Belarus Turns to Pro-Western Nations in the Middle East

Belarus's recent leaning towards pro-Western nations in the Middle East follows fast on the heels of rapprochement with the West. On 6-7 May, Joint Belarus-Saudi Committee on Cooperation will meet in Riyadh. On 15 April, Belarus opened an embassy in Qatar.

Establishing closer links with the very centres of conservative Arab bloc allied with the West is a milestone in Belarusian foreign policy. In the past, Minsk enjoyed amicable relations primarily with the so-called radical republican regimes in the Middle East. Saddam's Iraq, Qadhafi's Libya, Assad's Syria, as well as Ahmadinejad's Iran figured among Belarus's main partners.

The shift towards pro-Western monarchies reveals a contradictory, yet pragmatic approach by Minsk. The Belarusian government is looking for quick money to compensate for Belarus's trade deficits with other countries, though some odd deals and alliances have emerged as a result.

Minsk's New Friends Killed Its Earlier Buddies

Commenting on the embassy opening in Qatar on 31 March, deputy foreign minister Alyaksandr Huryanau called Qatar Belarus's “longstanding political partner.” This is a remarkable statement given this nation's role in toppling Minsk's former friends in the Middle East.

Minsk's new approach in the Middle East complements its recent rapprochement with the West

The partnership with Qatar complements Minsk's other policies in the region. Besides establishing closer relations with Saudi Arabia, the Belarusian government has undertaken many other activities in the region in the last two months. It held political consultations with Oman and the UAE, received an Omani parliamentary delegation, sent its representative to a ministerial meeting of the Arab League – dominated by conservative Arab nations, – and sent a delegation to Pakistan, another nation allied with the pro-Western bloc in the Middle East.

What is more, Belarus has enjoyed excellent relations with Erdogan's Turkey and made attempts to befriend pro-Western Kurdistan. Minsk's policies in the Middle East complement its policy of rapprochement with the West. Belarus's attempt to move away from risky partners challenging the West is greatest in the history of its foreign policy to date.

Any Money in Sight?

Belarus's previous, more limited, attempts at partnering with pro-Western states in the Middle East did not pay off as expected. In 2011, Minsk quietly renounced its close partnership with Libya and minimised its ties with Iran and Syria. It secured promises from Qatar of a new level of economic relations and investment. Alyaksandr Lukashenka has designs to create a kind of “Qatari Island,” a huge economic centre built on Arab money in Belarus, though thus far these and other plans have ended up creating nothing but a few hunting estates for Arab princes near Minsk.

A similar fate befell another project publicised over the past couple years – bringing Omani money to Belarus. Omani businesses received a big swathe of land in Minsk to develop, but in 2012 gave up plans in the Belarusian capital.

Belarus's firm Beltekhekspart reportedly supplied ammunition to Libyan armed groups

Yet trade with the Gulf Arab monarchies has continued to slowly grow. In 2014, Belarus-Saudi commodity trading was valued at more than $95m. This is almost as much as the last year's Belarus-Iran trade turn over of $97m.

In addition, Minsk has become involved in murky deals with pro-Western Arab monarchies in other countries as well. This March, Reuters quoted an unpublished UN Security Council report on Belarus, according to which Beltekhekspart was supplying Libyan armed groups with ammunition. Minsk retorted that the deals were legal and involved the Libyan government. Importantly, the groups supplied by Belarus seem to enjoy Qatari support.

Later on, the French specialist bulletin Intelligence online added that military equipment might be also supplied by the Belarusian firm to Libyan militias. According to the French publication, Western governments gave tacit support to these supplies.

Away From Iran and Syria?

As Minsk establishes rapport with the pro-Western Arab monarchies, it has been easing the level of contact with their opponents in the region – namely, Iran and Iran's allies. This year, Belarusian Foreign Minister Uladzimir Makei has visited Syria only once, this past February.

Now, Tehran and its allies are displaying more interest in maintaining relations with Minsk. In February, the Iranian Foreign Minister Mohammad Javad Zarif came to Minsk, in April, and Iraqi Foreign Minister Ibrahim al-Jafari and Syrian Minister of Industry Kamaleddin Ta'am have visited Belarus.

Yet these contacts are a mere shadow of Belarus's partnerships with these countries in the 2000s, when Minsk would host a new Iranian delegation almost every month. Minsk's recent level of engagement are not only less frequent but also far less meaningful. For example, Iraqi Foreign Minister's visit to Belarus resulted in both parties signing of the Memorandum of Understanding on Cooperation in Sports.

Belarus's trade with both Iran and war-ravaged Syria has decreased in recent years. While in 2008, Belarus-Syria trade made up over $85m, last year it barely exceeded $30m. Current promises to establish an assembly production plant for Belarusian MAZ trucks in Syria are unlikely to materialise. While Iran may indeed pay for such a project in Syria, the ongoing civil war in Syria makes the actual implementation of the project unlikely in the near future.

To Support the Winners

The Belarusian leadership has not changed its ideological preferences; it had none to begin with

The Belarusian government may go as far as to use its relations with Syria, Iran, and Iraq as a bargaining chip in relations with Western-allied Arab monarchies. The kings of the Gulf's willingness to buy up Iran's allies has already been exposed by Wikileaks, though Belarus can hardly attract the attention of Arab rulers on its own, and as such it is becoming an important ally of Tehran and Damascus and even as a source of military equipment and expertise for Syria, Iran, or Shiite Iraq.

The Belarusian leadership has not changed its ideological preferences; it had none to begin with. Not only does it is seek rapprochement with Western allies in the Middle East, but it has also followed a similar approach in other regions. For example, its reception of North Korea's Foreign Minister in March was rather cold. The Minister's trip was shortened by two days. Belarusian officials talked about "similar [to Pyongyang's] approaches to many issues" but not about "shared views," a standard statement in negotiations with developing countries. The Belarusian Foreign Ministry has emphasised that the meeting was "protocol-related".

Regardless, deals can be made with Minsk. The logic of Belarusian foreign policy stems from the political economy of a land-locked country with no notable natural resources and an industry that is in bad need of modernisation. Even though Lukashenka has decried the so-called Arab spring, which knocked down some of his earlier comrades, he prefers to accept the new situation and is working with the victors. The main priority of the Belarusian government is finding money that will allow it to survive.

Foreign Investments Weaken the Belarusian Regime

Today the Belarus Investment Forum opens in Minsk. In recent years, Belarus has significantly improved its ranking in the Doing Business Report of the World Bank Group. This year it climbed two places, and on two parameters even made it into top 10.

Yet state plans to attract foreign investments fail year after year. Perhaps some in the ruling elite understand that the stronger the foreign investors in Belarus are, the weaker the Belarusian regime becomes.

This year, the government planned to attract $3.7bn in direct foreign investment, yet by 1 September only a quarter of this sum, $956.5m had been registered. The problems are evident not only in statistical data. Time and again the Belarusian government starts talking about large-scale ambitious projects and ends up proposing that investors just land.

Problems in the West

Only small scale investors and adventurers come to try their fortune in Belarus, economist Mikhal Zaleski  recently commented to Radio Liberty in a discussion on the sad investment situation. He emphasised that though investment laws in Belarus looked smooth, investors have questions about political stability. Nobody knows who will run the country after Lukashenka and in which direction the nation will then be headed . Moreover, as Yaraslau Ramanchuk said when commenting at a series of Belarusian investment forums two years ago, “the government itself blocks foreign investments.”

In November 2010, at the Belarusian Investment Forum in Frankfurt am Main, Belarusian Metal Works (BMZ) signed with Italian firm Danieli a memorandum of intent to build new production facilities. The project could reach an investment of $1-1.5bn. Yet nothing has been implemented, as Danieli was willing to help find $1bn only if it got shares in BMZ. The government, for its part, wanted to retain all 100 per cent of the shares it owns.

In July 2010, the Minsk Regional Executive Committee and German company Enertrag AG signed an investment agreement to build a wind park with a capacity of 160 МW. It could cost about €360m and provide electricity to two districts. The Defense Ministry blocked the project, claiming that wind generators interfere with its radars.

At the first Belarusian Investment Forum in London in 2008, the Energy Ministry and Polish company Kulczyk Holding signed a preliminary agreement to construct in Belarusian Zelva a coal power plant. Planned investments should have reached $1.3-1.8bn. The richest Polish businessman Jan Kulczyk wanted to supply the power plant with mostly Polish coal and export part of its electricity to the EU.

Two years of negotiations ended with no results and were broken up after the 2010 Belarusian presidential elections and subsequent deterioration of relations with the EU. Kulczyk explained, “Such big projects should be done together with banks. Because of the current atmosphere around Belarus, it would be difficult to finance the project.”

Hunting Estates for Arab Monarchs

The problems, however, exist not only with Western businessmen. Belarus remains a problematic place for post-Soviet and Eastern entrepreneurs as well. Many of them – Russians, Poles, Iranians, Arabs – have tried to find a common language with Lukashenka and gave up.

Influential Russian oil and gas company Itera pledged to build a residential area and business centre to be known as “Minsk City” on the territory of the old Minsk airport. The amount of investment should have been about $5bn. Yet soon Itera put the project “on hold” and until now it has invested less than one per cent of the promised money and constructed only some a few ordinary panel houses. In February, the government cancelled the agreement with Itera.

In July, Omani State Reserve Fund renounced the investment project in centre of Minsk. In 2009, Lukashenka granted Omani businessmen favourable conditions to build in the historical area of the capital. They planned to construct a residential complex, a business centre and a five-star hotel for about $150m.

Last year, visiting Qatar, Lukashenka solemnly declared a project to create a “Qatar Island” in Europe. Belarusian officials explained that it would be a business and industrial centre of Arab countries and it would be built in Brest region. The only registered follow-up of these designs was revealing in September a document issued by Minsk Regional Executive Committee. It secretively regulated giving land plots to members of Qatar's ruling family to build hunting estates and facilities in the vicinity of Minsk.

Arab investors are known for being less than eager to undertake industrial production projects. Yet there hardly could be more stark a contrast than those events which took place in September than between two post-Socialist nations dealing with Arab investors. While Belarus tried to lure Qatar emir to hunt in Belarus, Belgrade concluded an investment deal with the United Arab Emirates which enabled it to revive the Serbian aircraft industry.

Serious Investors with €20,000

In the opaque bureaucratic mechanisms of the Belarusian state even the murkiest business is possible. In 2007, the Belarusian government gave a concession to the Luxembourgish company Polar Stars Group. It included two lignite deposits and two deposits of shale oil. The declared volume of investment was $2-3bn.

“I would say frankly, we are not going to study the investors' history and look at whose money they use,” said Lukashenka in 2007 and added that he had information confirming the serious reputation of the company's owner. The owner regularly called on the highest Belarusian officials till 2010. Finally, however, the media revealed that Polar Stars was founded in 2006 and its registered capital makes up only about €20,000. In 2010, the Belarusian government cancelled this dubious agreement.

In the absence of  a noisy scandal,  Belarusian society heard little about this incident. It is reminiscent of a similar incident in 1991. Then, Prime Minister Kebich granted one shrewd Italian the status of Belarusian Ambassador to all nations of the world, as well as gaving him an office in the centre of Minsk. The Italian had only promised Kebich that he would find loans badly needed by the Belarusian government. Only after the opposition vigorously criticised this affair, the government reviewed its decision.

The Belarusian government has serious problems handling foreign investments. It manages to combine contradictory attitudes. On the one hand, it enforces rather strict and inflexible rules. On the other, it lets dubious firms do serious business in Belarus.

Meanwhile, Belarus has no choice but to attract foreign investment. It has survived all these years economically because of Russian subsidies which, according to some calculations, have totaled about 15 per cent of Belarusian GDP. They are quite unpredictable, dangerous and likely to diminish.

Belarus has to replace these subsidies, which are also the foundation of Lukashenka's rule. Yet not with other subsidies; the EU is definitely not going to take over this role as Belarusian sponsor. Minsk has to reform the economy and create new production facilities and sources of revenues. For that, it needs serious investors. Any Belarusian government aware of national interests will have to deal with this task.

Only when this mission is accomplished will Belarusian independence and democratic transition become solidified. To scare foreign investments away from Belarus means to strengthen Lukashenka's regime and Russia's dominance in the country.