Common Currency for Belarus, Kazakhstan and Russia: as Far as It Has Always Been
Several observers say that the introduction of a common currency should be the next step of the integration of Belarus, Kazakhstan and Russia. The three countries have recently created a customs union and it is logical to assume that the integration will continue. However, there are reasons for being sceptical about it. Russian officials have been feeding the world — and in first place the Russian public opinion — with promises of a soon restoration of the USSR since the very moment of the USSR's collapse. Exploitation of post-Soviet stigmas for PR purposes has been actively used already under president Yeltsin, who initiated the creation of the so-called Union of Russia and Belarus (later renamed to the Union State of Russia and Belarus).
Aliaksandr Lukashenka, the president of Belarus, has also based his state ideology on the population's Soviet nostalgia and on exploitation of key Soviet ideological symbols like the Great Patriotic War of 1941-1945. The customs union of Russia, Kazakhstan and Belarus has already a concrete effect as the three countries have switched to a common tax code. As a result of newly introduced import duties, automobile prices in Belarus have risen by 20% and Russian telecom operators have had trouble importing equipment. President Lukasenka has several times stressed that the union will only make sense if Russia cancels duties on oil exports to Belarus.
Belarus would economically benefit from a common currency more than Russia or Kazakhstan, because Belarus' exports are largely oriented on Russia. However, it seems highly unlikely that the president of Belarus would give away some of his economic decision making power to a foreign centre. Belarusian officials have always demanded an equal representation of Belarus and Russia in the management of the eventual common central bank of the Union State. For obvious reasons, this is a condition Russia could never have accepted. Besides that, introduction of a common currency requires synchronization of economic systems of Russia, Belarus and Kazakhstan. At present they are very different and hardly compatible.
Resource-based economies of Russia and Kazakhstan react against global macroeconomic shocks in a way very different than the economy of Belarus. Therefore there are no indications that the talks of a new Eurasian empire will this time result in anything different from previous times. Ukraine's president Yanukovych has already de facto rejected Putin's proposal to join the Russian-Kazakh-Belarusian customs union. Ukraine would only cooperate with the Union as long as it doesn't contradict with the country's WTO membership. Kazakhstan won't give up its independence despite Nazarbayev not having appointed a heir yet. It's hard to imagine that the local elites won't be able to find a new leader. Different officials including Pavel Borodin, the Secretary of the Union State, have been predicting a soon introduction of a common currency since early 2000s. To be exact, Russia's deputy prime minister Igor Shuvalov only said he "would not rule out the possibility in the long-run of a switch to a unified monetary space". I.e., introduction of a common currency is a thing as far as it has been all these years.
The Soviet Union is gradually being rebuilt as Vladimir Putin eyes a return to the Kremlin. The man who declared the collapse of the Communist state to be the “greatest geopolitical catastrophe of the century” appears determined to forge a new empire. The latest evidence emerged in a suggestion by Igor Shuvalov, First Deputy Prime Minister in Mr Putin’s Government, that Russia may abolish the rouble and create a common currency with Kazakhstan and Belarus. Read the Full story
EU Belarus Policy: The Toothless Tiger Stratergy
The European Union looks like as a toothless tiger to Belarus authorities. It is large, makes a lot of noise but can't really do anything. Yesterday the European Parliament adopted yet another declaration condemning human rights violations in Belarus. The European Parliament's resolutions on Belarus seem to be based on the same template. First, the narrative correctly points out what is wrong in Belarus and then it goes on with the "carrots and sticks" part. The yesterday's resolution was not exception. First, the Parliament condemned measures taken against the Union of Poles, political activists Andrei Bandarenko and Tatsiana Shaputska and prisoners of conscience such as Ivan Mikhailau and Aristyom Dubski. Then followed the "carrots and sticks" part.
The "sticks" part included a threat that "further violations of human rights and the rule of law in Belarus may lead to the revision of the EU's position towards Belarus, including reimposition of the sanctions". The "carrots" were better described – the European Parliament underlines that the EU dialogue with Belarus can be mutually beneficial and believes that Belarus can be supported in obtaining maximum benefits from the Eastern Partnership, in particular in the most effective use of funds allocated under this programme to infrastructure, energy and social projects and by application of other EU instruments and policies, provided the Belarusian authorities commit themselves to real changes in the area of freedoms, democracy, the rule of law and respect for human rights, and in particular the rights of national minorities.
The "maximum benefits" part would make the regime in Minsk smile. Today's Belarus rulers already enjoy benefits unthinkable in a democracy. They are totally unaccountable to the voters, can remain in power for decades and still enjoy the benefits of Western civilization, such as skiing in Switzerland. Why would any dictator trade it for democracy which in the best-case scenario will leave them only with skiing in Switzerland?
The Belarus authorities understand that no serious sanctions from the European Union will follow. There are three reasons for that. First, Europe does not want to surrender Belarus to Russia. Second, Europe depends on oil and gas pipelines which go via Belarus. And, finally, blunt economic sanctions simply do not work. Are the European resolutions worth the nice glossy paper on which they were printed or they simply make the regime laugh? Repeating the same things over and over will not persuade the Belarus authorities. It is time for the European Parliament to understand that democracy will not come to Belarus because of the good will of its current rules.
Only civil society can bring democracy to Belarus. Instead of promising "maximum benefits" to the authorities, the EU should start providing "maximum benefits" to Belarus civil society now. Moral support is not enough. Europe should increase its financial support of the civil society coupled with effective supervision mechanisms. TV and radio broadcasts to the territory of Belarus and helping bright Belarusians return to their country should be the central part of such support. Poland now bears the main burden of supporting the independent Belstat channel and a number of other civil society initiatives. This could be the reasons why Belarus authorities put pressure on the Union of Poles in Belarus. The European Union should support Poland and do something more than self-righteous noises. Read the full text of the European Parliament Resolution here.