Belarus – China: strategic uncertainty
On July 15th – 17th, President Lukashenko made an official visit to China.
President Lukashenko’s official visit to China aimed at strengthening his political weight and potential future Sino-Belarusian relations. However, the Belarusian delegation was unable to resolve the cornerstone issue: to agree on an untied loan to help maintaining Belarus’ financial stability.
The main outcome of the Belarusian delegation’s visit was a joint Declaration on comprehensive strategic partnership, which implies development of bilateral relations, intensification of contacts at the highest level, investment and economic cooperation, and mutual support in the international sphere, including human rights and sovereign development issues.
The signed Declaration is more consistent with China’s political interests, rather than Belarusian. In particular, it clearly states that Belarus will recognize Taiwan a part of China. In turn, China promises Belarus some vague “support in protecting core interests” and “to support Belarus’ efforts in protecting state’s independence”. Evasive diplomatic language implies that China reckons that Belarus is in Russia’s sphere of influence and is not eager to actively interfere with the Kremlin’s policies in the Eastern European region.
In the Declaration, economic cooperation is named ‘the cornerstone of the Sino-Belarusian partnership’, but Belarus was unable to reach a new level and to secure an untied Chinese loan, which President Lukashenko mentioned in an interview with the “Xinhua” Agency prior to his visit. Official reports say that as a result of the visit, more than 30 investment agreements were aigned, including loan agreements worth circa USD 1.5 billion. But these are tied loans, mandated to be spent on goods and services produced in China.
All in all, Chinese position looks more advantageous, because China not only provides its equipment and engineering services under the Belarusian government guarantees (eg, USD 80 million tied loan for the supply of 18 electric locomotives and Gomel-Zhlobin railway electrification), but also is engaged in strategically important regional energy projects (eg USD 323 million consumer loan to construct power lines for the Belarusian NPP).
For Belarus, the visit’s outcomes are modest and do not correspond to a ‘strategic breakthrough’ in the relationship. Effects from the joint Declaration are postponed until the future. It is assumed that before the year-end, the parties will develop a cooperation ‘road map’, including Prime Ministers’ discussions about an untied loan for Belarus to replenish her gold reserves, National Bank Chairman Ermakova said on July 19th.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.