Lending to Belarus

The Italian ECA SACE is guaranteeing finance to Belarus in contravention of broad EU sanctions put in place because of serious human rights concerns in the country.


Background and current situation

At the end of June 2012, Italy’s ECA SACE was exposed to Belarus to the extent of €155 million, with a significant part of that sum guaranteeing the lending of two state-controlled Belarussian banks (OAO ASB Belarusbank, and OAO Belvnesheconombank) who are financing contracts benefiting Italian exporters.In September 2012 SACE decided to allocate another volume of guarantees for deals with Belarus to the tune of €50 million.

June 2012September 2012
SACE guaranteeing a total of  €155 millionSACE agrees to allocate another  €50 million to Belarus

Going against the EU

By regularly guaranteeing exports to Belarus, the Italian ECA contravenes the wide set of EU sanctions and restrictive measures that have been in place since 2007 due to concern about human rights in the country.[1]

The fact that state-owned financial intermediaries from Belarus directly benefit from foreign ECA cover is an evident example of lack of policy coherence between ECA operations and EU fundamental objectives and external action goals, such as the promotion and consolidation of democracy in Third Countries.

Undermining human rights

SACE does not perform any human rights and democracy promotion due diligence before taking decisions about specific operations in Belarus. Furthermore the country risk assessment, which guides the definition of premiums for ECA cover, is based on wider political and macro-economic stability issues, often conflicting with the protection and promotion of human rights and democratic freedoms in the country. Even so, Belarus is still given the highest country risk ranking according to OECD rules, thus increasing costs of ECA guarantees.

SACE’s executive summary of its Belarus risk profile states: “Political risk. Main risks for the leadership of Lukashenko and political stability are linked to the deterioration of the economic situation and relationship with Russia, on which the country depends economically, commercially and financially.”In this context the “political violence” risk – which indirectly might reflect some broader human rights protection related issues - is rated 51/100, much lower than any credit and regulatory risk (on average above 68/100). In short, according to SACE officials' words: “High [political] risk does not mean not to be able to operate, premiums ...are higher, but we go ahead.”

More information

[1]     Council of the European Union ; Council conclusions on Belarus, 3191st Foreign Affairs Council meeting, Luxembourg, 15 October 2012, European Union – Restrictive measures (sanctions) in force (Article 215 TFEU); (Regulations based on Article 215 TFEU and Decisions adopted in the framework of the Common Foreign and Security Policy); European Commission, update 01.10.2012 ; chapter on Belarus, page 6-11

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