Belarusian authorities restrict imports with temporary licensing
Due to rising real incomes, consumer goods imports have been on the rise amid an overall decline in imports. By introducing temporary restrictions on the imports of some goods, the government aims to improve sales of domestically produced goods and foreign trade balance. Countries outside the Customs Union may introduce reciprocal restrictions, thus minimising positive effects from licensing.
As of June 1st, Belarus introduces licensing on importing pasta, confectionery and their ingredients from outside the Customs Union.
In Q1 2014, the international trade deficit was USD 129.3 million. In Q1 2013, the deficit was USD 694.8 million. In Q1 2013, consumer goods trade surplus was USD 246.2 million, however a deficit occurred in Q1 2014. Due to pay rises and therefore consumer incomes growth, imports of fruit, vegetables, fish, chocolate, bread, and pastry products have increased.
The said licensing is introduced for a limited time-period – until November 30th, 2014. Similar restrictions on beer imports will be in effect until October 31st, 2014. With these restrictions, the government aims to protect domestic producers from competing with foreign producers, primarily Ukrainian. The devaluation of the Ukrainian hryvnia has made Ukrainian foodstuffs cheaper and increased their competitiveness on the Belarusian market. Amid falling profits in the Belarus’ food industry, import restrictions might improve the industry’s financial health.
However, the said measures might have little effect. The bulk of these goods are imported from Russia. For instance, in Q1 2014, Belarus imported USD 7.6 million worth of pasta, including USD 4.6 million worth from Russia. By restricting imports from countries outside the Customs Union, Belarus encourages Russian companies to take over current suppliers. As a result, instead of reducing imports, Belarus will change their origin. Import volumes subject to licensing are insignificant and would have no considerable impact on the trade balance.
Meanwhile, countries, which will be affected by the licensing, might introduce restrictions on Belarusian products in response. Ukraine may limit imports of petroleum products from Belarus, which is an extremely sensitive issue for Belarus, and demand restrictions on their products to be abolished. If so, the licensing will only have negative effects and the trade balance will not improve.
The Belarusian government has once again resorted to ineffective measures, which, given the open border with Russia, would not have the desired effect. Reciprocal actions against Belarusian products may lead to Belarus’ trade relations with major trading partners deteriorating and fewer exports to these countries.
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.