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December 21, 2018 www.intellinews.com I Page 2
Belarus-Russia energy dispute snowballs
The end of the oil subsidies could derail the nas- cent Belarusian recovery and will cost Minsk bil- lions of dollars in lost income. Belarus’ President Alexander Lukashenko caught the headlines over the weekend by claiming Russia was attempting to annex Belarus by using energy as a tool.
The Belarusian leader believes that under the pretext of "deep integration" Moscow wants to include his country in Russia. He stressed that he clearly understands all the hints, but believes that sovereignty for Belarus is “sacred”.
“If they want us, as [Russian nationalist and LDPR leader Vladimir] Zhirinovsky proposed, to be made a region and shoved into Russia, this will never happen. And if the leadership of Russia is thinking in these terms, this is to the detriment of Russia itself... For us, remember, sovereignty is holy,” the Belarusian leader said.
These statements appeared against a background of a meeting between Russian Prime Minister Dmitry Medvedev with his Belarusian counterpart Sergei Rumas in Brest the same day, where they discussed progress in creating a common mar- ket under the auspices of the Eurasia Economic Union (EEU).
"Russia is willing to move further in the develop- ment of the Union State [between Belarus and Russia], which would include the establishment of
a common issue centre, a common customs agency, a common court and a common accounts chamber in the sequence specified in the ... 1999 treaty on the formation of the Union State," Medvedev said. "In this respect, it is necessary to implement common tax and pricing policies in the areas that are beyond the competence of the Eurasian Commission."
The statement has immediately triggered worries in Minsk over a possible attempt by Moscow to
launch new economic, trade and military aggres- sion in the region against its post-Soviet neigh- bour, which could follow the Kremlin's annexation of Ukraine's Crimea in 2014 and fuelling of the Donbas military uprising.
Multi-billion losses
The Russian government is about to implement a crushing change for Belarus' battered state budg- et by cancelling exports of petroleum products. The so-called 'tax manoeuvre' in the Russian oil industry envisages a gradual reduction in the rate of export duty on oil and petroleum products from 30% to zero in the period from 2019 to 2024 and a proportionate increase in mineral extraction tax on oil production.
Minsk’s newly-appointed ambassador to Russia Vladimir Semashko said in November that the oil and gas negotiations with Moscow have brought little progress so far.
According to the Belarusian finance ministry,
the country’s budget revenue losses from the tax manoeuvre in 2019 alone have been estimated at BYN600mn ($300mn), and the losses might total $2bn by the end of 2024.
On December 8, a spokesperson for Lukashenko said in a televised interview that Minsk already lost $3.6bn due to Russia's cut of energy subsi- dies to Belarus. Due to Moscow's 'tax manoeuvre' Belarus will lose an extra $11bn within the next four years, the spokesperson added.
Belarus’ foreign exchange reserves increased by $181.3mn, or 2.6% month-on-month, to $7.108bn in October. However, significant part of the re- serves were created by bonds issued by the National Bank of Belarus (NBB), which the regulator should repay within the next 12 months. The bond- holders of these notes are local commercial banks.
"Our main trading partner is not Germany,
Mr Putin"
On December 6, a bitter dispute broke out be- tween Lukashenko and his Russian counterpart