Belarusian enterprises up for sale of interest to Putin’s inner circle
The State Property Committee (SPC) has published a list of companies to be put up for auction.
Often, statements by the Belarusian authorities about the sale of state-owned enterprises do not always imply real action. This time, some assets allegedly put up for privatization have drawn interest from people within Putin’s inner circle who supported Alexander Lukashenko during the ‘potash conflict’. The potential asset sales will be prepared to ensure minimal reputational losses for Lukashenko in the eyes of the population.
The SPC has repeatedly stated its plans to privatize state assets. The Belarusian government annually approves a new list of businesses and real estate for privatization. While these plans are not met in full, some assets are transferred to both Belarusian and foreign owners, mostly Russian.
State property privatization reduces Lukashenko’s absolute power, which is why these decisions are difficult for him to make. He is much more willing to carry out other unpopular measures, such as to ‘narrow’ the welfare state or to devalue the Belarusian ruble.
For a long time, the incumbent president was a guarantor of property remaining in the ‘people’s hands’, and was a keen fighter against the ‘oligarchs’. Despite the recent discrepancies in Lukashenko’s actions and rhetoric, he still seeks to maintain his image of the ‘peoples’ president’. Belarusian society has developed a strong opinion that he is reluctant to sell state property.
However, sometimes Lukashenko sells state assets, which often end up in Russian ownership. Most often, such privatization is carried out step-by-step and forced by various circumstances.
In May 2007, Gazprom and the SPC signed a contract to sell 50 % Beltransgaz shares for USD 2.5 billion to be paid in equal installments over four years. The deal was closed in 2010. The agreement to sell the remaining 50% of Beltransgaz shares for USD 2.5 billion was signed in November 2011 following the triple devaluation of the Belarusian ruble and deteriorated socio-economic situation in Belarus. Gazprom Head Alexei Miller said the deal was prepared back in June 2011, when Belarus had received the first USD 800 million tranche from EurAsEC ACF.
Assets on the latest privatization lists include Belarus’ shares in the Mozyr Oil Refinery, which is co-owned by Gazprom Neft and Rosneft (42.581%), Belarusian Government (42.757 %) and Mozyr Refinery Plus (12.252%). Russian large businesses have a clear interest in this asset.
During the recent ‘potash conflict’ Lukashenko met with two influential representatives from Putin’s inner circle: Rosneft President Igor Sechin and Gazprom Board Chairman Alexey Miller (who also chairs the Directors’ Board at Gazprom Neft). Back then there were no official reports that substantial agreements had been reached, but one month later, the State Property Committee included Mozyr Refinery in its privatization plans (Igor Sechin has interest in this asset).
Perhaps the announced privatization plans will not be met in full, but Russia will continue strengthening its presence in the Belarusian economy by acquiring the most attractive assets.
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.