The government tries for Chinese FDI
Given the SWAP agreement between the Chinese and the Belarusian National Banks does not work (Chinese exporters cannot return the claimed VAT back in Yuan), the Belarusian authorities have proposed to China to establish a joint industrial park in Belarus hoping to attract direct investments worth at least USD 1-1.5 billion.
An agreement concerning the creation of the park between the Economy Ministry of Belarus and the “Chinese Engineering Corporation CAMC” was signed on 11 October 2010 during the visit of Alexander Lukashenko to China. However a draft decree has been prepared only recently.
The increased cooperation and trade with China so far only results in deterioration of the Belarusian trade balance and in the growth of debt in the corporate sector. The government wants to change the type of cooperation with China and benefit from China’s FDI. However it is only dreaming and planning, given the sluggishness of the government officials, the current currency crisis and the fact that Chinese are focused on export of their goods and services rather than investment, ergo, joint industrial park even if it is established, will not be functioning this year. Moreover, the money will be allocated in tranches. All in all, the ongoing Belarusian issue with financing of the deficit will not be solved (also concerning the trade with China) or the more so, the economic crisis.
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.