Collapse of Belarusian Potash Company throws Lukashenkos family a political challenge
On July 29th, Uralkali’s Board decided to stop potash export sales through the Belarusian Potash Company.
The ultimate split between Uralkali and the Belarusian Potash Company (BPC) raises reputational and political risks for Lukashenko’s family as well as power elites around Lukashenko’s eldest son Viktor. Official response from Belarus did not follow, which implies that the ruling group had problems with making tactical and strategic choices.
The actual BPC collapse has political implications, i.e. casts a shadow on the Russo-Belarusian Commission’s negotiating capacity. The Commission was formed in May 2013 to settle potash export disputes. From Belarusian side, the negotiation process was supervised by Assistant to the President for National Security Affairs Viktor Lukashenko and KGB Chairman Valery Vakulchik. Formally, from Belarus’ side the Commission is led by "Development Bank" Chairman Sergey Rumas.
President Lukashenko specifically emphasized that his close affiliates were introduced in the Commission to raise its status following a request from Russian businessman Suleiman Kerimov. Informally, Viktor Lukashenko was responsible for the negotiations’ success while the KGB could engage in new scope of activities (there is reason to believe that since 2008 Viktor Lukashenko has largely controlled the KGB personnel policy, in particular, the new KGB Chairman Vakulchik is Viktor’s protégé).
In this context, the scandalous collapse of potash syndicate, two months after the negotiating group was appointed, appears as negotiations’ failure. Belaruskali’s public policy has not yet been identified, regardless of the falling world prices for potash fertilizers and Uralkali’s divorce from BPC. Moreover, Uralkali’s Board decision was unilateral, without consultations with the BPC. The work of the bilateral Commission and its members has been discredited.
Nevertheless, the ruling group and Belarusian potash exports supervisors need to figure out how to retain potash markets and fertilizer sales. The situation is complicated by the fact that pressure on Belarus to sell its Belaruskali shares and / or to delegate control over Belarusian export flows will increase. For instance, Uralkali’s Director General Vladislav Baumgertner said that cooperation between the two companies could resume only if Belarusian sales were made through Russian Soyuzkali.
If Belarus fails to resist this pressure, Viktor Lukahsenko’s business and political reputation will be undermined, which in turn will hurt his father’s reputation. Simultaneously, global potash prices’ fall will reduce Belaruskali’s export proceeds and will increase economic stability risks in the country, which in turn might have a negative impact on President Lukashenko’s electoral rating.
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.