EurAsEC Anti-Crisis Fund: Belarus has already budgeted future installments
The draft 2013 state budget has incorporated the receipt and use of the fifth and sixth tranches within the EurAsEC ACF loan to finance the national budget’s deficit. However, there may be certain difficulties in negotiating the tranches’ disbursement, linked to the failure to meet a set of agreed indicators.
From 15th to 19th October 2012, EurAsEC Anti-Crisis Fund evaluation mission will be working in Belarus.
On October 2nd, 2012 the House of Representatives approved in the first reading the draft law “On the 2013 national budget”. The draft 2013 budget is balanced. The balanced budget lists USD 880 million in external funding from international creditors, i.e. the EurAsEC Anti-Crisis Fund. Conditions for the allocation of ACF tranches are elaborated in the Letter of Intent dated June 13, 2012.
Some indicators, essential for receiving the next tranche from the Anti-Crisis Fund, will not be implemented. The ACF considers the failure to fulfill the requirement regarding increased share in utility costs and transport tariffs coverage by the population, as non critical. Alternatively, failure to meet the volumes of state property sales is critical.
Today there are no major privatization transactions. MAZ and KAMAZ assets merger will not take place before 2013. An attempt to sell MTS shares for USD 1 billion is doomed to failure. Deterioration in the foreign exchange market and an urgent need to refinance the public debt could result in increased pressure from Russia in terms of privatization.
Belarus has no other options for external funding. 2013 socio-economic development plan leaves little hope for new cooperation programme with the IMF. Belaruskali loan refinancing agreement was made on market terms.
Russia could exploit the situation and delay negotiations on the next tranche’s allocation. In the circumstances, when yet unavailable resources have been budgeted, and their replacement is impossible on similar conditions, there may be trade-offs in terms of easing the requirements for potential buyers from Russia, willing to buy state-owned Belarusian assets.
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.