Belarusian authorities have no right to convert their SDRs into euros

Belarusian authorities have no right to convert their SDRs into euros under the mechanism of voluntary conversion at any central bank of a European state or the European Central Bank

EU High Representative for Foreign Affairs and Security Policy Josep Borrell responded to the letter of the NAM on the situation with the allocation of Special Drawing Rights (SDR) to the Lukashenka regime by the IMF.

Here is the most important part of the answer:

1. We have received assurances that the EU will not allow the exchange of SDRs for the euro in any central bank of the European Union.

2. The reason for blocking such an exchange is the fact that it would be a violation of the established ban on investment services to Lukashenko’s regime, regulated by the EU sanctions.

3. But even more interesting is the reference to paragraph 16 of the European Parliament Resolution on Belarus, which urges "member states to coordinate their actions with international partners in multilateral organizations, such as the IMF, to limit the allocation of funds to the Lukashenko regime and freeze any cooperation with it.

That is, in this matter, the recommendatory nature of the Resolution has become a direct guide to action. This means that there is reason to believe that other paragraphs of the Resolution can work according to the same principle. For example, point 1 — non-recognition of Lukashenka as the President.

In the meantime, we continue working on the complete blocking of the SDR account of Belarus in the IMF for the regime. And we expect a similar EU approach from the U.S.

Recall that Biden’s executive order of August 9 marked the financial sector of Belarus as one of the sectors against which U.S. sanctions can be imposed.

We should also remind you that a package of secondary U.S. sanctions is expected to be adopted in December. If the future sanctions list contains the National Bank and the Ministry of Finance of Belarus, any attempt by a third party to exchange the Belarusian SDR for hard currency will be grounds for falling under the secondary sanctions. But let’s not think ahead.