Outflow of foreign investment from Belarus
Last week Oman refused to implement an investment project worth USD 150 million in Minsk. Belarusian authorities are looking for new investors to implement a number of investment projects.
Omman’s State Reserve Fund refused to implement an investment project. The investor believes the project is unprofitable due to significant changes in the economic conditions resulting from the devaluation of the Belarusian ruble in 2011.
In March 2010 the Fund, in face of “Eagle Properties four”, Ltd, received a land plot in the centre of Minsk (2.6 hectares) in private ownership for USD 10 million (no auction was held) for the construction of a residential complex, business center and a five star hotel. The overall investment was estimated at USD 150 million and the project should have been finished by 2016.
Quoting similar reasons an investment agreement with a Cypriot company IteraVnukovo Ltd (part of the group \"Itera\") was terminated. The contract envisaged construction of an aircraft maintenance and repair and business aviation centre at the Minsk National Airport.
Among other reasons that hinder the implementation of investment projects in Belarus are corruption and inefficiency of government agencies.
Nevertheless, the government continues looking for investors. For example, the Swiss Stadler Rail AG and JSC “Belkommunmash Holding Management Company” will build a plant to produce urban electric passenger transport in Dzerzhinsk district, Minsk region. For this, a JSC “Electric vehicles” has already been registered as a FEZ “Minsk”. Project implementation is envisaged between 2012 and 2016.
Lithuanian Norfa will build a vegetable processing plant in Belarus. Retailer Norfa Norfos mažmena has already acquired land plot in Belarus (in Vilejka). Currently design works are carried out, project cost is around Euro 5 million.
For reference. According to the National Statistics Committee, the net inflow of foreign direct investment in January-May 2012 decreased compared with the same period in 2011 by 18.5% to USD 605.7 million with the forecast for 2012 USD 1.2 billion.
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.