Minsk gives the Kremlin a fair opportunity for blackmail
Russia has no interest in disclosing the likely smuggling scheme of petroleum products from Belarus, but uses the disclosure threat as a lever to put its Belarusian partners under pressure. Belarus has a weak bargaining position and probably will have to make further concessions on privatization issues.
Belarusian and Russian officials have exchanged statements about the reasons behind the rapid growth in exports of some petroleum products, including solvents, lubricants, from Belarus to the EU. Suspicions have been voiced that under the guise of solvents Belarus re-exports Russian oil without making due export duties payments to the Russian budget.
During the past week, debate over the likely smuggling of petroleum products from Belarus to the EU has reached the inter-state level. On June 28th, Russian Deputy Finance Minister Sergey Shatalov voiced his own suspicions about the true nature of Belarus’ export miracle. Earlier Deputy Prime Minister Dvorkovich and, according to unofficial reports, Prime Minister Medvedev, also voiced similar concerns.
In turn, Ambassador of Belarus to Russia A. Kobyakov, Deputy Prime Minister S. Rumas and Belarusian Foreign Ministry press-service made their own statements: all being evasive and not giving straight answers. Earlier, Belarusian Customs Committee Chairman, Mr. Shpilevsky denied suspicions raised by Russia.
The high level of discussion implies that Russian claims vis-à-vis Belarus are quite serious. However, Russia did not initiate checks against the background of high-profile allegations by senior Russian officials, which means that the Kremlin was not really interested in revealing the probable smuggling scheme, and would like to use this issue as an additional argument in negotiations with Belarusian partners.
On the other hand, the evasive position of Belarusian officials and government agencies which do not provide with straight forward answers and do not deny charges further weakens the bargaining position of Belarus. In particular, Belarus’ Prime Minister Myasnikovich expressed readiness to buy Russian Rostselmash. However, on June 27th Chairman of the Board of “New Commonwealth” holding replied that he saw no reason for merging Rostselmash with Belarusian Gomselmash.
One should anticipate that the “solvent” conflict with Minsk will be maintained in a “heated” condition and used as an additional leverage in the negotiations about the privatization of Belarusian enterprises. Proceeds from the solvents exports are extremely important for the Belarusian authorities (in January-April 2012 its exports increased by USD 1.4 billion as compared with January-April 2011), who said the average salary in Belarus will reach USD 500 by the end of the year.
President Lukashenko is not interested in losing this abundant source of income. Probably the Russian authorities’ recon that threat to deprive him of these proceeds will make Lukashenko more amenable regarding the Eurasian integration of Belarus.
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.