‘Potash case’: causes and likely effects
On August 29th Uralkali Director General Vladislav Baumgertner was charged with abuse of power and official authority. The Russian CEO was detained and is being held in the KGB detention center in Minsk.
During the week, Belarus outlined its expectations following the detention of Uralkali’s CEO and Russia switched on its coercion to compromise tactics. Since Belarus’ expectations are not high, a compromise is likely to be achieved when Belarus’ propaganda machine finishes full cycle, that is, in the relatively close future.
Almost all Belarus’ law enforcement agencies have worked on the ‘potash case’: Prosecutor General (initiated proceedings), the Investigative Committee (investigated), the KGB (detained Baumgertner), Ministry of Internal Affairs (appealed to Interpol) and the State Control Committee (inspected the Belarusian Potash Company (BPC)). Belarusian media published pieces of information that the Belarusian law enforcement system will use in the ‘potash case’. Belarus assessed the overall damage caused by the breakup between Uralkali and the BPC at USD 100 million.
On August 29th, Belarus’ Investigative Committee announced its readiness to initiate criminal proceedings against Uralkali’s principal shareholder and Senator Suleiman Kerimov, and also threatened to arrest Uralkali property (the tycoon has not yet received any official documents in this regard).
Apart from the mentioned USD 100 million, Belarus is not making other claims. However state media has accused Uralkali of undermining Belarus’ economy and of losing profits in the potash trade. It has quoted online fora users who were willing to “live in dugouts”, “starve, but not give up”, etc.
Last week, it was disclosed that two of the four Belaruskali mines have stopped work. In January -July 2013 Belaruskali reduced its cash volume exports by 23.5 % in the year, while maintaining the same physical sales volumes as in 2012. Most likely, the arrest of Baumgertner will be used to justify Belarus’ economic failures which have already occurred, and future ones which may be caused by Russia in response to the arrest.
For instance, Rosselkhoznadzor has banned Belarusian pig imports and limited Belarusian dairy supplies to Russia. Transneft has threatened to cut oil supply in Q4. EurAsEC ACF hinted that the new loan provision might be postponed. However, it is unlikely that the losses due to the ‘potash case’ will significantly burden the predictable Belarusian economic failures in Q4. Regardless of the ‘potash case’, international trade has deteriorated, Belarus has gradually been losing the Russian market, international public debt has been building up and costs of external loans have been rising.
Belarus is unlikely to have other gains than ‘reputational’ as a result of its actions. Allegedly, when Belarus decided to arrest Baumgertner it was reckoning on Russia’s involvement in the Syrian conflict, the tariff war with Ukraine and the opposition between Medvedev supporters and ‘Putinists’ would win Belarusians (or their Qatari partners) some time to sign contracts, while Uralkali’s management was dealing with Interpol and the arrest of its CEO. But Russia is unlikely to lose time on that. Moreover, experts say that, due to expectations of further price reduction, the world potash market is unlikely to get off the ground before spring. In any case, the signing of major contracts has been postponed, and the arrest of Baumgertner has made key customers wait.
Meanwhile, Belarus has won over Russian public opinion by “arresting an oligarch”. Russian internet fora visitors were ready to send other Russian oligarchs to Minsk to “face prosecution”.
The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.
In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.
The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.
There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.
That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.