The Baltic States and Poland have urged the European Commission to impose tariffs on fertilizer imports from Russia and Belarus into EU countries. These four nations argue that the importation of nitrogen, phosphorus, and potassium fertilizers is financing Russia's aggression against Ukraine.
Many experts liken the dependency on Russian and Belarusian fertilizers to the reliance on Russian gas and oil, which poses a significant threat to the national security of numerous European countries. Russian fertilizers are also generally cheaper than those produced by European companies. The primary operating cost in fertilizer production is natural gas, which accounts for 70-80% of the overall production cost. As the chemical industry is highly energy-intensive, Russian companies benefiting from access to inexpensive gas are free to set their prices.
Poland's largest chemical company, Grupa Azoty, faces severe financial difficulties, having recorded a loss of 748 million zlotys (approximately 174.4 million euros) in the first half of 2024. The company’s losses have been even more substantial in previous years and are compounded by significant investments needed for decarbonization and a transition away from fossil fuels. It is worth mentioning that, directly and indirectly, 19.82% of the company is owned by Russian oligarch Vyacheslav Kantor. Now, after he was put on the sanction lists, his shares in the company have been frozen. Grupa Azoty is now hoping that new tariffs on fertilizers from Russia and Belarus will provide relief.
However, Polish government representatives indicate that implementing high tariffs on these fertilizers could be challenging due to a lack of support from France and Germany. It is crucial to assert that the aim of customs policy should not be to eliminate certain producers in favor of others, especially when those producers are now state-owned companies. Despite the sanctions imposed on Russian and Belarusian firms, the recent increase in fertilizer imports to EU countries suggests that these economic sanctions are not being effectively enforced. Without a robust sanctions policy, the West will struggle to financially undermine Russia and force it to stop its aggressive actions.
Source, Łukasz Wojdyga – Center for Strategic Studies