Belarus’ gold reserves would grow only if net currency sales by population persist
According to the National Bank, as of March 1st, 2017, Belarus' gold reserves totalled USD 5022.3 million, i.e. increased compared with February 1st, 2017 by USD 37.3 million. The last time Belarus' gold reserves exceeded USD 5 billion was in January 2015. Amid deteriorating foreign trade, the increase in the reserves was due to borrowings by the National Bank and the Finance Ministry on the domestic currency market. Additional government securities in foreign currency are likely to be placed on the domestic market, and banks are likely to raise subsidized loans from consortia of foreign banks. Meanwhile, foreign trade situation is unlikely to improve. Lower interest rates on national currency loans unlikely not have a significant impact on currency demand from legal persons due to the lack of a sufficient number of reliable borrowers within the country. In January-February 2017, the population sold more than USD 290 million on a net basis. Artificial measures to boost people’s incomes could reverse this trend and without the net currency sales by the population, Belarus’ gold reserves unlikely to grow.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.