By Robin Emmott, Sabine Siebold and Francois Murphy
BRUSSELS/VIENNA - The European Union is set to ban new loans to Belarus after reaching a deal on Friday for economic sanctions on Belarus as punishment for forcing down a flight to arrest a journalist, the Austrian foreign ministry and three diplomats said.
Broad economic sanctions would be the EU's strongest response yet to the forced landing of a Ryanair flight in May by Minsk to arrest an exiled dissident, a move the bloc's leaders have called state piracy.
Restrictions on the Belarusian financial sector, if agreed by EU governments at a political level, will include: a ban on new loans, a ban on EU investors from trading securities or buying short-term bonds and a ban on EU banks from providing investment services. EU export credits will also end.
Friday's agreement overcame objections from Austria, whose Raiffeisen Bank International is a big player in Belarus through its Priorbank subsidiary.
EU leaders meet next Thursday for a scheduled summit. It is not clear if they will approve the deal agreed by expert officials.
"With this agreement the EU is sending a clear and targeted signal against the Belarusian regime's unbearable acts of repression," the Austrian foreign ministry said in a statement.
President Alexander Lukashenko, in power since 1994, has argued that the journalist pulled off the plane, Roman Protasevich, had been plotting a rebellion, and he has accused the West of waging a hybrid war against him.
EU experts tasked with drawing up sanctions have also agreed on an ban of exports from the bloc to Belarus of any communications equipment that could be used for spying and a tighter arms embargo.
They also agreed restrictions on EU purchases from Belarus of tobacco products, as well as oil and oil-related products, and a ban on importing potash, a major Belarusian export.