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On 31 October Belarusian Deputy Prime Minister Uladzimir Siamashka, while speaking in parliament, claimed that Belarus was suffering losses due to systemic exemptions in the Russian-dominated Customs Treaty and Common Economic Space.
These losses might increase - in January Russia is introducing a recycling tax on cars. The losses for Belarusian trucks producers might allegedly reach as much as $350m.
The Belarusian government is not only quarreling verbally with Kremlin, it is changing the conditions of its agreements with Russia or refusing to effectively implement them - for example by ignoring its obligations on privatisation, which Moscow imposed as a precondition of loans.
Moreover, Minsk constantly discusses the dangers of energy dependence on Russia and displays little interest in Putin's further Eurasian integration plans.
Nuclear Power Replaces Russian Gas
Belarusian officials openly discuss their grievances concerning Russia. For example, member of Belarusian Parliament Dzmitry Kharytonchyk said, “We hope that after 1 January, when the signed agreements will enter into force, they [Belarusian enterprises] will get an opportunity to buy the necessary fuel and energy resources at prices found on the internal Russian market.”
Meanwhile, the state-run ONT TV reported, “the Government calls dependence on national enterprises on Russian gas “dangerous.” It assured that the situation would change after the launch of a Belarusian nuclear power plant and the volume of Russian gas used would be reduced by a third.
Lukashenka himself leads this wave of criticism. In early October, according to the Interfax news agency, Lukashenka said, "Putin has promised – beginning 1 January – to remove all exemptions and restrictions with trade. Otherwise, we will not be able to stay in the Customs Union, since we would not see any economic benefits from it.”
More bluntly, Lukashenka hopes that Russia will abolish its excise tax on Belarus export duties for petroleum products produced from Russian oil. He claimed that Belarus annually pays into the Russian state budget about four billion US dollars, and if not for these hefty payments, “we would already have built the Emirates here.”
Since 2011, Belarus has been importing duty-free Russian oil to reproduce at its own refineries. These petroleum products partly are sold to third countries. For these exports Minsk pays duties directly to the Russian sate budget: in 2012 - $3.8bn, in 2011 – $3.07bn. Meanwhile, Minsk believes that Moscow should not demand this money from them as Russia owes Belarus something for being its close ally.
The Belarusian government's expectation that Russia should pay for cooperation is predictable. Three years after establishing the Customs Union in July 2010, it looks contradictory. Most importantly, the negative consequences of the economic union have an impact on ordinary people and threaten to foment discontent.
It is precisely this union that has caused Belarusians to lose the opportunity to buy used cars in the EU, as average car prices have been increased by 40%. In addition, they have faced rising prices for petrol and food. The Ministry of the Economy explained that prices have grown because of the need to “equalise prices with Customs Union countries.”
Belarus joined the Customs Union in order to maintain Russian markets for Belarusian products – first and foremost for its food products and automotive industry. Yet hopes for expansion have not materialised. Belstat reported that in January-August, industrial production in Belarus fell in comparison to the previous year by 4.8%, and the profitability of enterprises fell by 37.2%.
Of course, Belarus has received benefits from membership in the Customs Union in the form of discounted prices for Russian oil and gas, as well as other economic preferences which have been granted mostly by Russia. Furthermore, Minsk entered the Union after facing economic difficulties in 2010 and Belarus had no choice but to join in order to get urgently needed loans from the Anti-Crisis Fund of the EurAzES.
Ideological Differences with Russia
Trade with Russia makes up about 47% per cent of Belarusian foreign trade, while the share of Kazakhstan in Belarusian foreign trade is approximately 1%. Although the volume of trade with Russia is gradually decreasing, Russia still dominates Belarusian foreign trade and is the major source of support for Belarusian state. Hence, Minsk had little choice but to accept the Russian-designed Union.
Russia evidently wished to create the Union extending beyond Belarus. An expert of the Polish Center for Eastern Studies, Adam Eberhardt, when talking on Polish Radio emphasised, “for Moscow, the Customs Union remains an integration priority, as it is important to demonstrate other states, e.g., Ukraine, that it is not such a bad idea to cooperate with Russia.”
Actually, the Kremlin's plans go even further than this. Belarus, Russia and Kazakhstan, the constituent members of the Customs Union, agreed to establish by 1 January 2015 the Eurasian Economic Union. In writing about the Common Economic Space in 2011, then Russian Prime Minister Putin spoke of a “new integration project for Eurasia” and the possibilities for “change in the geopolitical and geo-economic configuration of the entire continent.”
Putin resorts to the Eurasian project to find a new place for diminishing importance of Russia.
Putin resorts to the Eurasian project to find a new place for diminishing importance of Russia. Renowned philosopher Lev Gumilev – popular not only with some Putin's advisers but also in Kazakhstan – defended Eurasianism as the grand strategy for Russian national development. He said, “If Russia can be saved, she can do it only as a great Eurasian power and it will happen only through Eurasianism.” Eurasian ideology is growing stronger. So it was not entirely a shock when, at the Customs Union summit in October, President Nursultan Nazarbayev of Kazakhstan discussed the possible membership of Turkey in the economic bloc.
Belarus, on the contrary, does not have any serious proponents of Eurasianism as far as the projects ideas of Slavic-Turkic cooperation are concerned. An ideologist of the Belarusian regime, Siarhei Kizima, openly expressed his doubt in the state-owned daily Zvyazda that Turkey could join the Union. Belarus sees itself marginalised in such continental designs, moreover these designs might dangerously expose it to global confrontations.
If Lukashenka ever had an ideology, it was that of Soviet restoration. He has little affinity for Eurasian ideas. Belarusian and Russian leaders follow different geopolitical visions and hold different worldviews.
Belarus and Russia: Marriage of Convenience
The differences between Moscow and Minsk are not verbal ones. The Belarusian leadership clearly is challenging Moscow whenever the Kremlin threatens its vital interests. Recently, it not only detained the CEO of Uralkali, at move that irritated many in the powerful quarters of the Russian business community and government. Minsk has also managed to change the terms of its loans received from Russian-controlled Anti-Crisis Fund of the EurAzES.
Initially, Moscow gave these loans with the condition that wide-scale privatisation would be carried out in Belarus. Then the privatisation clause was transformed into more humble plans for five integration projects which would effectively takeover the best, most profitable Belarusian enterprises by Russian businessmen. Among these Belarusian businesses were MAZ, MZKT, Integral, Peleng, Hrodna-Azot.
The negotiations, however, led to no tangible results and after the Uralkali affair, Russian truck producer KAMAZ said it had no plans for a merger with MAZ.
Essentially, relations between the Belarusian and Russian regimes are more a marriage of convenience than a genuine partnership or union of like-minded political elites. Calling Lukashenka's regime “pro-Russian” does not reflect the realities of the huge differences between Minsk and Moscow in almost every regard.
Siarhei Bohdan is a Research Director at the Ostrogorski Centre. He is an alumnus of the Belarus State University and European Humanities University in Lithuania.