Will Russia Provide More Loans to Lukashenka?

The Eurasian Economic Community (EurAsEC), a post-Soviet economic bloc led by Russia, agreed in May to extend a loan of USD 3 billion. According to the agreement, Belarus will receive the following funds: USD 1.24 billion in 2011, USD 800 million in 2012, and USD 1 billion in 2013. The first installment was received  by Minsk last week.

The provision of the loan does very little to end the economic crisis in Belarus. Alyaksandr Lukashenka himself stated in his interview on June 17, 2011 that dollars and and Euro would not appear in foreign currency exchange offices any time soon. Moreover, in 2011 Belarus will receive only an insignificant sum from the EurAsEC.

The loan extension does not mean that something changed in Belarus – Russia relations.  Russia appears determined to privatize Belarusian enterprises. “Privatization is the main factor of capital inflow. Therefore, there are conditions, connected with privatization of property to the sum of USD 7.5 billion, i.e. USD 2.5 billion a year in the contract. This condition will be retained for sure,” said the Minister of Finance of Russia Aleksey Kudrin after the EurAsEC Anti-Srises fund meeting, where the credit extention to Belarus was approved, on June 4, 2011.

The official representatives of Russia, including Kudrin, underscore that “Beltransgas”, “Belaruskali”, and Minsk Automobile Plant should be privatized (in other words, to be sold to Russia), first of all.

The Kremlin officials believe that Belarus will be able to avoid a default only in case of selling a part of state property. Sergei Shatalov, the EurAsEC Anti-Crisis Fund Director noted on June 14, 2011 that Belarus would not receive other credit tranches, if it failed to meet its contractual obligations or announced a default.

The Belarusian authorities hold the same position on the issue of selling the industrial enterprises to Russian companies as on other issues of ‘real integration,’ as seen by Russia. Thus, the Belarusian side did not refuse to discuss the issue of concluding the Constitutional Act of the Union State in 2002 – 2004. However, it insisted categorically on signing its version of the Constitutional Act, knowing pretty well that it would never be supported by Russia.

Similarly, the authorities do not officially rule out uniting monetary systems with Russia. However, they insist categorically on their version of the alliance. Accordingly, the National Bank of Belarus must enjoy the rights of the second emission center together with the Central Bank of Russia.

Having signed the contract on getting the credit, Lukashenka and the First Vice-Premier Uladzimir Siamashka articulated again the position of Belarusian side: the state shares of “Beltransgas” can be sold only in case if “Gasprom” agrees to supply gas to Belarus at Russian domestic prices.

Apparently, among other, the position of authorities on the sale of “Beltransgas” was influenced by forecasts of expert organizations on the gas consumption growth. In particular, according to the International Energy Agency updates, the quota of gas in the global energy balance - 2035 is expected to reach 25% to be compared to 21% nowadays. The authorities believe that “Gasprom” will require the Belarusian transit facilities to meet obligations on contracts with buyers in the EU member-states after the “Nord Stream” gas pipe line is put in operation.

On June 17, 2011, Lukashenka stated he did not object to the sale of state shares of enterprises. However, the Russian party is not happy with the articulated prices at all. In particular, Lukashenka valued “Belaruskali” at more than USD 30 billion. Apart from that, the Belarusian negotiators listed other terms of sale, never to be accepted by the Russian partners. Thus, the investors were urged to retain the high employment rate, increase the tax revenues and invest in the development of their enterprises after all.

Lukashenka also doubted that Russian oligarchs would develop the purchased enterprises and fulfil their commitments to the Belarusian state. He underscored that the state enterprises worked efficiently: “Our population owns USD 20 billion. Who will buy the enterprises then? You know, who has an eye on them, don’t you? Especially, on such an effective one, as “Belaruskali”. They propose me to privatize the best assets. Nobody will have an eye on poor companies.”

Lukashenka had stated repeatedly before that the sales of industrial enterprises would have created danger to the independence of Belarus. Following his recent statements, the position remained unchanged.

Lukashenka noted that there was a number of unresolvable contradictions in relations with Russia. Thus, a  Belarusian TV propagandist Prakopau put the following question to Lukashenka on June 17, 2011: “Why does Russia pursue the unfair policy in relation to Belarus and fails to support the ally during the crisis, like the EU backs Greece?” “Don’t provoke me! I have enough of it. Everyone understands that without saying. We will survive,” Lukashenka replied.

Andrei Liakhovich

Andrei Liakhovich is a contributing author. He directs the Center for Political Education in Minsk.
Belarus Digest