“Potash conflict” exposed the scale of Belarus’ dependence on Russia

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April 22, 2016 18:36

On August 28th, Epidemiology Department Head Onishchenko talked about Russia’s claims on Belarusian dairy products.

Belarus’ actions added a political dimension to the economic conflict. Conventionally, Russia has marked out the potential losses for Belarus if the conflict deteriorates. Reduced foreign currency proceeds against the background of substantial public debt payments and deeply rooted reliance on raw material supplies from Russia do not leave Belarus a chance for long-term confrontation in the conflict.

The breakup between Uralkali and the Belarusian Potash Company has damaged Belarus’ economy. Belaruskali, one of the major donors to the economy, reduced its production volumes in August, and plans further cuts in September. Around 4,000 employees receive only two thirds of their salary, and due to reduced export volumes, the proceeds from foreign currency have fallen. All these financial losses have provoked a harsh reaction from the Belarusian authorities against potential perpetrators. The Prime Minister’s invitation to Uralkali’s CEO and the subsequent arrest of the latter, following the meeting, has moved the conflict to an inter-state level.

Russia’s reaction was quite predictable. It has used economic coercion tactics and then outlined the potential losses if the conflict exacerbates. Firstly, they outlined potential losses from cutting Belarusian dairy product exports. In Q1 and Q2 2013 the volume of dairy exports to Russia was USD 1 billion (the main contributor to exports growth in Belarus in 2013). Secondly, Russia talked about reducing oil supplies to Belarusian refineries by 400,000 tons. As a result, annual oil supplies to Belarus will be reduced to 18.5 million tones instead of 23 million tons. Thirdly, as the conflict was escalating, Russia banned pork exports from Belarus (In Q1 and Q2 2013 exports brought USD 80 million). In addition, Russia ordered a thorough inspection of Belarusian meat products (exports in 2013 - USD 132 million). Finally, Russia may introduce a ban on other exports from Belarus.

If all outlined sanctions are introduced, the loss in exports could be catastrophic for Belarus. Russia’s share in Belarus’ exports in the first half of 2013 was up to 42.5 %. Reduced oil supply may reduce Belarus’ exports to the Netherlands, Italy, and Great Britain, since Belarus mainly exports petroleum products to these countries. Reduced foreign currency proceeds against the background of substantial international public debt payments and heavy reliance on raw material supplies from Russia do not leave a chance for a long confrontation in the conflict. Belarus has no substantial counter-arguments in the conflict, and, if it attempts to break cooperation within the Customs Union, it will suffer from higher energy prices (they will pay at world level) and the painful closure of the Russian market for Belarusian products.

Belarus’ systemic reduction in international trade diversification has resulted in its greater dependence on its largest trade partner (Russia) and this trend will only continue.

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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.

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