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Opinion
March 1, 2019 www.intellinews.com I Page 19
COMMENT:
Belarus’s post-Soviet theatre, opportunistic technical fiddling or Putin’s ace in the hole?
Gunter Deuber of Raiffeisen Research and Marcus How of Vienneast
Alarm bells have been going off in Belarus, which may be cut off from the generous Russia has granted the republic for decades. Like with so much in Central and Eastern Europe (CEE), it began with energy: the Russian reform of its oil sector – known as the “tax manoeuvre” – paved the way for the abolition of export duties over 2019-2024, offsetting the cost through tax increases elsewhere.
Minsk has been seriously worried by the proposals. Given that the country was enjoying tariff-free oil exports from Russia on account
of their privileged trading relationship, the
tax manoeuvre winds back a subsidy of the Belarusian oil sector. Estimates of the costs to the Belarusian budget by 2024 range between $8-12bn. The state-owned sector, which is dominated by energy-intensive industry, is already overleveraged and could take a hit.
Negotiations over bilateral economic issues began in the summer, but despite agreements in other areas, Moscow held out on the tax manoeuvre. Once tabled in the autumn, Minsk demanded,
with increasing anger, compensation; to, which Moscow responded – with typical legalism – that any such compensation would be conditional on deeper integration, as stipulated in the terms of the 1999 “Treaty on the Union” between Belarus and Russia.
The relations between Moscow and Minsk are changing and entering a crucial two year period
After a series of heated exchanges, during, which Belarusian President Alexander Lukashenko warned that Russia was risking its only remaining Western ally by threatening its sovereignty, a more conciliatory tone was struck: in February, Lukashenko remarked that unification could be achieved with ease on the technical level, but questioned the popularity of such a move.
The signals were mixed, to say the least, reflecting first and foremost the increasingly volatile interdependence between Russia and Belarus. In this sense, the flaring tempers were just another episode of post-Soviet theatre.
Neither side is likely to initiate a full “political merger”. Moscow, in particular, rarely prevaricates when taking sweeping external policy moves, as its actions in Georgia and Ukraine demonstrated. Therefore, reasonable doubt exists that talk of “uni- fication” is nothing more than a distraction. None- theless, negotiations show that Russia and Belarus are facing a strategic juncture in their relations. If Moscow is serious, Minsk is between a rock and a hard place; Russia remains by far its most impor- tant trading partner and foreign investor, making any radical rupture (such as Belarus leaving the Eurasian Economic Union) highly unlikely.
Minsk must choose between sacrificing its prized sovereignty for money or accepting a period of