Belarus Threatens to Spoil the Inauguration of the Eurasian Economic Union
According to a leaked document published by TUT.BY this week, the Belarusian parliament will insert its own special clause when it ratifies the Treaty of the Eurasian Economic Union.
The clause will reserve the country’s right to ignore its treaty obligations if Russia does not agree to lift all barriers of the free trade regime that are harmful to Belarus.
This most recent scandalous development is unfolding only three months before the planned inception of the next stage of the Eurasian integration project – the Eurasian Economic Union.
This is a result of Belarus’s harsh reaction to Russia's plans to reform its taxation system in the oil sector, something more commonly known as a “tax manoeuvre". Belarus will suffer considerable financial losses if this move pushes forward.
The presidents of Belarus and Russia will meet in Minsk on 10 October. Given the current geopolitical climate, Vladimir Putin will surely have to make concessions. The Russian Prime Minister Dmitry Medvedev has already promised to cushion the effect of the tax manoeuvre for the Belarusian economy.
Oil Tax Manoeuvre
The House of Representatives, the parliament’s lower chamber, plans to discuss the Treaty of the Eurasian Economic Union (EAEC) on 9 October. Rather uncharacteristically, a leaked document appeared on the TUT.BY portal before the parliament's planned discussion. According to it, MPs will amend the ratification instrument with an important reservation.
Belarus wants to sign a bilateral (with Russia) or trilateral (with Russia and Kazakhstan) agreement that will lift “barriers, limitations and exemptions” in trade for certain goods and services. The leaked document specifies those goods and services: energy resources, industrial assembly-line products, automobile shipping and others. Without such binding agreements, Belarus will not guarantee that it will strictly adhere to its Eurasian integration obligations.
This is how the Belarusian authorities are reacting to Russia’s previously announced oil tax manoeuvre, a plan to tweak oil taxes by increasing the mineral extraction tax and cutting export duties. The move is part of Moscow’s attempts to improve the competitiveness of Russia’s economy by reforming its tax system.
In particular, it wants to stimulate more efficient consumption of energy resources inside Russia and limit the energy rents that it doles out to its Eurasian partners.
For example, Belarus gets, according to some estimates, about 16% of its overall GDP from Russian subsidies. The manoeuvre will mean a surge in crude oil prices and losses for oil refineries as well as for the country’s economy at large. In other words, it will significantly impact Belarus’s export potential. According to official statistics, mineral resources made up 33% of Belarusian exports in 2013. Agricultural and industrial exports will also suffer.
Belarus Wants Compensation
On 29 September Alexandr Lukashenka met with members of the lower chamber of the Belarusian parliament. He stated that his government would not put up with the Kremlin’s tax manoeuvre.
According to Lukashenka, the tax manoeuvre might cost Belarus more than $1 billion. He underlined that if Russia made such a move it would become a serious problem for the prospective Eurasian Economic Union's (EAEU) ability to function:
First of all, because we had a different agreement. Secondly, if certain actions are taken in one direction then there should be compensation in another direction. This is a significant amount of money and we should, by no means, suffer to lose out on it.
Lukashenka also stressed his position that the country’s accession to any organisation has to bring clear benefits to the state and its citizens:
We need to get more than we currently have. […] We have to take steps that do us good. Otherwise, what is the point if we do not benefit from it?
He called on the MPs to cautiously defend the interests of Belarus when considering the EAEU Treaty and hinted that the tax manoeuvre issue will impact the country’s decision on whether or not to ratify it.
Not the First Time
The Eurasian integration project is currently experiencing new tension between its members. Apart from the tax manoeuvre, other issues are also fouling up the integration project.
Ever since the Russian government introduced an embargo against certain categories of Western goods there have been growing rumours that Belarus has been re-exporting some of those goods and, subsequently, cashing in on the Russian sanctions. During the Customs Union-Ukraine-EU summit in Minsk on 26 August, Vladimir Putin even made a public accusation to that effect.
For its part, Belarus claims that it is suffering financial losses due to the Russian ruble's devaluation. According to the Belarusian Ministry of Agriculture, the country has already seen losses totaling around $160 million.
This is not the first time that similar scandals have arisen since the inception of the Eurasian integration project. Perhaps the incident with the most resonance took place in 2012 and had to do with solvent exports.
At that time the authorities in Minsk and their partners among Russian businessmen actively exploited a loophole in the Customs Union’s legislation. They disguised oil products as solvents and exported them to the EU. The trick helped Belarus to avoid making any payments export duties on oil products into the Russian state budget as the Customs Union’s laws did not classify solvents as oil products. As a result, Belarus saved about $2 billion in 2012.
What is Next for Eurasian Integration?
As with the solvents scandal, the current row will likely end with a compromise. On 2 October, during a meeting with Lukashenka, PM Mikhail Myasnikovich stated that his cabinet had suggested a way to resolve the tax manoeuvre issue.
Today Belarus has to transfer to Russia’s state budget all export duties on oil products made from Russian crude oil and sold to a third party. In 2013, for example, the government handed over $3.3 billion worth of export duties to Russian state accounts. Belarus has long expressed disagreement with this arrangement and even threatened not to sigh the EAEU Treaty was it not changed.
As a result, on 8 May 2014, Alexandr Lukashenka and Vladimir Putin agreed on a compromise formula: in 2015 half of the export duties on oil will go to the Belarusian budget and the other half will go to Russia.
Myasnikovich’s solution to the ongoing row foresees the whole sum going to the Belarusian budget.
Given Russia's difficult geopolitical position at the moment, the Kremlin is particularly interested in demonstrating progress with its Eurasian project. Therefore, it does not want to see any visible prolonged tension with Minsk and will be forced to offer some kind of compensation to its Belarusian partner.
On 7 October, the Russian PM Dmitri Medvedev met with his Belarusian counterpart and promised to cushion the negative effects of the tax manoeuvre. Precise details of what this entails remain unknown. Belarus will hardly get everything it wants but the concessions will likely be lucrative enough for Minsk to ratify the EAEU Treaty and host a peaceful summit of the Supreme Eurasian Economic Council on 10 October.
This will not, however, put an end to similar tensions in the future.
Is Lukashenka Trying to Emancipate Belarus from Russian Culture?
On 29 September, Alexander Lukashenka stated that schools should increase the number of Belarusian language lessons they teach.
Following Lukashenka's public speech in Belarusian in July this year, a rare even in and of itself, the retirement of some pro-Russian officials and the unveiling of a monument to the Great Duke Alhierd all show that the authorities realise the need to strengthen national identity as war rages on in Ukraine.
Even if this attempt at Belarusisation does not become Lukashenka's official policy, the government de facto declared a policy of non-aggression towards the Belarusian language after decades of suppressing it. Low-level officials will not be afraid to support it, and cultural organisations will have more opportunities for development.
Is Lukashenka Becoming More Belarusian?
The Belarusian head of state can hardly be accused of nationalism. As far back as 1994, Lukashenka famously declared, "People who speak the Belarusian language cannot do anything else apart from speak the Belarusian language, because it's impossible to express anything great in Belarusian”.
One year after he rose to power, he granted both the Russian language and Soviet symbols official state status. Consequently, Belarusians have seen a shift in their identities. In 1999, 73.7% of Belarusians called Belarusian their native language, while in 2009 only 53.2% did so.
At the beginning of the 1990s, a third of schoolchildren received their education in Belarusian. Today, even regional centres and large cities do not have a single Belarusian-language school. Even the remaining schools that are considered 'Belarusian' lack basic Belarusian-language textbooks, so teachers conduct lessons in Russian.
In a recent article published on 27 September, the Nasha Niva weekly wrote that they could not find either contour maps or manuals for geography in the Belarusian language in any of the shops they visited. Lately, however, it appears that the Belarusian authorities are finally showing signs that they are capable of changing.
On 29 September, Alexander Lukashenka told deputies from the House of Representatives that Belarus should pay more attention to the study of the Belarusian language in its schools. Several months ago, on Independence Day, Lukashenka spoke Belarusian in public for the first time in many years. Many Belarusian cities now have large billboards advertising the Belarusian language scattered throughout their urban landscapes.
The surprising changes underway concern more than just language too.
Earlier this summer, the authorities in Vitebsk erected a monument to the Great Duke Alhierd, a historical Belarusian figure, who successfully fought against, among others, the Russians. It is the first monument in Belarus dedicated to the head of the Grand Duchy of Lithuania.
That was not without its own controversy, as it led to a backlash from the nation's multitude of pro-Russian organisations. The history of the Grand Duchy tends to nurture in Belarusians feelings of historical dignity, making them feel like they are a part of the Western civilization, a history that is separate from Russia.
On 3 July 2014, the authorities renamed Soviet Square in the city of Mahiliou to the Square of Glory. According to the officials, the former name covered only a short period of history, implying that it was an out-of-date relic.
Even within the ranks of the Belarusian authorities, openly pro-Russian figures are starting to disappear. Leu Kshyshtapovich, who previously served as the deputy head of the Informational-Analytical Centre of the Presidential Administration and was known for his favourable views towards Russian imperialism, recently resigned.
Can the Belarusian Authorities Do More?
Lukashenka’s policy change seemes to come as a result of the Russo-Ukranian war. The regime has managed to build a polity, one which depends solely on Lukashenka, though its ideology has had the unintended side effect of making it dependent on Russia.
The policy of russification has served Lukashenka well over the years as he built up ties with the Kremlin. Russian TV, for example, is much more popular than Belarusian TV in Belarus. According to the Independent Institute of Socio-Economic and Political Studies (IISEPS) 73.6% of Belarusians identify themselves as being to be closer to Russians than Europeans, and 13.3% would welcome a Russian occupation of Belarus.
For a long time Belarus received support from Russia because of its russification policy, and yet it is this very policy that has made Belarus so vulnerable. The fear of potential Russian aggression has forced Belarus not only to strengthen the state's ideological framework, but even to start practising counter-insurgency and anti-sabotage manoeuvres during military drills in spring 2014.
The desire of the Belarusian authorities to become ideologically less dependent on Russia seems rational. However, up until this point the regime has taken only the smallest of steps towards building a uniquely Belarusian national identity, so it is difficult to speak about any long-term strategy.
There is nothing holding Lukashenka from pushing through identity strengthening reforms since, after all, he can unilaterally increase the number of lessons of the Belarusian language without discussing it with Belarus' puppet Parliament.
A 'Hands Off' Policy for the Belarusian Language
Although a real change in policy remains rather unlikely, a noticeable shift in the mindset towards the Belarusian language among the Belarusian authorities has clearly taken place.
This means that all of those low-level officials who wanted to come out in support Belarusian language will no longer be afraid to do so. A rising number of Belarusian-language TV programmes will start to appear and Belarusian bands' concerts will raise less suspicion among state officials.
On 1 October, famous Belarusian musician Zmicier Vajciushkievich announced that he will soon hold his first legal concert in Belarus follwing a three-year hiatus. This is no coincidence, as journalist Viktar Marcinovich noted when pointing out that Lukashenka’s speech in Belarusian in July coincided with the emergence of a large number of ads and TV broadcasts in Belarusian.
It seems that the government will not throw a wrench in the spokes of existing cultural organisations. Existing Belarusian language courses like Mova ci Kava (Language or Coffee), Mova Nanova (Language in a New Way) or Movaveda now draw hundreds of people in public spaces. They expect to sustain this level of popularity under these more favourable conditions.
The lack of pressure from the authorities will certainly allow these kinds of organisations to quickly grow. For example, on 28 September in Minsk hosted the National Sports Festival Mova Cup/Language Cup. It promoted sports and the Belarusian language and received a very high level of support from the authorities which allowed to use large state-owned sports facilities. The Budzma! campaign holds many cultural events and some of them they have even managed to do together with the authorities.
This change in the mentality of the officials will stimulate the development of new social initiatives that will contribute to the popularity of the Belarusian language. It can even lead to a partnership between civil society and the authorities in the field of language.
The real irony of this story is that the Belarusian language is being resurrected under Lukashenka, the man who has put so much effort into wiping it out. The times are indeed changing.