The US Treasury Department's Office of Foreign Assets Control (OFAC) has officially confirmed that Washington's sanctions against Belaruskali, one of the world's largest potash fertiliser producers and exporters, are not binding on Lithuania's state-owned railways.
Belaruskali, considered a lifeline for the regime of Alexander Lukashenko, exports a large share of its production via Lithuania.
Lietuvos Geležinkeliai (Lithuanian Railways, LTG) said on Monday that it received OFAC's letter on how the US sanctions should be treated on December 17.
However, Mantas Dubauskas, the state-owned railway operator's spokesman, told BNS that the company will continue to seek a solution on how to legally terminate its contract with Belaruskali.
"Together with the shareholder, we are currently looking for a sustainable legal solution to the situation," LTG said in a statement. "The Belarusian company's freight flow [via Lithuania] will be halted as soon as the necessary legal basis for doing so emerges."
LTG says it wrote to OFAC back on November 12, asking it for a written clarification and confirmation of the information it had previously provided during oral consultations on the application of the US sanctions.
The Lithuanian company quoted OFAC as saying in its letter that the sanctions "do not appear to be directly binding on LTG as there is no link to the US" or US entities, including US financial institutions or correspondents.
However, the office encourages entities that choose to comply with its sanctions to carefully assess the regulation and sanctions risks associated with the transaction before deciding to take action.
Dubauskas told BNS that the key message conveyed in the OFAC document is that the US sanctions cannot be a pretext for LTG to terminate its contract with Belaruskali.
"It confirms the statement that the US sanctions are not a sufficient legal basis to terminate the contract with Belaruskali and the company [LTG] would risk being sued by the other side for non-performance of the contract," the spokesman said.
"We hear the state's expectation that fertiliser shipments should stop, so we need to find other solutions," he added.
Belaruskali product shipments via Lithuania did not stop after US sanctions against it came into force on December 8, because the Belarusian company had made an advance payment to LTG, sufficient to cover the cost of rail services for several months.
The government announced after the sanctions had already taken effect that it was seeking to terminate the state railway company's contract with Belaruskali, even though it said the US sanctions do not directly apply to the transit of fertilisers through Lithuania.
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