Belarus Reinstates Customs Control on the Border with Russia: the End of the Eurasian Union?
The new food war between Belarus and Russia may signal the end the Eurasian Economic Union. In early December Belarus and Russia unofficially resumed customs control on the border, which led to Belarus responding to a Russian imposed embargo against Belarusian meat and dairy products.
The food war shows that the Eurasian Economic Union, expecting to officially launch on 1 January 2015, will be primarily a political project despite its name. Trade wars will remain the norm in relations between the two countries, in violation of numerous international agreements concluded between Belarus and Russia.
The New Economic War
Over the last decade, economic trade wars have been an important feature of relations between Russia and Belarus. They affect trade in various sectors - from milk and sugar producers to oil traders and airlines. These wars include conflicts over energy supply deliveries to Belarus that exploded in 2004, 2006, 2007 and 2010. In 2009, Russia banned the import of Belarusian dairy products.
The new food war will be less visible in the media than for instance the Uralkali and Belaruskali's divorce, but can still significantly undermine the basis of regional economic integration. Although officially Minsk denies it, multiple reports suggest that in early December the Belarusian authorities resumed customs control on the border with Russia.
Now customs are functioning on both sides of the border
Now customs are functioning on both sides of the border which will have a negative impact on trade between the two countries. Some trucks spend up to eight hours at customs on the border, which Belarus and Russia previously eliminated back in 2011 by creating the Customs Union.
The Belarusian authorities say that they reinstated border control to help Russians identify goods which remain under Russia's sanctions. However, the recently imposed customs control has all the appearances of being a response to the food war launched by the Kremlin on 24 November. Then Russia has imposed an embargo on the importation of goods for nine Belarusian meat processing plants.
Since then, the number of Belarusian enterprises that fell under the Russian ban increased to 23. Russia also checks trucks sent from Belarus through Russia to Kazakhstan and other countries for potential banned goods secretly destined for Russia.
During the first five days of monitoring the border, the Belarusian authorities initiated three administrative investigations on the export of goods from Belarus to Russia and 15 more for imports from Russia to Belarus.
The recent iteration of the trade war was very costly to Belarus. According to the government’s estimates, Belarus lost $160m during the first five days of the embargo alone, a sizeable hit for a small economy. Alexander Lukashenka said that ‘the Russian authorities' behaviour was not just surprising, but dispiriting. Indeed, their actions threatened to dismantle all of the agreements on the Customs Union’.
The government conducts negotiations with their Russian counterparts almost daily, but so far these talks have failed. On 10 December, Belarusian senior official Siarhiej Rumas announced that both parties agreed to solve the crisis during a meeting of the Eurasian Economic Commission, but time will show when the embargo will be actually lifted.
What the Kremlin Said and What It Means
Russia has two official complaints against Belarus.
First, Russia has declared that Belarusian meat and dairy products contain antibiotics, salmonella and listeria and are therefore dangerous for consumption. The Phytosanitary Service of Russia linked this with the purchase of cheap raw materials from Canada.
Secondly, Russia accused Belarus of smuggling Western goods into the country which are subject to sanctions. Officially these goods are in transit from Belarus to Kazakhstan through Russian territory, but in practise they end up in Russia. Russia is now forcing trucks with goods are headed to Kazakhstan to pass through checkpoints on the Russian border.
The true motives of the Kremlin’s policy remain obscure
In practise, Russia lacks legal grounds for imposing these kind of sanctions Belarus. Russia's border checks alone cannot confirm the purportedly dangerous nature of Belarusian goods. The requirement that the products coming from Belarus to Kazakhstan through the territory of Russia should pass through border controls is also a flagrant violation of the terms of the Customs Union. Therefore, Lukashenka's recent statement that "we are not puppies to be taken up by the scruff of the neck" is not without merit.
The true motives of the Kremlin’s policy remain obscure. Minsk-based financial analyst Siarhiej Čaly cites several potential reasons: to demonstrate that Russian sanctions against the EU agricultural sector are working, to protect their own producers and improve the trade balance or simply just to punish Lukashenka for making money on Russia’s problems. Whatever the logic of the actions, the latest trade war succeeded in reaching these goals.
Are Countries Dropping the Eurasian Economic Union?
The Belarusian authorities believed that the Customs Union could deprive Russia of the means to carry out this kind of low-level economic warfare. But at the beginning of the conflict, the Kremlin basically ignored the rules of the Customs Union. Officially the Federal Service for Supervision of Consumer Rights Protection, not the authorities themselves, began inspecting shipments on the Belarusian-Russian border. The Kremlin often uses this institution as a political tool to conduct trade wars.
Meanwhile, the Belarusian authorities are trying to fix their own economic problems. Deputy Prime Minister Mikhail Rusy proposed to establish a unified supervisory institution, as he explained ‘not to have to constantly prove that I'm not bald’. While the countries have the same safety standards, they have not yet created a single certificate that would eliminate these kinds of issues.
However, even the patching up of gaps in the legislation of each country cannot guarantee their peaceful economic coexistence. The treaty establishing the Eurasian Economic Community is silent with regards to any possible sanctions for violating the rules of the economic union. Therefore it is not surprising if countries will continue to break the rules in the future.
For Belarus, this conflict if even more painful because of the shrinking market of the Eurasian Economic Community. The economic crisis in Russia reduces imports from Belarus and has led to the Belarusian ruble's further devaluation.
Belarusians joined the Eurasian Economic Union to become richer. Now as Russia is itself struggling economically because of falling oil prices many wonder whether Belarus made the right strategic choice.