Page 39 - bneMag April 2022 Russia living with sanctions

bne April 2022 Eastern Europe I 39
of Perm Krai. Our interests in potash are concentrated exclusively in this region.” Moreover, he added that if Uralkali received purchase offers from Belaruskali, it would not consider them.
The Chinese direction
Amid increasing isolation on the international arena and being left out to Russia’s grace, Minsk has turned to China, which is its traditional major partner for balancing out Russian dependence. Only this month, President Xi Jinping has praised bilateral co-operation between the countries twice in honour of the 30-year anniversary of establishing diplomatic relations.
Belarus in its turn has made several public announcements praising
the development of the countries’ bilateral relations, mostly in trade and investments, which is the main focus for the Belarusian regime.
However, the real benefits of Chinese-Belarusian co-operation are questionable, as Belarus has an immense trade deficit with China (totalling nearly $1,223,500,000 in 2020 according
to UN COMTRADE). Previous major Chinese investments in Belarus have also turned out to be disappointing for the Belarusian regime. Last year’s worsening relations between Belarus and the West was also a concern for Chinese investors, and no new major loans were given to Belarus from Chinese banks.
In fact, in August last year, China suspended the payment of the remaining $580mn for a loan to the construction
of the Nezhinsky mining and processing plant for potash in Belarus, an investment guaranteed by the Belarusian government. The suspension is thought by some to have been made due to the fact that the owner, Russian billionaire Mikhail Gutseriev, and the Belarusian bank holding the loans, Belarusbank, came under Western sanctions. However, some analysts suspect that the credit freeze was a Chinese attempt at exerting leverage over Belarus in order to drive down costs.
During last year’s migrant crisis at the Belarus-Poland border, there were
pronouncements from both sides of completely shutting down the trade routes with between the countries. Moreover, the state Belarusian media recently reported that over 5,000 trucks are waiting to pass from Belarus into Lithuania. Throughout last year, Minsk accused Vilnius of deliberately slowing down the major truck transport routes between the countries for political reasons.
In January this year, Belarusian Ambassador to China Yuri Senko assured Chinese state news agency Global Time that any rumours of the rail link between Belarus and Poland being shut down are false and promised that Belarus would ensure the “smooth transit” of Chinese goods. Moreover, Senko added that “we hope that Belarus will boost bilateral trade with China and use its geographical advantages to become a hub.”
The last 12 months haven’t been calm for the Chinese silk road, as projects
are being delayed in the Caucasus, Kazakhstan has experienced political unrest, diplomatic ties have worsened between China and Lithuania and now recently, war is looming between Russia and Ukraine. Since Belarus is a vital transit country for Chinese products
to the West, worsening Belarus-EU relationships are not in Beijing’s interest. At a time when such large geopolitical
Furthermore, since Ukraine’s conflict with Russia since 2014 made the Ukraine-Russia border a non-viable alternative to reach the Ukrainian market, Belarus quickly became important for the BRI project due to its proximity to and close trade ties with Ukraine. But lately these trade ties have also become sour due to Belarus’ participation in Russia’s military build- up along Ukraine’s northern, eastern and southern borders. Most recently, Ukraine heavily increased border checks for Belarusian citizens, probably due to heightened fears of Belarusian espionage after the Ukrainian special services claimed it had arrested a spy and provocateur of the Belarusian KGB.
With Belarus’ increasing international diplomatic and trade isolation, though, Russia clearly isn’t the only one winning Belarusian market shares. For instance, in January, state Belarusian state news service BelTA announced that the state- owned logistics operator Beltamozhservice would start co-operation with Chinese Taitong International Transport Company, so more transport co-operation is definitely under way.
The past two months' heavy praise for bilateral trade between the countries and for Chinese investments from Belarusian state officials could be interpreted as a
“During last year’s migrant crisis at the Belarus- Poland border, there were pronouncements from both sides of completely shutting down the trade routes with between the countries”
issues as a possible war are developing, Senko’s statement is undoubtedly
a reassurance to Chinese investors.
Although, one should question Senko’s statement on making Belarus a hub for the Silk Road trade. With an increasing number of sanctions and halted truck flows between Belarus and the EU, Chinese companies will definitely see fewer possibilities to reach western markets from Belarus.
genuine wish to move closer to China; And if Minsk wishes to balance its dependency on Russia, it will be forced to cater to Chinese investment and trade interests to a much greater extent than before. Now that Belarus’ relations with Lithuania have hit rock bottom, and its relationship with Ukraine is worsening by the hour, increasing rail traffic on Chinas Silk Road in order to also reach India and other large East Asian potash markets seem increasingly more probable."
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