Belarus has achieved foreign trade surplus by restricting imports and devaluing rouble
In January 2015, Belarus marked foreign trade surplus – its highest since July 2012. Devaluation of the Belarusian rouble and a ban on price increases have led to a decrease in imports to Belarus. This result is only temporary – soon the trade balance deficit will return.
In January 2015, trade balance surplus was USD 244.7 million. Imports of goods decreased to USD 1821.9 million or by 36.5% compared with January 2014. This is the minimum value since January 2011. Exports have reduced too – supply fell to its lowest since January 2012. Imports have reduced more rapidly than exports, which led to trade balance surplus.
Imports have fallen thanks to devaluation of the Belarusian rouble and tighter pricing policy. Wage cuts have resulted in reduced imports of cars from Russia. In December 2014, Belarusians imported 48,000 vehicles from Russia and in January 2015 – only 8000. Consumer spending has reduced, entailing a reorientation towards greater domestic consumption of food. Price control introduced by the government has resulted in some exporters seizing operations. Many companies have reviewed downwards their investment programmes for 2015, which has already led to a decrease in imports of equipment. Compared with December 2014, in January 2015, imports of machinery fell by USD 500 million.
Foreign trade improvements are unstable. The positive results of January have led to a sharp reduction in the range of products and problems in both, retail and whole sales. Refining and fertilizer production are among relatively stable industries in Belarus. Devaluation was insufficient to solve the problems in the food industry, mechanical engineering and rubber industry. In addition, businesses continue to have troubles with supplies to the Russian market.
Diversification of exports is now a priority task for the government, but developing new markets requires considerable time and might take years. In the short term, trade balance surplus is unlikely to sustain, however, in 2015, foreign trade performance should improve as compared with 2014 due to the economic slowdown in Belarus.
Trade balance surplus was only achieved thanks to devaluation and tough restrictive measures against imports introduced by the government. Import volumes might be restored and trade balance deficit might return to the level of USD 50-150 million per month.
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.