No major oil concessions for Belarus from the Kremlin
Belarus has reaped some minor concessions from the Kremlin within the Eurasian Economic Community’s founding treaty. However, when it comes to oil duty exemptions - the most sensitive issue for Belarus – Russia is uncompromising. Minsk will insist on resolving the oil issue when the EEC takes effect on January 1st, 2015.
Meeting in Moscow last week, the Prime Ministers of Belarus, Kazakhstan and Russia could not find solutions to key aspects in establishing the Eurasian Union (Eurasian Economic Community, EEC); the decision will have to be made by the presidents.
In late May, the presidents of Belarus, Russia and Kazakhstan plan to sign the EEC founding treaty. During the prime ministers’ meeting, Belarus managed to find some compromise solutions to a number of controversial issues. However, it is the issue of oil duty exemptions that is at the top of Belarus’ agenda. President Lukashenko will attempt to resolve this at a presidential ‘troika’ meeting on April 29th.
If exempt from paying oil duties, Belarus would earn additional USD 3-4 bn. The Belarusian government could use this money to minimise risks during the 2015 presidential campaign. The March national poll by IISEPS suggests that President Lukashenko’s popular rating has gone up. However, the state is reducing its social guarantees to the population which may have an undesirable effect on the president’s popularity.
The president emphasised how important it was to abolish exemptions, “Since we are building a union and strive to ensure that there are no borders, there should be no exceptions and restrictions on the movement of goods, labour and capital. This is the main goal”.
Meanwhile, during the prime ministers’ meeting, PM Myasnikovich and PM Medvedev reached an agreement over the procurement of agricultural machinery. Ahead of signing the EEC treaty, the Kremlin is using this agreement to compensate for its disagreement over oil issues.
In addition, Russian Ambassador Alexander Surikov confirmed Russia’s decision to maintain oil supplies to Belarusian refineries at the same level. In 2013, these volumes were revised by Russia every quarter – after Belarus had seized oil supplies to foreign markets under the guise of solvents and diluents without paying duties to the Russian budget. The Kremlin and Minsk have agreed to keep a steady supply of oil in 2014 at 23 million tonnes.
It is worth noting that, with the Kremlin dragging other CIS countries in the Eurasian integration, Belarus’ negotiating positions have weakened. Armenia’s Economy Minister Avanesyan stated that Armenia planned to sign the Customs Union treaty with Russia, Belarus and Kazakhstan on April 29th, 2014. Kyrgyzstan also expressed the desire to join the Eurasian integration.
Thus, Belarus will insist on abolishing the oil duty exemptions and trade restrictions when the Eurasian Union takes effect on January 1st, 2015. Meanwhile, Belarus is waiting for acceptable compensation from the Kremlin during the transition period until the oil issue is resolved.
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.