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How Can Belarusian Authorities Retaliate Against the EU Sanctions?

Andrei Liakhovich

9 April 2012

Last month for the first time ever, the EU introduced sanctions against a number of companies, which supply oil refinery products to EU countries. It means that there is still a possibility of expansion of painful economic sanctions against Lukashenka's regime.

There is no dominating opinion in the assessment of the possible effects of the EU sanctions' expansion and possible retaliatory measures of Lukashenka's regime. A more common opinion is that the EU, by introducing, for the first time ever, the sanctions against quite a large number of Belarusian companies, reached a certain line in its pressure on Lukashenka's regime, which it will not cross. It will not cross it because it is afraid of pushing Lukashenka into Russia's arms. This step will be followed by a period of long diplomatic maneuvers and backroom talks on the terms of resuming the dialogue.

Some experts believe that actions of both the EU and Lukashenka's regime, starting from this point, can be described in terms of conflict resolution studies. Each party will make ever stronger confrontational steps to save face. In this case, Lukashenka's actions will resemble more and more to actions of a person who threw a noose around his neck hoping that someone will stop him and agree with him. The noose in this case is the degree of dependence from Russia.

Foreign Policy

The authorities will retaliate to the sanctions mainly in the foreign policy area, and less so in the domestic sphere. Lukashenka's regime will try and convince the West that in response to the expansion of sanctions it will intensify cooperation with Russia.

At the same time, the authorities will try and use the deterioration of relations with the West for persuading Moscow into stepping up its economic support.

In fact, the authorities will make no concessions to Russia. Together with Kazakhstan, they will block the initiatives of the Russian leaders to strengthen the centralization in the framework of the newly created Eurasian Union.

In 2012, the Russian leadership will hardly push for more concessions on the part of Lukashenka's regime. They will not demand to sell Belarusian enterprises to Russian companies and to establish a monetary union.

In 2012, the most pressing foreign policy issue for Putin's administration will be relations with Ukraine. Russia will put pressure on Ukraine in order to buy its gas transportation system. It will push Ukraine into the Customs Union.

Putin's administration will use cooperation with Belarus as an advertisement for Ukraine. However, Moscow will not satisfy Lukashenka's request to increase the volume of subsidies.

Domestic Policy

In the domestic policy sphere, Lukashenka's regime will exert pressure on the EU position by using the methods it uses now. It puts pressure on political prisoners, including using criminals. The authorities made it more difficult for opposition activists and NGO leaders included on its "black list" to go to EU countries.

Repression against opposition groups, which the authorities believe to be involved in the attempt to storm the Government House on December 19, 2010, continues.

If the EU remains consistent and decisive and expands the economic sanctions, it will not lead to a change of power in Belarus: opposition is divided, it is represented by conflicting groups and does not have a leader or a program. In its current capacity, opposition is unable to form a well-functioning government.

However, acting in such fashion, one can force the authorities into implementing changes in Belarus. The first such step should be the release of the political prisoners.

No Good Solutions

If the EU backs down and agrees to Lukashenka's terms, it is most probable that the political prisoners who are now in jail will be released. But then, at the next turn of the cycle of relations between Lukashenka's regime and the EU (thaw – tension) their place in jail will be taken by others.

A certain advantage of Lukashenka's regime in its relations with the West is that for the West, the political decision-making and decision-implementing system in Belarus is a "black box". Until now, an opinion is widespread that Belarus is a de facto super-absolute monarchy. Everything is decided and controlled by one person, Lukashenka.

On Lukashenka's team, there are people who know well how the huge bureaucratic machine of the EU works. There is a great deal of open information about what is said and what is planned to be done in Brussels, as well as about what Brussels and the capitals of some EU countries, which are interested in Belarus, are afraid of. Now, Lukashenka's team will push these buttons, these vulnerable pins of the EU. They know that in the West they are afraid of:

1. Pushing Lukashenka towards Russia.

2. Provoking a broad wave of repression.

3. Causing negative attitude towards opposition from people who are not happy with consequences of the EU sanctions.

4. Provoking growth of anti-Western and pro-Russian sentiments in Belarusian society.

Moreover, businesses in some EU countries, primarily in Lithuania and Latvia, will suffer as a result of sanctions against Belarusian companies. According to some Lithuanian experts, the annual losses of Lithuania as a result of introduction of large-scale EU economic sanctions would amount to about $2bn. According to some Latvian experts, the annual losses of Latvia would amount to $500m.

However, the Belarusian authorities are not going to foster anti-Western hysteria in society for several reasons. First, even in the present-day situation, they believe that the main threat is not generated by the West with all its demands to release political prisoners. They are pretty sure it comes from Russia who is interested in buying Belarusian enterprises and securely attaching Belarus to itself.

https://belarusdigest.com/story/how-can-belarusian-authorities-retaliate-against-the-eu-sanctions/

Andrei Liakhovich

Andrei Liakhovich directs the Center of Political Education in Minsk.

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2 April 2012

Trade Wars with Russia: from Sugar to Airlines

Last Monday, flights and all available jet rentals between Minsk and Moscow suddenly stopped. Russia has recalled the licence for flights to Russia from Belavia, the Belarusian national airline. The Belarusian side responded by cancelling the licences of the Russian companies. A new trade war between Belarus and Russia is brewing.

Although the flights have resumed according to the temporary agreement, the conflict yet again reveals the tough methods Russia employs to promote its economic interests in Belarus. As Belarus’s conflict with the West escalates, Lukashenka feels unsafe on the Eastern front where Moscow is taking advantage of his weakness. However, this and other trade wars do not mean that Russia will decide to “civilise” the Belarusian ruler any time soon. A weak and isolated Belarus is an easy prey for Russian economic advances.

The Airlines Trade War

At the moment, the frequency of flights operated by the Belarusian and Russian air companies between two capitals is regulated on parity basis, four flights a day from each side. However, only slightly more than a half of the seats these flights are filled, which makes them unprofitable. Increasing the frequency of flights would certainly bring losses to Belavia.

The Russian side is apparently eager to return the situation of the Soviet times when the Belarusians flew into the world through Moscow. Read more

The Russian side is apparently eager to return the situation of the Soviet times when the Belarusians flew into the world through Moscow. The Russian companies know that Belavia provides expensive fares and is not good at marketing its flights. It relies on Belarusian government support and effectively acts as a monopolist on the Belarusian market.

The Russian companies are willing to conquer the new market by proposing cheaper tickets for Belarusians flying abroad via Moscow. However, at the moment they are constrained by the frequency of flights. Once this barrier is removed, they will be able to overtake the market and effectively drive Belavia into insolvency.

The new trade war demonstrates that Lukashenka is not prepared to give up any assets to Russia, and even the confrontation with the West cannot change his mind. Lukashenka does not prefer Russia to Europe, and his conflicts with the outside world stem from pragmatic interests free of any ideology.

Wars for Gas, Milk and Sugar

The current “airlines war” is neither the biggest nor the most important trade war. The disputes over the exports of Belarusian goods to Russia and the transit of Russian gas and oil made many headlines across the world in the 2000s and were much more serious. There were also conflicts related to the export of agricultural products. The trade wars with Russia are much more dangerous to his regime than all its troubles with the West. The nightmare of Russia closing borders to Belarus exports constantly haunts the Belarusian ruler.

The trade wars with Russia are much more dangerous to his regime than all its troubles with the West. Read more

Last month, Moscow threatened to stop the Belarusian milk exports to Russia. This is not the first in the series of “milk wars”. The Russian businesses have been eyeing the Belarusian dairy industry for a long time, and Lukashenka signed the first agreement on selling dairy branch enterprises to Russians in 2008. But as with many other agreements, he was in no hurry to deliver.

A little milk war waged by Moscow the same year made him sell just one enterprise. The next conflict, in June 2009, was the biggest of all. Then, the Belarusian ruler publicly declared that Russia wants to take over the Belarusian dairy production. However, he lost the dispute and had to concede one more dairy fabric to Russia. Another milk war took place in 2010.

Belarus has also lost several sugar wars to Russia. In 2005, Russia accused Belarus of “dumping” by selling cheap sugar made from the Cuban sugar cane. Moscow emphasised that the agreements on the Belarusian sugar exports applied only to the sugar products made of the local beets. The low-intensity dispute lasted for two years until in 2007 Belarus had to cut its exports. It was painful, as Belarus had taken up to 10 per cent of Russian sugar market by that time.

Just in November 2011, the Belarusian ruler promised that “[a]fter establishment of the Single Economic Space milk, sugar and other trade wars [would] disappear.” The Customs Union between the two countries already prohibits trade barriers. However, the agreements between the post-Soviet nations tend to be less stable than similar agreements among the Western countries.

Instead of resorting to courts or arbitration, the governments and corporations in the post-Soviet space tend to use whatever coercion tools they have: they turn off gas, shut down borders, etc. Read more

This is why trade wars in this region are such a frequent occurrence: nobody trusts the letter of the law. Instead of resorting to courts or arbitration, the governments and corporations in the post-Soviet space tend to use whatever coercion tools they have: they turn off gas, shut down borders, etc.

Political analyst Alyaksandar Klaskouski has warned that Putin could “take Lukashenka by the throat demanding implementation of integration projects” that would begin with the creation of the single economic space and culminate in the establishment of the Eurasian Union. The Belarusian regime will be forced to open borders and undertake economic reforms, particularly in the wake of Russia’s accession to the WTO.

No Business, Just Politics

Past trade wars between Russia and its neighbours prove that the sources of such conflicts lie beyond pure business interests. They are primarily linked to the political ambitions of the Russian government. This became obvious after Moscow initiated multiple conflicts with the post-Soviet nations over gas, banned Georgian wines, Latvian fish, and Ukrainian cheese. Just some days ago, in order to exert pressure on Baku as a Russian radar station on its territory is being negotiated, Russia threatened to restrict Azerbaijani exports of vegetables and fruits.

The Belavia affair is just one instance of the increasing danger to the future of Belarus as an economically viable nation. The country’s relations with Russia are far less rosy than Lukashenka presents them. The Russian rulers and businesses are aware of Lukashenka’s vulnerabilities. In conflict with the West, Lukashenka is all the more dependent on Russia.

The more political prisoners Lukashenka holds, the better for Moscow. Read more

Lukashenka’s troublesome relations with Moscow do not mean that Russia has finally decided to civilise the dictator. The Russian leadership merely wants to strengthen their control over the Belarus leader and are not going to change the absolutist features of his regime or stop his persecution of the opposition.

On the contrary, the more political prisoners Lukashenka holds, the better for Moscow. They make Russia look more democratic in the eyes of the West. They also increase Belarus’ dependence on Moscow – as the democratic Western governments become even more reluctant to deal with his regime. This rule works not only for Belarus, but also for other autocratic regimes across the world – from Syria to Uzbekistan.

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Tags aeroflot air travel airlines Belarus-Russian relations Belavia Belavia. air travel customs union Eurasian Union milk war sugar war trade war