Russia to cut Belarus revenues from petrol re-exports
The Russian Government has suspected two Russian companies of tax evasion for supplying large quantities of oil to Belarus. Amid Russian budget deficit, Belarus is likely to be prompted to either stop exports of anti-oxidants, or part with profits from re-exports in favour of Russian companies-suppliers.
On March 17th, Deputy Chairman of the Russian Government Dvorkovich requested the Energy Ministry, the Finance Ministry and the Federal Customs Service together with Gazprom and Tatneft to report why Tatneft and Gazprom subsidiaries had sharply increased oil supplies to Belarus. According to railway freight forwarders, Tatneft subsidiary, Tatneft-Trans LTD supplied 25000 tons of petrol to Belarus in January 2016, which was 50% of the total oil supplies of Russian petrol to Belarus in January. The second company supplied 15000 tons of gas condensate distillate to Belarus or 83% of total Russian supplies in January. The Russian Government regarded both supplies by Russian subsidiaries as a possible scheme of tax evasion.
The above scheme appears to be a modification of the scheme with solvents actively exploited by Belarus in 2008-2012, when Belarusian companies acquired Russian naphtha, added small amounts of chemicals to change the code of the commodity nomenclature, and further exported petrol under the guise of solvents. Exports of solvents did not require export tax payments to the Russian budget, Russian companies therefore could circumvent prohibitive duties on the straight-run gasoline (90% of the crude oil export duty) and ensured large sales of petrol products at better prices than those on the domestic market. In the end, Russia’s budget suffered significant losses, and the supply of raw materials was suspended in 2013.
Russia could not fail to be aware of oil exports under the guise of chemicals. In Q4 2014, Belarusian companies started exporting anti-detonators (FEACN code 3811), and simultaneously, imports of straight-run petrol increased significantly, the entire amount of which was delivered from Russia. During 2015, Belarus imported 583000 tons of light distillates and exported 599000 tons of anti-detonators and antioxidants. The main buyers, according to the National Statistics Committee, were the Netherlands and Latvia, while these countries had not reported imports of these products from Belarus. Total exports of these products totalled USD 250 million in 2015 and Belarus could raise circa USD 40-50 million from this scheme.
Russia’s enquiry into the matter could be linked with her desire to cut indirect financial assistance to Belarus amid Russian budget deficit. The fact that the Russian government has raised the issue just now could be due to the need to obtain an additional lever in negotiations with Belarus. Or, which is more likely, due to the changes in the rules of the game on the oil market, Belarus wanted Russian companies to redistribute revenues from the resale of petrol in her favour. Influential Russian companies allegedly rejected Belarus’ claims and requested the Russian government to issue threats to potential competitors and/or ban such schemes.
Belarus has used the opportunity to keep the export duty on oil in her budget and resumed re-export schemes of Russian petrochemicals. Amid Russian budget deficit, Belarus is likely to be prompted to either stop exports of anti-oxidants, or part with profits from re-exports in favour of Russian companies-suppliers.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.