Belarus and NATO: still far from cooperation, but dialogue starts
The agreement between the Defence Ministries of Latvia and Belarus is a standard one, covering cooperation on international security and defence policy. Belarus needs a dialogue with NATO countries in the defence field, but regards it as having secondary importance for the overall Belarusian-western normalisation strategy.
During his visit to Riga on December 5th and 6th, 2016, Belarusian Defence Minister Andrei Raukou signed the cooperation agreement between the Defence Ministries of Latvia and Belarus in the defence field.
Despite political and economic disputes between Belarus and Russia, the Belarusian authorities still regard Russia as the main partner in the security field. Inter alia, due to technical reasons: the need to maintain combat readiness of the armament inherited from the Soviet Union. The Belarusian-western normalisation suggests political normalisation too, which includes cooperation in the security filed and defence field in particular, as a crucial component.
It should be noted, that the Belarusian-Latvian ‘cooperation’ agreement, in fact, aims to create conditions for a bilateral military dialogue, so that the parties become more predictable and transparent in the international security and defence policy, airspace control, arms control, military medicine, environmental protection, and in holding cultural and sports events in the Armed Forces of the two states. Prospects for cooperation between the Belarusian and western defence agencies (including Latvia) depend entirely and directly on the political dialogue between the parties.
The Belarusian Defence Minister Ravkov’s visit to Latvia is a part of the general trend aimed at improving relations with the West. That said, there are no reasons to talk about Minsk’s geopolitical U-turn. The Belarusian authorities are attempting to find a balance between cooperating with the West with minimal Western influence on Belarus, and retaining amicable relations with Russia.
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.