EU set to target Belarus businesses with sanctions

Belarussian policemen block the pavement in central Minsk, June 15, 2011.

BRUSSELS/VIENNA (Reuters) - The European Union is expected to target Belarussian businesses with asset freezes next week to step up pressure on President Alexander Lukashenko to end a crackdown against the opposition, diplomats said.

EU foreign ministers will probably agree at a meeting to sanction at least one, and possibly three companies, in a move that would extend the 27-nation bloc's punitive steps which already affect more than 150 Minsk officials, they said.

"It's likely that at least one Belarussian company will be sanctioned," one EU diplomat said.

The Vienna-based Organisation for Security and Cooperation in Europe (OSCE) said this week in a special report that Lukashenko's government systematically uses fear, harassment, torture and blackmail to clamp down on its people.

The author of the report, French researcher Emmanuel Decaux, said on Friday that Belarus could not escape growing international pressure over human rights abuses. He urged Russia to use its financial weight to push Minsk towards reforms.

Speaking a day after he issued the damning human rights report on Belarus for Europe's main rights and security watchdog, Decaux said it was impossible for Belarus to "go back to business as usual."

"Belarus is on the radar," he told reporters in Vienna. "The pressure is getting stronger and stronger."

Minsk has come under international scrutiny after a disputed election in December that reinstated Lukashenko. Police arrested nearly 700 protesters and reporters during a night of demonstrations after the vote.

A group of 14 of the OSCE's 56 member states had asked the body to investigate the situation after the crackdown.

Belarus, which holds OSCE membership, refused to cooperate in the investigation. It said the mission, requested by Western countries including the United States, had "no valid grounds."

RUSSIAN LEVERAGE

The EU has tightened its punitive measures against Belarus since the vote, but concerns about commercial interests of EU companies in Belarus had earlier prevented the bloc from reaching an agreement on steps against local business.

Lukashenko, who has ruled the ex-Soviet country for 16 years, faces increasing pressure also at home with the onset of a severe economic crisis that has lead to a 36-percent devaluation of the rouble and soaring inflation.

"Belarus can be an island cut off from the world -- it is a reality for the president," Decaux said.

He called on OSCE heavyweight Russia to help add to international pressure, noting that it was in Moscow's interest to get Minsk to listen and avoid becoming a pariah state.

"(The Russians) have a lot of economic and financial leverage and the main issue now is the crisis," he said, referring to Belarus's hopes of receiving $3 billion (1 billion pounds) from a Russian-led regional fund within the next three years.

Russia has complained about the treatment of Russian journalists working in the country, saying Belarus risks losing financial aid if the crackdown continues.

"I think (Russia) wants to strangle them to have more and more concessions, privatisation and liberalisation. But this is economic liberalisation not human rights liberalistion," Decaux said, adding this could still help open up the country.

Decaux said Moscow had been less helpful in raising pressure at the OSCE, citing a debate on Thursday over the report. "The Russian mission was always trying to slow things," he said.

(Additional reporting by David Brunnstrom; editing by Alison Williams)