Belarusian exports hit the bottom
On October 31st, Belstat published the January – September 2013 foreign trade data.
Belarus’ foreign trade is highly dependent on a narrow range of exported goods. Export growth potential is insignificant. Although modernization has partially improved export opportunities, any positive effects have been offset by growing exports of equipment and ill-conceived business plans.
In September, the foreign trade in goods deficit was USD 484.5 million. The main reason for this was a decline in exports to USD 2.925 billion, the lowest level since February 2011. The decline in exports was due to the drop in Belarus’ main export items – petroleum products, potash fertilizers and machinery. Production of petroleum products directly depends on the volume of supplied raw materials for processing, and in the case of Belarusian-Russian conflicts, the latter exerts pressure by limiting the oil supply to Belarus. Exports of potash fertilizers have suffered after the breakup between Uralkali and Belaruskali and will not be improved because the market prices keep falling. Mechanical engineering is dependent on the Russian market: the drop in investment demand from major customers has resulted in a sharp drop in sales, which cannot be compensated by sales in other markets. Other export items are too insignificant to affect the overall picture.
For instance, Belarusian dairy products are in great demand on the Russian market in 2013. Dairy exports are constrained by the shortage of raw materials to produce milk powder, casein, and cheese. Sugar has high export growth potential due to poor harvest in Russia. In addition, Belarus has started producing Chinese cars – Geelly, with a clear orientation on the Russian market in the future. However, even if Belarus increases exports of these items and earns up to USD 200 million per month, this will not be enough to remedy the situation.
The industrial modernization was held to expand the range of export products and their exports on foreign markets. In some cases, it worked out: for example, with some Grodno Azot products or chipboard exports. However, these are rather exceptions than a rule. Most often, modernization has resulted in increased imports of production equipment and negative output.
Modernization in Belarus has failed to diversify exports. Belarus needs not only new technologies, but also new managerial approaches, which are not feasible in the current environment.
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.