The British government has come under fire from prominent opposition MPs over the effectiveness of its new sanctions on Belarus.

The new package of sanctions came in response to the crackdown on peaceful protesters that followed president Alexander Lukashenko’s victory in last year’s Belarusian elections.

The sanctions target the aviation, financial and trade sectors, and include any future securities and other money-market instruments – but not the $1.25bn in sovereign debt that Belarus raised in June 2020 via the London Stock Exchange.

“Belarusian indebtedness to UK investors provides some of the clout needed to add to the pressure on the regime to halt its abuse of human rights and attacks on political opponents,” Labour MP John McDonnell told openDemocracy.

“If the UK government is serious about holding the Lukashenko regime to account, half-hearted financial measures are not sufficient,” he added.

Liberal Democrat MP Layla Moran said that “If the London Stock Exchange has been used by the Lukashenko regime to fund oppression in Belarus, that is hugely concerning.”

“There must be an urgent investigation into how these funds have been used – and what further steps the UK Government should take to stop Lukashenko using the City of London to sustain his rule,” Moran, the party spokesperson on foreign affairs, added.

The UK Foreign, Commonwealth and Development Office has stated that the new sanctions are “carefully targeted to build pressure on Lukashenko, state institutions and those around him to change behaviour, while minimising, as far as possible, any unintended consequences on the wider population in Belarus.”

In the run-up to the prestigious London bond listing in 2020, the City of London hosted a series of investor promotion events for Belarus.

During a visit to London in June 2019, the now former Belarusian prime minister, Siarhei Rumas, was hosted by both the Lord Mayor of the City of London, Peter Estlin, and at a ‘Belarusian Capital Markets Day’ at the London Stock Exchange.

It was there Rumas met the exchange’s chief executive, Nikhil Rathi, now chief executive of the FCA, and Alan Duncan, the UK Foreign Office’s then minister of state for Europe and the Americas.

“London is the place where Belarus can raise the capital it needs to grow its economy,” Duncan said at the event. “Our governments are ready to continue cooperation, our companies will also interact. We believe that London Stock Exchange will facilitate your economic endeavours.”

Just a few weeks after the bond was issued in London in June last year, Belarusian law enforcement brutalised and tortured thousands in the post-election crackdown.

Over the past year, 35,000 Belarusian citizens have been subject to administrative detention since protests broke out last August over falsified election results. In the brutal crackdown that ensued, more than 4,690 people have been prosecuted or are facing criminal charges, according to the Viasna human rights association. Between eight and 15 people are believed to have died as a result of the security forces’ actions.

In response to human rights violations, the Belarusian opposition outside the country started a divestment campaign against Belarus’s bonds, targeting the underwriting banks and bondholders over their ESG policies – documents on “environmental, social and governance” risk that financial institutions claim guide their actions.

The 2020 bond was underwritten by Citi, Raiffeisen, Société Générale and Renaissance Capital, and buyers of this new round of Belarusian debt included Abrdn, HSBC, Franklin Templeton, Payden & Rygel, Amundi, BlackRock and PIMCO.

When openDemocracy asked the underwriting banks about the possible disconnect between their commitments to human rights and ESG factors on the Belarusian bonds, Raiffeisen, the international Austrian bank, responded that thebond “was issued well before the presidential elections.”

The Raiffeisen spokesperson continued: “All legal and regulatory requirements were met. The bond finances the Belarusian state budget and was intended to support the country’s transformation. We are monitoring the current developments in Belarus with concern and hope for a peaceful solution.”

In the bond prospectus, the Belarusian Finance Ministry says that the bond proceeds are meant to contribute to paying off the country’s external debt. When raising money via sovereign debt, bond proceeds are mixed with foreign currency reserves, and there are few transparency mechanisms to find out how exactly governments have spent the funds.

The Belarusian opposition says it is unclear whether the funds have, in fact, been used for that purpose – and could have been used to support law enforcement actions against protesters. In June, the Belarusian opposition urged the UK Financial Conduct Authority to investigate the issuance.

Regional financial and political expert Maximillian Hess, from the Foreign Policy Research Institute think tank, believes the UK’s action on Belarusian debt is “quite strong”.

“Sanctions on the secondary trading of Belarusian debt will also see the existing Belarusian sovereign bonds shunned from the UK market and asset managers,” said Hess.

“However, this move is not as wide-reaching as, for example, the US executive order banning trading in Venezuelan bonds in early 2019. This is because the US views any entity or transaction with debts in dollars as effectively subject to its jurisdiction.

“Given that Belarus' bonds are listed in the UK and issued under UK law, the sanctions could highly limit trading in such debt. The combined US, UK and EU sanctions – although they contain some notable differences – will effectively cut off Belarus from Western capital markets.”

To mark the anniversary of the controversial election, on Monday this week Lukashenko, who has ruled Belarus since 1994, held a marathon six-hour press conference in Minsk, the country’s capital.

When he was informed of the new UK sanctions during the event, the 66-year-old responded: “Who’s bringing in sanctions? Great Britain? Great Britain? Go in peace. Go and choke on your sanctions, Great Britain! We didn’t know anything about Great Britain for a thousand years, and we don’t want to now, you American puppets.”