I'm shocked that, of all places, we would even dare to consider purchasing thousands of tractors and other agricultural machinery from Belarus. Have the dangers of violating the trade restrictions put in place by the US and its allies on Belarus and Russia been thoughtfully considered?
You might call me a sensationalist journalist and claim that I'm exaggerating, but these are some of the dangers that a corporation or government that decides to violate the trade restrictions imposed on Russia and Belarus by Western nations must be prepared to face.
The foundation of your involvement in the international financial system is your Central Bank's account at the New York Fed, which they can first freeze. You can find yourself in a situation where importing food, medication, and fuel is hard if you lose access to deals with the New York Fed.
Second, any nation-state or business that violates Western trade sanctions runs the risk of having its access to regulated commercial banks in the West restricted or blocked. It will be challenging for you to open letters of credit. We occasionally run into issues being paid for the tea, coffee, and flowers we export.
Thirdly, breaking sanctions carries the risk of possibly losing access to the worldwide Swift money transfer system, as we witnessed with Russia and Belarus. This might make import and export trade impossible.
The possibility of losing good status with the World Bank and the International Monetary Fund (IMF) is the fourth risk. Dealing with nations that have been imposed sanctions by their major shareholders is typically frowned upon by the Bretton Woods institutions.
The US Trade Representative conducts an annual certification procedure under Agoa, the agreement that grants Kenya and other developing nations duty- and quota-free access to US markets. If you violate the rules, this body may reference you negatively.
We must always keep in mind that, compared to the time of the 2008 global financial crisis, our financial systems are more intertwined with the global financial system. We have issued a ton of Eurobonds, just like Ghana, Angola, Mozambique, and Rwanda have done. The demand for commercial borrowing, mostly in the form of syndicated loans, has exploded to previously unheard-of heights.
The Friday failure of the Silicon Valley Bank got me thinking about its ramifications. I learned that the huge bank's demise was directly related to the US's rising interest rates.
What would happen to a sovereign state like Kenya, which has approximately $50 billion in external loans denominated in dollars, if rising interest rates in the US might cause the collapse of the 16th-largest bank in the country (with assets totaling $200 billion)?
The idea is that the current state of the world economy is so precarious for us that even considering doing business with a nation subject to Western sanctions would be an act of economic suicide.
From the correspondence I have seen, including draft Cabinet Memos, a concept paper by the Agricultural Finance Corporation (AFC), the government agency carrying out the project on behalf of the government, and the party acting on behalf of Belarus, I need to explain what the deal being planned with Belarus entails.
Finally, an SPV-like organization established in Dubai and owned by Belarusians will purchase the tractors and equipment from Belarus. Fourth, Belarus has designated the Dubai-based business known as AFTRADE DMCC as its representative in the program. It's been a while since I've been this excited about a project. Second, the government has named AFC as a key implementer of this project. This project is intended to be a "government-to-government arrangement," which means that no open bidding will be required to purchase the equipment.
A wide range of parastatals, including the Kenya Agriculture and Livestock Research Organisation (Karlo), the Agricultural Development Corporation (ADC), the Kenya Prisons Service, and the National Cereals and Produce Board, would share the tractors and equipment once they arrive in the nation (NCPB).
These grandiose initiatives carry a considerable danger of corruption. The largest conundrum in this tale, though, is how the massive scheme was paid for. The money is expected to arrive from the Trade Development Bank, according to letters from government agencies (TDB). Oddly, according to the regional bank, neither it nor the initiative are known to them.
Look, by dealing with Russian oligarchs seeking to conceal their wealth, we may be exposing ourselves to hazards. Thus, the government ought to cancel the agreement with Belarus right away. We just cannot take the chance of violating the sanctions the US and its allies have placed on the nation.
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