Belaruskali’s new strategy is no more than tactics

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April 22, 2016 18:35

On August 5th, Belaruskali signed a framework agreement with Qatari Muntajhat to sell jointly 3 million tons of potash fertilizer per year.

Belaruskali has difficulty with a strategic response to Uralkali’s aggressive action following BPC collapse. Its decision to increase the supply volumes amid lost opportunity to influence the pricing policy will result in reduced efficiency of potash exports. Reconciliation between Uralkali and BPC looks more promising, but the terms might be quite harsh.

Belaruskali management presented the project with Qatar as part of the “new sales strategy” and its implementation aims at strengthening Belaruskali’s presence “in the previously unexploited markets”.

Following Uralkali’s demarche, Belaruskali promised to promptly present a new strategy. However, the signed agreement with a new partner, Qatar, as well as the intention to develop “previously unexploited” markets is hardly a “strategic” decision, rather a tactical move. Currently, the company’s attempts to increase the export sales volumes (so far only by making statements) play in the hands of the Uralkali’s strategy: to flood the market with potash to bring the prices down (to USD 250 per ton) and to push competitors off the market. In addition, Uralkali intends to block all projects to develop new potash deposits (Belarus will suffer additional losses, since it is involved in a project at Garlyk potash ores in Turkmenistan). As a result, some ‘mergers and acquisitions’, profitable for Uralkali might take place and then the game will restart with higher prices.

Perhaps, Belaruskali’s best ‘strategic’ response to the Uralkali’s aggressive policy would be curbing exports from Belarus (or even their slight reduction). It would be difficult for Belarus to increase its potash exports, even if the “previously unexploited markets” were included (Uralkali is able to increase its production capacity up to 14 million tons per year, while Belaruskali – only slightly over 10 million). Such a response will have implied that Belaruskali attempts to stabilize the world prices and to prevent their sharp fall, and quite possibly might have been supported by North American producers (Potash Corp., Mosaic and Agrium), who will also suffer painful losses from Uralkali’s actions.

However, such a strategy is unlikely to be approved by the Belarusian authorities, who value every export dollar in times of economic instability. The agreement with ‘Muntajhat’ proves it.

Nevertheless, the information about partnership with Qatari trader may have additional “strategic” implications. Two years ago, the government was considering selling development rights on Oktyabsky and Petrykov potash deposits to investors from Qatar (later Petrikov deposit was signed off to Belaruskali by a Presidential Decree). Potentially, this could be a signal to Russia to restart negotiations about Belaruskali privatization, which, in turn, could become a starting point to resume negotiations with Uralkali about reconciliation of trading.

In an interview with the Vedomosti newspaper, Uralkali CEO Baumgertner acknowledged the possibility for such reconciliation, so far with one reservation – it certainly would be ‘under different jurisdiction’. In other words, the establishment of a joint Trader Soyuzkaly in Switzerland was not yet buried. However, previously the motivation was to improve the trader’s image and to gain access to cheap resources in Western Europe. Today, ‘different jurisdiction’ means, above all, to exclude the trader from the Belarus’ President Decrees’ jurisdiction (according to Russians that was main reason behind the BPC breakup).

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

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.