All good things come to an end...

On May 9 the Belarusian president, after returning from an informal meeting of the presidents, confirmed that he would sign the Treaty establishing the Eurasian Economic Union on behalf of the Republic of Belarus on May 29. “We are not going to block the signing of this treaty. If we cannot make a leap forward, we should move on in small steps. We believe in it”. So, the agreement on the establishment of the Eurasian Economic Union will be signed on May 29, 2014.  (http://politoboz.com/content/zagadochnyy-sammit).

Expert fantasy

However, it is worth recalling that after with the completion of the next Eurasian summit on April 29, Alexander Lukashenko publicly expressed dissatisfaction that the real energy market within the framework of the Eurasian Union could be created only in 2025. This was the reason of Alexander Lukashenko's public refusal to sign documents on the EAEC.

Against this background, the Belarusian experts talked about the upcoming large-scale bargaining with Russia and Alexander Lukashenko’s refusal to participate in the EAEC, in other words, according to tradition, got into political fantasies and illusions. However, a week later, after the meeting with the Prime Minister of Russia Dmitry Medvedev in Minsk and an hour long conversation with Vladimir Putin in Moscow, Alexander Lukashenko changed his mind.

It is worth recalling that in March-April 2014 Belarusian information space was full of speculations about the upcoming bargaining for the recognition of the referendum in the Crimea by the Belarusian government. Someone even voiced the volume of economic concessions that Minsk could receive from Moscow for this political “service”. However, the temptation of political corruption inevitably leads to postulate that everything is bought and sold in politics. Maybe ... but we should take into account the “political season”, when political “services” fall in price sharply.

It is worth recalling that Vladimir Makey tried to return to the issue of recognition of Abkhazia and South Ossetia in 2011, when the republic had severe economic crisis. Official Minsk hoped that Moscow would be lavish... However, as it turned out, it's good to have mustard in time, not after dinner. Belarusian experts did not take into account that that the Russian policy towards the new Transcaucasian states changed significantly.

Formula

During the meeting between Vladimir Putin and Alexander Lukashenko the sides have reached not a compromise, but rather a formula, that allowed the Belarusian president to “save his face”. This formula will help Lukashenko not to be a political puppet in front of his own ruling nomenklatura and the political class. However, we cannot say that Alexander Lukashenko is "Kremlin’s protégé" or the same "puppet" of Russia, etc. He does not have any major resources, but tries to conduct his own policy, often directly contradicted to public statements.

At the same time, we should not forget that the various levels of the Belarusian society continue to support the Belarusian president. Periodically, during the conflicts with the Kremlin or in specific situations - the Georgian-South Ossetian conflict, the Russian-Ukrainian crisis, etc., Alexander Lukashenko causes sympathy even among his political opponents.

The Russian leadership knows about these domestic factors that allow Alexander Lukashenko to maneuver on the Belarusian political field with varying success. The Kremlin takes these factors into account in policy-making in relation to the Belarusian president.  From here it follows the promise of the Russian leadership to return to the issue of gradual cancellation of the export duty in 2015.

According to Alexander Lukashenko, the Russian authorities should refuse from 50% of the export duty in 2015, which is paid by Belarus in the Russian budget (from 3 to 3.5 billion dollars according to various estimates). Alexander Lukashenko expects the total abolition of the export duty in 2016, which should bring the Belarusian budget more than $ 3 billion.

In the coming weeks Alexander Lukashenko will receive the promised loan in an amount of 2.5 billion dollars. In fact, this will remove the problem of devaluation of the Belarusian ruble in 2014, but not forever ... only until the next loan.

In turn, Alexander Lukashenko was forced to promise open Belarusian market for Russian medicines, beer, etc. This looks curious as all last year the Belarusian president argued for the four freedoms of movement of goods, services, labor and capital. He demanded the common market of the Customs Union without any exceptions and made claims only to the Russian side. In fact, the Belarusian president acted on the principle “Stop thief ...”, and practiced the closing of his own market.

We will not hide that the scheme, announced by Alexander Lukashenko on May 9, raises some doubts as the partners have no the main obligatory component for joint business - trust. In particular, there is no doubt that the Belarusian authorities once again will find reasons to protect the key sectors of the Belarusian republican economy from the Russian competition. But unhampered access to Russian oil is the main problem.

History of deception

It is worth recalling that the issue of Russian oil supplies at the lowest possible prices (as well as natural gas), has always been the main motivation for simulation integration with Russia for the Belarusian ruling group. All the stages of economic and political integration with Russia were accompanied by the requirements to Moscow immediately open access to Russian energy. In fact, every negotiation round with the Belarusian side was ended with oil issue. Russians were always amazed by the persistence and even the hysteria of the representatives of the official Minsk on the issue of Russian oil.

The paradox of the current situation in relation to the oil issue is that Minsk is trying to turn back the clock. It is worth recalling that Belarus has already received Russian crude oil (so-called "union oil") on the most favorable terms since the late 1990s. No export duties were paid, although initially the Belarusian authorities undertook this liability.

In those years Minsk defiantly ignored Moscow’s calls to pay export duty basing on powerful at the time integration trend. At the same time, the Belarusian authorities have publicly assured that they were buying the Russian oil at market conditions (!).

Belarus has entered into an oil crisis after the oil and gas crisis of 2006-2007. Conditions of oil supply became so complicated that Minsk has taken a real oil provocation against Moscow and tried to use Caracas. In fact, the supply of Venezuelan oil was an interesting manifestation of the Belarusian state idiocy. It was believed that oil supply via Atlantic had to soften Moscow and raise an outrage among Russians toward the Kremlin - oppressor of "brotherly" Belarus. The Belarusian authorities also counted on this "wave" as believed that Alexander Lukashenko's popularity among the Russian population is higher than among the Russian ruling elite.

Venezuelan provocation was a complete failure. Belarus was in debt to Venezuela, but Hugo Chavez took with him to the grave the secret of the deal. It is interesting that the Belarusian nomenclature still considers the Venezuelan adventure as a quite successful blackmail of Russia (Vladimir Semashko).

Since 2009 the Belarusian side aimed to get equal economic conditions with Russian companies in the Russian oil market (of course, not in Belarus). Since the formation of the Eurasian integration project in 2010 the republic began to receive duty-free 6.3 million tonnes (about 0.6 tons per capita) for, so to say, domestic consumption.

It is worth noting that the volume of crude oil was exceptionally generous for "domestic consumption". For example, Germany imported 93, 42 million tons in 2012 and the total amount of consumed oil was equal to 95.46 million tons (it means 1.2 tons per capita - two times more than in Belarus).  (http://pda.gazprom-neft.ru/sibneft-online/arhive/2013-november/1095986/).

At the same time GDP per capita in Germany in 2013 exceeded Belarusian figure in 6 times (of course, these calculations are one-sidedness and linked to the work of the petrochemical industry, but nevertheless). In fact Belarus has turned into a privileged gas station at the beginning of the second decade. And the country’s well-being was entirely dependent on the goodwill of Moscow.

However, the official Minsk very quickly found that equal economic conditions did not solve the problem of the rapid buildup of financial resources at the expense of Russian oil refining on two Belarusian refineries. Belarusian government did not want to pay export duty, in other words, to pay along with Russian oil companies which supplied Russian oil to foreign markets.

Already in 2011 the official Minsk started the whole program in order to avoid payment to the Russian budget, declaring that petrol was a kind of some solvents / thinners, and then started hydrocarbon distilling under the brand of biodiesel. It is worth noting that even today the Belarusian authorities continue the practice of deception of Russian partner, but in smaller quantities.

Belarusian authorities have used best efforts to get special privileges - the right to export oil without payment of export duties to the Russian budget. According to the Belarusian government, only a special right to use Russian energy resources could save the Republic from the constant threat of a large-scale devaluation and default (especially after the total failure of the modernization program of the Belarusian economy and surviving on the principle “from loan to loan”).

In fact, the Russian budget should pay for long-term primitive semi-feudal economic policy of the Belarusian authorities. It is worth recalling that for many years the Belarusian authorities and their propaganda machine tried to impose Belarusian economic "experience" upon the Russian leadership and to extend it to Russia.

Abolition of export duty became sacred purpose for the Belarusian authorities. They waited for the Abolition in 2014 and even counted the months and days in the autumn of 2013. Closest associates of Alexander Lukashenko wondered: "Survive - not survive ..."

What’s in summary?

On May 8 Vladimir Putin promised partial cancellation of export duty in 2015. No doubt, the Russian president will keep his promise. But do not forget that if the Russian budget system does not change, the Belarusian authorities from January 1, 2015 will receive an unprecedented privilege against Russian companies, which will pay export duty to export Russian oil, and Belarusians will not. It is clear that such a situation is impossible in principle as Russia is not the Belarusian colony. As they say, it doesn't hurt to dream…

No doubt, the Russian leadership will find opportunities to return Belarusian importers of Russian oil to equal status with Russian companies in 2015.

In summary

Belarusian government escaped the threat of the ruble devaluation. And this is the only ‘”success” of the Belarusian president in Moscow. It must be noted that this is a significant support for the Belarusian economy ahead of 2015 presidential election. However, this does not solve the problem of the pre-election year. It is worth recalling that the socio-economic and political situation in the former Soviet Union continues to deteriorate rapidly, the general crisis of statehood of CIS countries increases, disintegration processes are becoming decisive. In this case in would be unwise to propose the voters "goblet and bacon” and $ 600-700 salaries. Alexander Lukashenko’s manageability in Moscow is explained by the fact that he had already gradually and steadily entered the election campaign. He needs money, huge money. And he can get it only from Russia. But the problem is that earlier, in 2001 and 2006, Alexander Lukashenko could count on financial and resource support of Moscow "without any problem". But today Moscow offers support in exchange for the real integration. Alexander Lukashenko has no choice. Otherwise he may lose his power and life.

А. Suzdaltsev, Moscow, 11.05.14

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