Posts Tagged Belarus export

Hostage of Love

News from Belarus: activist detained, activist arrested, journalist detained…

And now for something completely different: head of Russian potash giant Uralkali, Vladislav Baumgertner, arrested in Belarus.

Baumgertner is also chairman of the supervisory board of Belarusian Potash Company, a joint trader of Uralkali, and of Belarusian potash producer Belaruskali.

At the end of July 2013 Uralkali stopped exports through the joint cartel (BPC), citing Belarusian president Alyaksandr Lukashenka’s December 2012 decision to allow Belaruskali to export potash through other traders.

Minsk was outraged. Belarusian investigators have counted the losses of Belaruskali so far: $100 million.

The dissolution of the BPC cartel could cause the global potash price to fall. Which could bring Belarus’ losses up to $1 billion a year.

And probably even more, as Russians were responsible for sales, Belarusian side doesn’t have traders.

Baumgertner would not have travelled to Minsk unless the bait was sweet. They say the Prime Minister of Belarus arranged a meeting with him through his Russian counterpart Dmitry Medvedev.

After a brief discussion (or, as Russian press reports, after an angry monologue of the Belarusian head of government), Baumgertner tried to return to Moscow. And failed.

TV footage, aired on Belarusian state channels the same evening, showed him handcuffed. He is being kept in a KGB detention centre, accused of abuse of office. If found guilty, the head of Uralkali could spend up to 10 years in prison.

The Russian elite is quite shocked but not so active just yet.

Uralkali has refuted all the allegations. The Russian foreign ministry has demanded the release of Baumgertner and Russia’s eccentric ambassador in Minsk has made some angry comments and insists on visiting him.

The press in Russia has ridiculed this humble reaction to what it calls Belarus’ “outrageous provocation.”

Minsk’s action is understandable: In a time of external deficit growth, any loss is unbearable.

Potash fertilisers are the only considerable source of foreign currency in Belarus that is almost free from Russian control. Oil, which is processed in Belarus and sold in the West, originates from Russia. Belarus has so far resisted selling Belaruskali to Russia.

Meanwhile, this apparently risky venture is a game that Minsk can hardly lose.

It is a form of Russian-type machismo enacted on the eve of the next round of negotiations on Russian oil deliveries and another Russian loan.

The potash business in Russia does not belong to people from President Vladimir Putin’s team; it is rather Medvedev’s business.

Baumgertner’s arrest has so far not influenced the next tranche of loan money, approved by Russia.

At the same time, in case there are no concessions on the Russian side, or even a new “economic” war, Moscow can be blamed for economic failures in Belarus.

This could help Belarus President Alyaksandr Lukashenka escape the Eurasian Union, the Russian-led club to be launched in 2015.

A standoff with Russia is also an opportunity to mend relations with the West: one political prisoner was released by Belarus shortly after Baumgertner’s arrest.

The fact is. Moscow cannot let Belarus go, not from the Eurasian project, not to lose it to the West. So Minsk has taken the apparently risky move, knowing that its strategic partnership with Russia death could not end.

And Baumgertner is a hostage of love. Be it love of Belarusian revenue or Russia’s love of its old status as a regional power.

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Rinse and Repeat

It sounds familiar in 2013: Belarus is aiming high. It plans to have 8.5 percent GDP growth and it has unveiled a big-hearted programme on modernisation, social housing, wage growth and debt repayment. After another period of turning its back on the West, it also says it wants to get back to the negotiating table.

But time is a river, you cannot really step into the same water twice. Yes, the average wage is back to $500/month. Meanwhile, prices keep growing. Stable, but low is the President’s popularity rate, at just 30 percent.

So who can help with a bit of cash to keep ambitious plans alive? It is Russia and/or the West.

Moscow already owns the gas pipelines that run through Belarus. It does want to see more extensive privatisation. But with oil prices going down, its support is also dwindling, be it in the form of Russian oil which Belarus refines and sells on, cheap gas, loans or, more simply, in terms of Russian demand for Belarusian exports.

The EU is a rich neighbor. It also has the means to help modernise industry and to bring private sector investment. But it wants Belarus to free political prisoners and to see economic and political reform.

So today it is cheaper to come to terms with the West. You release the inmates and you pick up the discourse of yes-we-want-to-be-your-democratic-friend.

The Russians want the family jewels, and you can only sell those once.

However, the EU might be less easy to fool after the violent post-election crackdown in December 2010 than it used to be. Lukashenko can put on his poker face. But he has already showed his cards.

Let’s wait and see who outwit the others.

The game is: promise more and give less. Complain about the iron fist of Russia but reap the benefits of its Eurasian Union project. Release dissidents and arrest new ones. Rinse and repeat.

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EU or EU

Twenty years ago the Soviet empire broke into independent pieces. It’s a very good moment for Putin – who considered the break-up “a geopolitical catastrophe” – to launch his Eurasian Union to relieve its phantom pains of the new post-Soviet states.

The Eurasian Union is presented as a purely economic integration project to unite the markets of Belarus, Kazakhstan and Russia, to begin with.

But there is nothing as political as an economic integration project with Russia. As Putin once put it: wars for land are pointless today, as you can just buy it.

The Union can look to its predecessors. The pilot version – the Union State of Belarus and Russia – got stuck somewhere between oblivion and non-existence. There is also the Commonwealth of Independent States, the Collective Security Treaty Organisation, the Eurasian Economic Community, Eurasian Economic Community of Belarus, Kazakhstan and Russia and – last but not least – the Customs Union of Belarus, Kazakhstan and Russia.

The Kremlin’s neo-imperial ambitions start and end with the immediate neighbourhood and have a strongly nostalgic flavour. The Eurasian Union looks like a set of crutches for three authoritarian regimes with different (and to some extent incompatible) economies to cling together for survival.

Russia’s main export is gas and oil. Its import is everything else. The most significant part of the Belarusian budget is exports of processed Russian oil. Russia is an important market for Belarusian products, but no Russian oil means no state budget. But considering popular protests around Belarus and Russia, economic stability is more than ever a necessity in these countries.

Twenty years have gone by and Belarus’ choice between the EU and the EU (the Eurasian Union) is not political but purely geographical as it still borders on three EU member states and Russia.

Brussels expects Belarus to embrace democracy before any integration can go ahead. The regime in Minsk has ignored Brussels’ unilateral offer to liberalise visas. Politically, the offer from Moscow looks unbeatable as it contains no uncomfortable conditions on structural reforms, liberalisation and respect of democratic values.

But the latest-model union means for Belarus an even tighter hug by the Russian bear. The common market excludes access to Russian gas and oil. And the formula for gas prices is always open to re-calculation and re-negotiation, depending heavily on the good political will of Moscow.

So the Eurasian Union, another integration project with Russia: It’s like a bad dream, not even a nightmare, because it’s all too familiar.

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Zealous Belarus

P.P: As the post was published, shocking news came. There was an explosion in the busiest Minsk underground station Oktyabrskaya, in the very centre of the city, near the Presidential Administration. 11 dead, 126 injured.. The explosion is classified as a terroristic act. The second one after the bombing in July’2008.. and the first one which took human lives.. Lukashenka personally examined the scene and urged to search the county and arrest anyone who has explosives.

The two main weapons of the Belarusian authorities are fear, surprise and ruthless efficiency… Well, the three weapons are fear, surprise, ruthless efficiency and fanatical devotion to the social model of market economy… Anyhow, not the rule of law, but the law of their rules, which are not always logical.

The current economic and political self-portrait of Belarus is full of the brightest shades of the darkest colours. Since presidential elections in December 2010, the future of the country has been changing. On 12 April EU ministers will discuss potential economic sanctions against Belarusian authorities. No sweat: they already introduced economic sanctions against themselves.

The country faces a crisis in terms of hard currency: trading in foreign currency has been restricted and no flexibility in the exchange rate is allowed. It’s very difficult to buy dollars or euros, which makes foreign travel difficult, handicaps the private sector and could end-up bringing the biggest state factories to a standstill.

Belarusians have hurried to empty their bank accounts to buy foreign currency as well as anything that can be traded (gold) or might get a lot more expensive (sugar, buckwheat, sunflower oil).

Belarus lives beyond its means. Foreign debt skyrocketed from zero in 2006 to $10.6 billion dollars in March 2011. The government has ruled out a devaluation, which the IMF believes is a vital step.

It looks like Moscow is in control. It promised loans ($3 billion) but is in no hurry to pay them. First the Kremlin gave Minsk 10 days (!) to bring forward a plan for economic reforms. Now this document is being studied. Is Moscow expecting Belarus to give it carte blanche to buy the family silver (Belarusian chemical and machinery plants, oil refineries)? Russian businessmen have wanted this for a long time but could not get access.

Meanwhile, Russia is to raise its gas price for Belarus. It used to be $187 dollar per 1.000 cubic metres in 2010, $223 at the beginning of 2011 and will now be $244.7.

One sign that Belarusian authorities are once again putting their hope in the West is the release of a number of detainees from KGB detention centres considered by the EU to be political prisoners. Their charges have not been dropped but10 of them now face three instead of 15 years in jail. The official story is that this is the result of the investigations.

The two main sources of stability for Belarusian authorities have always been cheap Russian gas (for whatever reasons) and the trust of the wider public (for whatsoever reasons). The lack of the first asset shows the instability of the latter. And this at least is logical.

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Some Tons of Belarusian Socks?

Global economic crisis demands new extensive measures. Belarusian authorities as always come up with fresh, innovative ideas.

Agriculture in Belarus is loss-making but the authorities are still proud of it. Within the next five years the modernisation of the whole industry is to be sped up to reach the European level of production. The new 2011-2015 rural development programme is aimed at increasing the efficiency of farming and reaching a profitability rate of 25 to 30 percent…

Hrodna region which borders on Lithuania and Poland already suggested selling stones to EU. Why not? We have abundance of those on our fields. The pain will be just to collect and wash them. The product made in Belarus is export ready.

But the best idea however belongs to the government. The power-wielding structures — Ministry of Internal, KGB (!), Ministry of Justice, Ministry of Emergency Situations (!), Defence Ministry, State Customs Committee — received a list with recommended number of tons of Belarusian goods to be sold to the respective ministries abroad by the end of the year. There’s everything on the list: Belarusian sweets, furniture, tracksuits, rubber shoes, TV-sets, fridges… Luckily no stones.

State Customs Committee for eg. is expected to sell 700 tons of beetroot a carrot, 200 tons of sausage, 40 000 shirts, 50 000 boxers, etc. KGB officers have it easier, their list is almost 5 times smaller. But not that of the Ministry of Defence, they have to find a purchaser for the furniture (equivalent to 23 million dollars); 11,5 tons of cheese and cottage cheese; 2,15 tonsof  sausage. Hope, they will have time and resources for the rest of the duties.

Customs Committee head Alyaksandr Shpilewski explained the recommendation was not really about selling the goods, but helping Belarusian enterprises find contacts and partners abroad.

You never know which could work better in these difficult times.

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