Belarus is concerned about potential losses from Russia’s tax manoeuvre
The Belarusian authorities have assessed the potential economic losses from Russia’s tax manoeuvre at USD 1 billion. Russia has not yet made a decision, but is considering various options, inter alia, increasing the tax on minerals extraction while reducing export duties on petroleum products, which will lead to higher oil prices on the domestic market and may reduce refineries’ profits, including Belarusian ones. In the event that Russia adopts tax changes, she might envisage a re-compensation mechanism, for example, partially or completely abandon the transfer of duties to the Russian budget. That, in turn, will require Belarus to revise her 2015 budget. In addition, Russia may allocate additional credit resources at a good discount to compensate for higher oil prices for Belarus. Russia may also revise the share of customer-owned oil refining in Belarus and increase refining costs for Russian companies. Russia may postpone implementation of the tax manoeuvre indefinitely, if so, Belarus will withdraw her claims.
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.