Jun 30, 2021
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The European Union played into the hands of the Kremlin in Belarus

The European Union played into the hands of the Kremlin in Belarus

Photo: Ramil Nasibulin / BelTA / TASS.

Belarus may complete economic integration with the Russian Federation by the end of this year. This was announced on June 28 by the ambassador of the republic in Moscow Vladimir Semashko.

“There are such tasks as, as soon as possible, literally by January 1, 2022, to create a single market for oil, oil products, a single gas market, a single electricity market, a single transport market, conduct a single industrial and agricultural policy, and unify tax and customs legislation. That is, to create an economic base that will be very necessary and important for both Belarus and Russia “, – said Semashko.

The diplomat added that now the countries are in a “fundamentally new stage” and they have to move to a unified industrial and agricultural policy, create common markets for energy resources, transport, and unify tax and customs legislation.

Previously, the parties have already completed work on 28 road or integration maps. However, an agreement on deep integration was never signed – it was blocked by the President of Belarus. Alexander Lukashenko at the end of 2019 after negotiations with his Russian counterpart Vladimir Putin in Sochi. As a result, the integration process was paused. The main stumbling block for Minsk was the prices for oil and gas and the terms of their sale, as well as the desire to receive compensation for the tax maneuver in the oil and gas sector of the Russian Federation.

Now Belarus has suddenly decided to speed up the stalled integration process, which is not surprising, given that on June 24, sectoral sanctions of the European Union were first introduced against the republic. The EU has completely banned the import of Belarusian oil products and potash fertilizers, which is at least 13% of the total export of the state. Financial restrictions were also introduced, for example, closing access to European capital markets, a ban on insurance of the Belarusian government and state bodies.

In response, Alexander Lukashenko promised to show “these scoundrels” that their sanctions are “their impotence”. On June 28, on the same day as Semashko’s statement, it became known that Belarus had decided to temporarily withdraw from the EU’s Eastern Partnership program, which was launched in 2009 to strengthen “political association and economic integration” between the member states and the EU. In addition to Belarus, it includes Ukraine, Moldova, Armenia, Georgia and Azerbaijan.

In general, it turns out that until the roast cock in the form of European sanctions pecked the Belarusian president, he was not very interested in economic integration with Russia. Now it turns out that everything has already been agreed and it needs to be forced. It is just right for Vladimir Putin to thank the “European partners” for such assistance in the negotiation process.

Another question is how real this integration will be, or will it boil down to the fact that Belarus, as before, will be a recipient of Russian aid and benefits, giving little in return. In June, the Russian Ambassador to Minsk Evgeny Lukyanov stated that the Russian-Belarusian integration does not provide for the absorption of the economy of Belarus and may be beneficial for both countries.

Famous political scientist Marat Bashirov believes that now it is difficult to say how real Minsk’s intentions are, but he does not have much choice.

– The Belarusian authorities are inconsistent in their course towards integration. Often external factors force them to speed up this process, but when these factors become more favorable, they slow down everything.

Now all these statements are connected only with sanctions pressure and the realization that budget revenues will begin to fall and, accordingly, there will be less money to maintain social stability.

“SP”: – Will the integration result in subsidizing the Belarusian economy by Russia?

– It depends on the parameters of the interaction. If customs and tax systems are balanced, no subsidies will be required, there will be a single market. True, questions will arise related to forecasts for the revenue side of the budget of Belarus. When you have a single market, you also have direct competition. And in the face of direct competition, Belarusian enterprises, it seems to me, will lose to Russian ones, because they have modernized quite well in recent years.

But it is important to understand that Minsk will no longer be able to keep everything as it was. Get the same income base while retaining property rights too. This is no longer about the pros for Minsk, but about how many minuses there will be and to what level of losses they are ready to move.

“SP”: – But they have no alternatives?

– Well, why. The world is big, perhaps they will find some other partners, for example, China or other players.

Political scientist, head of the “Political Expert Group” Konstantin Kalachev believes that integration depends on whether Alexander Lukashenko is ready to admit large Russian capital to his market.

– Real economic integration between Russia and Belarus will become possible when there is free movement of capital between the countries. With the movement of labor and citizens, everything has been clear for a long time, the question is whether large Russian business will be able not only to invest in the creation of production facilities from scratch, but also to buy backbone Belarusian enterprises that Lukashenka did not allow to buy earlier.

One thing is a common energy market or the unification of legislation, and another thing, under whose control will be the main means of production and large Belarusian enterprises. In Russia, there is an interest in acquiring, for example, potash assets, and not only them.

Sincerity of intentions is manifested not only by declarations and statements, but also by real actions. In the struggle for the sovereignty of Belarus, large Russian business practically did not allow Lukashenko to enter the republic. Whether something has changed is the most interesting question.

The fact that deepening integration with Russia in the context of European sanctions is becoming the only way out for Minsk is obvious. But life will show how far the current Belarusian leadership is ready to go.

“SP”: – Representatives of Russia have repeatedly said that deeper integration does not mean the absorption of Belarus. Will Lukashenka perceive the desire of Russian capital to enter the country precisely as a takeover?

– One thing is political absorption and joining of Belarus to Russia as one of the subjects, and another is economic integration. There are many examples of sovereign countries whose key assets are controlled by transnational corporations, and nothing terrible happens.

Of course, our ambassador should say that there will be no absorption of the Belarusian economy. But the question is who is ready to invest in someone else’s, if you can invest in your own. Belarus will need investments and investors, but what guarantees will they receive? What will Minsk offer them? Will they be able to get controlling stakes in Belarusian enterprises and guarantees of their safety?

In words, it is clear that we are making statements so as not to disturb the peace of mind of Mr. Lukashenko, who is spinning like a frying pan, in order to ensure his political survival, and not to lose what he devoted his whole life to – the sovereignty of Belarus. But economic and political sovereignty are different things.

Until recently, economic cooperation between Russia and Belarus, it must be admitted, was flattered by the latter. Former Ambassador Babich spoke about this a lot, who stated that Russia was actually subsidizing Belarus. Is Minsk ready to switch to other relations now?

We have before our eyes another example – Abkhazia. If land were sold there, Russian hoteliers would have built luxury hotels there long ago, and not only economical but also spending a lot of money, Russian tourists would go there instead of Sochi or even Turkey. By and large, with Belarus now the same story – either-or.

We can come to a relationship in which Russia minimizes losses and at least reaches zero, so as not to frighten an ally. But business thinks not only about minimizing costs, but also about profits.

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