Azerbaijan and Belarus may help each other to survive

December 05, 2016 8:58

Due to mutual interests, in the near future, Belarus and Azerbaijan may confirm being in the de facto union, including in the military and political area.

Lukashenka's visit to Baku on November 28th-29th, 2016, confirmed the strategic partnership between Belarus and Azerbaijan based on the personal relationship between the leaders of the two states.

Baku is aiming to respond adequately to the deployment of the Iskander, Russian tactical missile complex, in Armenia. As an option, the Azerbaijani army may adopt heavy MLRS, such as the Belarusian Polonaise.

Minsk’s interest is to sign a long-term agreement on Azeri oil supply to Belarus. Amid the fight between oil producers for preserving their market share, penetration on the Belarusian (and later European) market could be of considerable interest to Azerbaijan. In addition, Minsk will gain an additional argument in negotiations with the EU, only this time not as a peacekeeper, but as an oil hub.

Azerbaijan is Turkey’s closest military and political ally and has a lobbying potential in Ankara. The Belarusian authorities regard Turkish foreign policy ambitions as a potential mechanism for balancing Russia in Eastern Europe and South Caucasus. In addition, Belarus is interested in a comprehensive cooperation with Ankara and Baku’s assistance may prove to be very handy.

In the near future, Belarus-Azeri cooperation may gain momentum. The ruling regimes in both countries are concerned about external security threats and because of distrust of the West, are interested to engage new external players in the regional context. However, the question remains, what would be Russia's response to such a game by Minsk and Baku? As regards Azerbaijan, the Kremlin has a free hand: Azerbaijan is not a member in the Russia-led integration associations, it is de facto in a state of war with Russia’s ally, Armenia, it is a rival on the oil market, and has no clear external security guarantees. Overall, potential cooperation between Minsk and Baku could only materialise if Russia turns the blind eye to it.

Similar articles

Economic growth in Belarus may be delayed until 2018
January 23, 2017 11:13
Image: Novy Chas

The Belarusian economy was shrinking for the second year in a row, in 2016, by 2.6%. Before 2015, the Belarusian economy was growing for 18 consecutive years. In order to stop the economic slump, Belarus needs a favourable international market situation and to settle all trade disputes with Russia. The Belarusian economy is unlikely to recover before 2018.

According to the preliminary reports, in 2016, Belarus had a 2.6% GDP decline. The Belarusian economy was shrinking for the second year in a row – a 3.8% decline in 2015. Most economic indicators in 2016, except in agriculture, had negative values. Wholesale trade had the most negative impact on GDP due to falling exports of potash fertilizers and petrochemicals, as well as construction, due to reduced investment in fixed assets by enterprises and decreased housing construction volumes.

In 1996-2011, the Belarusian economy was growing most rapidly, average GDP growth rate was 6.9% per year. In 2011, amid emission injections in the economy, disproportionate growth of wages against the background of low productivity and significant financial aid for loss-making agricultural, construction and industrial enterprises, the Belarusian rouble depreciated by three times. The absence of economic reforms and significant relative weight of state in the economy amid deteriorating external economic environment led to a sharp economic slowdown – circa 1% per year in 2012-2014; the slowdown was followed by the recession, caused by a slump in the prices for basic exports from Belarus and cuts in soft loans issued to maintain production volumes.

Belarus’ budget for 2017 is based on anticipated 0.2% growth. The expected decrease in the construction volume is circa 17% in 2017, which is unlikely to allow industrial growth with the renewal of fixed assets by legal entities. Even if wages grow, they will be offset by the 15% increase in utility tariffs by late 2017. Wholesale trade is largely dependent on the potash market situation and the oil processing volume at the Belarusian refineries. In view of the planned reduction in Russian oil supply in Q1 2017 to 4 million tons, wholesale growth is only possible provided the potash market situation improves. In late 2016, engineering output increased significantly, but amid the trade conflict with Russia, she may prioritise purchases from domestic manufacturers. In the given circumstances, Belarus’ GDP would only grow in 2017, provided the Russo-Belarusian dispute over energy supplies was fully resolved, Russia removed barriers for Belarusian exports and the potash market situation improved. That said, Belarus’ GDP in 2017 is likely to decrease by 0.5% - 1% and is likely to be followed by an attempt to overcome the recession in 2018.

The Belarusian economy has been in recession for two consecutive years. Amid anticipated decline in retail trade, construction and unresolved dispute over energy supplies from Russia, economic recession is likely to persist in 2017 and the economic recovery may be postponed until 2018.