Alexander Lukashenka announced a re-orientation of Belarusian export cargo streams from Latvian and Lithuanian ports to Russian ports. The announcement came on 9 November at a meeting with the Governor of Russia's Leningrad region.
Belarusian authorities have started a new round of geopolitical games between the East and the West. On the one hand, Belarus is showing its loyalty to Putin. On the other, it is showing its importance to Lithuania and Latvia. The experts say that this step will give no economic benefits to Belarus. Baltic ports offer much better conditions with regard to prices, quality and speed, than Russia could ever provide.
Putin of course warmly greeted this statement from official Minsk. However, he knows Lukashenka too well to trust him. The Belarusian ruler promised democratisation to the West, and the introduction of the Russian rouble to the East, many times. He has failed to keep either promise. Today’s promise may also eventually turn out to be bluff.
No Economic Sense
Today, the Lithuanian port of Klaipeda and the Latvian port of Ventspils conduct most of the transportation of Belarusian goods by sea. It makes good economic sense.
First, the Baltic ports are located closer to Belarus. Potassium fertilisers produced by Belaruskali pass 712km on their way from Salihorsk to Klaipeda. The distance between Salihorsk and St. Petersburg amounts to 998km.
Second, railway transportation for one tonne of cargo is cheaper in Lithuania than in Russia. Third, Lithuanian and Latvian railways offer better services. Fourth, additional logistic expenses always accompany any logistical re-orientation. And finally, ports in Russia's Leningrad region freeze, which leads to greater economic expense.
Belaruskali, which made up 16 per cent of the world's potassium production in 2010, used to make the decision on transportation through the Baltic ports by itself, based on its own economic interests. It concluded long-term agreements with Lithuanian and Latvian ports, beneficial for both parties.
The Baltics long for cooperation with Belarus, because Belarusians remain the main clients of their ports. If the decision to re-orientate is really undertaken, it will greatly affect the economy of the Baltic States. For example, Latvia receives five to seven per cent of its own GDP from freight transportation on behalf of Belarus.
Today, Latvians want to make further concessions to the Belarusians. The Minister of Transport Aivis Ronis has promised to create milder conditions for the purchase and lease of the port facilities. This may partially explain why the Baltic States often stand against the European Union's economic sanctions with regard to Belarus.
Lukashenka took the decision to re-orientate together with Putin and under his pressure. Lithuanian Minister of Transport and Communications Eligius Masulis said that “Russia set certain conditions in return for aid and Belarus has nowhere else to go”. Indeed, Putin has strong leverage against Lukashenka.
First, Belarus and Russia are holding negotiations on prices for energy resources for the coming year. Minsk wants discounts as the economic stability of Belarus depends on these prices.The Russians want Belarus to ship 2-2.5m tonnes of oil products back to Russia rather then to the West. Belarusian oil processing plants can fulfil such task but they will have to work with no profit.
Secondly, the Belarusian authorities hope to receive another Russian loan. Belarus failed to fulfil Russia’s demands on liberalisation and privatisation, so there may be no more loans. However, decision-makers rarely stick to the papers they have signed in Eastern politics. Re-orientation of exports to Russian ports may become an additional argument to help Moscow forget about other older commitments.
Thirdly, the re-orientation may also be the payment for the deceitful schemes of oil products export. This year, Belarus exported petrol disguised as solvents
. Thus Belarus avoided the obligation of paying the fees to the Russian budget. The Russians detected this scheme and demand that Belarus should pay pack $1.5bn. Belarus has no money to do that.
On the other side, official Minsk is displaying its importance to the Baltic States. Lukashenka's statement appeared as a powerful message to remind Lithuania and Latvia that they should do their best to defend the “mild approach” of the EU to Belarus.
This spring, Belarus already threatened Lithuania and Latvia with freight transportation re-orientation were the European Union to impose economic sanctions. Official Minsk wants the European Union to make concessions on democracy and political prisoners.
What Decision Will Official Minsk Take?
Even Lukashenka probably does not yet know whether Belarus will transfer the export to Russian Baltic ports. Belarusian analyst Valer Karbalevich recalls that ten years ago Lukashenka promised that Belarus would transfer its export to the ports of Kaliningrad. It remains an empty promise.
Lukashenka likes to make promises and but not keep them. Very few politicians in the world still trust his words as a result. On the one hand, it would be logical if Belarus exported its goods through the Baltic ports as before. On the other hand, the Belarusian authorities are fully dependent on Russia today and will do their best to make the Russian leaders like them.
Lukashenka stands out as the only politician in the world who can play games with the Russian leadership so skillfully and openly. The Belarusian ruler has been manoeuvring between the EU and Russia for 18 years and he knows his stuff very well.
But this may not last much longer. The Belarusian ruling elite must demonstrate its loyalty. Otherwise, they will have to release political prisoners and to improve relations with the West - something which they are very reluctant to do.