What's behind Lukashenka's visit to Egypt and Sudan
On 15 January Belarusian president Aliaksandr Lukashenka set off for official visits to Egypt and Sudan, where he conducted negotiations with the leaders of the two countries.
Belarus is trying to broaden its economic relations with developing countries. However, its seems that the main reason behind Egypt and Sudan's growing interest in Belarus lies not in the high quality of Belarusian goods but because other nations do not want to cooperate with them.
More bold declarations
The way Belarusian officials cover the president’s visits to African or Asian states follows a predictable pattern. They emphasise the necessity of increasing mutual turnover, particularly in Belarusian export, as well as the importance of new agricultural and industrial projects.
However, unlike Qatar or the UAE, where such lofty goals seem unrealistic, Egypt is a relative success story for Belarusian policy in the Middle East. Until the beginning of 2016, Egypt was the top Belarusian export destination in the Arab world. Unfortunately, in January – October 2016 these figures dropped significantly. The condition of Belarusian trade with Sudan is similarly pessimistic. The table below illustrates Belarusian export to Egypt and Sudan in 2011-Oct. 2016 (in $m):
These figures clearly demonstrate that Belarus has managed to find a niche on the Egyptian and Sudanese markets. The Belarusian authorities must now try not to lose it, and expand Belarus's presence in these countries.
A focus on agriculture?
In spite of ambitious declarations by Belarusian state officials, the results of the visits may not end up being very significant. In discussing the economic cooperation between the countries, the Egyptian mass-media was cautious in their estimations. The newspaper Masr Alarabia emphasised the weakness of the Belarusian economy, non-developed private business, and the low level of foreign investments coming mainly from Russia.
According to the newspaper, agriculture is one of the main sectors of the Belarusian economy. Thus, the countries should concentrate their efforts on developing cooperation in this sphere.
The newspaper Al Youm el Sabea focused on diplomatic declarations, as well as on Mikalai Lukashenka’s visit to the Pyramids. Belarusian investments in Egypt remains very low, hovering around $1.3m. The Egyptian authorities do not expect any significant investments from Belarus.
It seems that Egyptian economists consider Belarus to be a relatively successful agricultural country and would like to use Belarusian experience and capacities to develop Egypt's agricultural sector, particularly, in reclamation of new agricultural lands. Thus, the main point of interest lies in possible supplies of Belarusian agricultural machinery and equipment.
Tractors and agricultural machinery
Due to its ambitious plans to add about 3.4m acres of reclaimed land by 2017, the Egyptian government has tried to increase imports of agricultural machinery. However, Belarus has never been among the top 10 suppliers of agricultural machinery to Egypt, failing to compete with such countries as the USA, China, Germany, etc.
The following table illustrates the dynamics of Belarusian tractor exports to Egypt in 2011-2016:
The table above points to a lack of any clear trend for Belarusian tractor export to Egypt; over the years, demand has varied significantly. Moreover, the figures show that tractors' share in the overall Belarusian export to Egypt is decreasing. In other words, exports are successfully diversifying.
Why is Belarus becoming more interesting to Egypt?
Thus, the intentions of the Belarusian authorities to strengthen their position on the Egyptian market seem realistic. Egypt already has plants for assembling Belarusian tracks and tractors. In March 2016, the Minsk Automobile Plant opened its representational office in Minsk.
However, the economic situation in Egypt risks becoming a serious obstacle to cooperation. Since 2011, the country has faced a deep economic crisis. With the national currency decreasing by almost 300 per cent, Egypt is suffering from a lack of foreign currency and can hardly pay for already signed contracts.
In this context, the Egyptian authorities are trying to find more loyal and patient partners. Belarus risks facing problems either with payments or with profitability of its supplies. For example, the average price for a Belarusian tractors shipped to Egypt in 2016 was 20 per cent ($12,103) less than the average price for other consumers ($15,080).
The second point of interest concerns Belarus’s participation in Eurasian integration and access to the attractive markets of Russia and Kazakhstan. However, the Egyptian government enjoys sustainable relations with Russia and it seems unclear to what extent Belarus can develop its cooperation with Egypt in this sphere.
Relations with Sudan: a second revival?
The situation with Sudan is similar to the one with Egypt. The following table illustrates the dynamics of Belarusian tractor exports to Sudan in 2011-2016:
Belarus started to have very intensive relations with Sudan in the early 2000s, and in 2004, Sudanese leader Omar al-Bashir visited Belarus. Due to the internal conflict in Sudan, the parties paid special attention to military and technical cooperation, including supplies of military goods. However, the scale of cooperation has never been stable.
The easing of international sanctions on trade with Sudan in January 2017 forced the Belarusian authorities to intensify their efforts to expand Belarusian export to the country. Belarus has already proposed its services in the spheres of oil-field exploration and exploitation. Not surprisingly, the Joint Sudan-Belarus Ministerial Committee is headed by the Sudanese minister of petroleum and gas, Muhammad Awwadh.
Joint manufacturing of vehicles and machinery production also seem to be in the offing. Previously established contacts, as well as a Sudan-Belarus business forum organised during the visit, will help to promote cooperation.
Belarus faces a serious economic crisis. The amount and value of its exports is falling and the country is looking for new markets, or at least intends to expand existing ones. In this context, countries such as Egypt or Sudan, where Belarus enjoys a relatively sustainable position, look to be promising partners.
Belarus is proposing a traditional set of goods (focusing on agricultural machinery and to a lesser extent on agricultural products) and services, including oil prospecting. The main problem, however, lies in the following question: why have these countries become more interested in Belarus now? Both Egypt and Sudan suffer from economic crises. Few countries consider them reliable partners.
The Belarusian authorities should make efforts to guarantee the implementation of signed agreements and expand the scale of cooperation. Dealing with economically weak countries involves many risks. Belarus has already suffered from this in the past, when Mozambique and Zimbabwe defaulted on payments. The country should be careful with supplies without 100 per cent payment in advance.