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.
Last week, Belarusian Foreign Minister Makei participated in the foreign ministers’ meeting of the Eastern Partnership and Visegrad Group initiative hosted by Warsaw. The Belarusian FM emphasized Belarus' interest in cooperation in the transport sector, which could be due to Belarus’ desire to export electricity surplus after Belarus finished construction of the nuclear power plant in Ostrovets. Minsk expressed concerns about Warsaw’s stance on the Belarusian NPP, as it refused to buy electricity from Belarus and supported Vilnius’ protest on this issue. Following accusations by the Belarusian leadership and the state media against western states, including Poland, of training "nationalist militants", Minsk did not agree on the visit of the European Parliament deputies from Lithuania and Germany to Belarus and to the NPP construction site near Ostrovets in particular. In addition, the Belarusian authorities have stepped up efforts to enforce education in Russian in Polish-language schools in Grodno and Vaukavysk. Should a rift in Belarusian-Polish relations persist, the Belarusian authorities are likely to step up the pressure on the Polish-speaking minority in Belarus.