Posts Tagged Belaruskali

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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Decree Me

Belarus used to be one of the most technically advanced republics of the Soviet Union. Today, 21 years after the collapse of the USSR, it’s just one of the most Soviet. Years pass, but certain qualities stay.

Belarus’ strategic efforts to attract investment and modernise the industry are overshadowed by presidential orders and decrees. Recently at the stroke of a pen two of its biggest candy makers were nationalised. Decree No9 on planned reconstruction of the wood-processing enterprises also forbids their workers to quit their (yet poorly paid) jobs.

2012 is the Year of Books here, 2013 will be the Year of Frugality.

The country starts paying off its debts next year and plans no further loans so far. It is unlikely that they could get any from the West due to the lack of (promised!) structural economic reforms.

But Russia can never fail a true friend, even though this friend failed to fulfill the precondition for 2012, a $2.5 million privatisation. Moscow already signaled that the last of tranche of its EurAsEc grant ($440 million) will be wired in December.

Despite the difficulties, Belarus aims high. There are lists of factories for sale, with impressive price tags. For example, the state share of Belaruskali potash company can be acquired for $32 billion.

These attempts to sell the crown jewels remind me of a story about a neighbour, who hoped to sell his ancient car for $8,000. Just because he badly needed money.

I don’t mean to underestimate Belaruskali, it has some 40 percent of the world’s potash fertilisers market. But if you want to be effective, you have to be realistic.

Now all eyes on economic security! Economy should be economic was the Soviet slogan.

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