive director of the Latvian Forest Industry Federation, said that, for example, last year 600 thousand cubic metres of boards were imported from Belarus. This year, volumes have climbed rapidly and nearly half a million cubic metres were imported in the first half of the year.
“We basically use them in further processing, because from Belarus we buy rather low-processing-level boards, even undried ones. And in Latvia we are drying them, filing, profiling, waterproofing, and exporting them further,” he explained.
The formally imposed European Union sanctions against Belarus also cause inconvenience to merchants, but not as much as the Latvian banks, which deal with Belarusian merchants cautiously.
"And then the solution that many companies find, given that this is not the first time that Latvia's financial system has a much smaller risk appetite than other countries, is to open accounts in other countries, such as Poland. And then Poland is allowed to carry out these deals with Belarus. [..] We do not claim in any way that the sanctions against Belarus are inadequate. But it is not adequate that they are significantly expanded or reinforced by local banks."
The Latvian Investment and Development Agency has also observed that trade volumes with Belarus are declining. Deputy Director of the Agency Iveta Strupkāja said: “We also see this in the statistics that economic cooperation is slightly declining, and it is also difficult to carry out bank transactions. Although there are no formal restrictions on transactions with Belarusian banks. The Latvian banks, which in themselves are not prohibited from providing transactions with Belarus, are cautious, and this is the limit that we feel,” she said.
Strupkāja explained that the banks' strict rules had been encountered last year when the LIAA launched an investment campaign, attracting investment from Belarus.
However, Finance Latvia Association's councillor Laima Letiņa said the caution was objective.
She explained that the Belarusian authorities' ties to business are very close, so it is the responsibility of the banks to make sure that the asset does not come into the hands of sanctioned persons.
The Finance Latvia Association called on entrepreneurs who feel unduly restricted to turn to the regulator to consider each case. In the meantime, the forest industry, which imported materials worth €177 million from the neighbouring country last year, warned that unjustified rigidity could lead to the fact that Britain, as a major destination of goods, will start importing timber from Belarus directly and without creating added value in Latvia.