elarusian President Alexander Lukashenko has just agreed to deepen the country’s economic ties with Russia. In the past, he persistently tried to preserve as much of Belarus’ sovereignty as possible, but now that the Eastern European nation faces Western sanctions, Lukashenko hardly had another option but to agree on the Kremlin’s conditions. What did Moscow demand from the Belarusian leader?
Over the years, Lukashenko and Russian President Vladimir Putin have held numerous meetings to discuss the future of the Union State of Russia and Belarus. This federal-type state entity formed in 1999, but has existed only on paper. Originally, the idea was to create a supranational entity that will have a common parliament, government, currency, judicial and tax systems, as well as a common political, economic, military, customs, legal, humanitarian, and cultural space. Now, more than two decades later, the two countries seem to have made some progress regarding the integration into the Russia Belarus Union State. But why did it take so long?
“We argued for a long time,” said Putin after the meeting with Lukashenko in Moscow on September 9. “Our Belarusian partners are difficult negotiators.”
Indeed, before the West imposed sanctions on Belarus due to the crackdown on anti-Lukashenko protests the summer of 2020, the Belarusian leader was determined not to make any significant concessions to the Kremlin. He was relatively successfully balancing between Russia and the West, but now his “multi-vector” foreign policy is over.
After neighboring Lithuania joined anti-Belarus sanctions, and decided to impose restrictions on the export of Belarusian potash through the Lithuanian port of Klaipeda, Minsk was forced to reorient its exports to Russian ports. It was a clear sign that Russia was the main beneficiary of the post-election turmoil that hit the former Soviet republic in 2020.
While he still had relatively good relations with the West, Lukashenko strongly opposed closer military ties with Moscow. Now that his space for political maneuvers is rather limited, he had to agree on building a joint combat training center for the Air Force and Air Defense near the city of Grodno, in Western Belarus. In addition, he accepted the integration roadmap which paves the way for closer economic ties between Moscow and its only ally in Europe. For the Kremlin, on the other hand, the energy aspect of integrations remains the top priority vis-à-vis Belarus.
"It is envisaged to conclude an agreement on the unification of markets of oil and oil products, as well as an agreement on a single electricity market," Putin stressed at the September 9 meeting.
The deal will undoubtedly keep Belarus in Russia’s geopolitical orbit, but will also help Minsk to bypass Western sanctions. For instance, Belarusian oil products can now be supplied to the single Union State market, and then exported to Europe. The only way for Brussels to prevent Belarusian products from reaching the European market is to impose additional sanctions to Moscow. Still, given the EU’s dependence on the Russian energy it does not seem very probable that the EU leaders will take such radical measures.
Russia, for its part, will continue supplying gas to Belarus at the price of $128.50 per thousand cubic meters through the end of 2022, which is far below the current price in Europe—about $650. At first glance, Lukashenko seems to have got a concession from Putin. However, it is worth noting that in May 2020—three months before the controversial presidential election—Lukashenko accused Moscow of selling natural gas to Germany under $70, while Belarus had to pay $127 per thousand cubic meters. Now that natural gas prices have doubled this year and are expected to continue to rise, Lukashenko’s energy deal with Putin will likely prevent Belarusian sanction-hit economy from sinking into deep crisis. That, however, does not mean that Belarus’ President got what he wanted.
Before the meeting with Putin, he reportedly insisted that Belarus should pay the same price for natural gas as Russia’s Smolensk Oblast. In addition, he demanded from Moscow to compensate Minsk for the so-called tax maneuver—a move that provides for a step-by-step reduction of Russian oil export duty from 30% in 2019 to zero by 2024, and a simultaneous increase in the mineral extraction tax. Also, according to reports, Lukashenko was hoping to receive a $3 billion loan from the Russia-dominated Eurasian Union’s Fund for Stabilization and Development. Instead, Russia agreed to provide Belarus with “only” about $630 million.
In order to keep receiving loans and subsidies from Moscow, Lukashenko will likely have to agree on other aspects of integrations into the Russia Belarus Union State. For now, he skillfully managed to avoid signing a deal that would approve the introduction of a single currency and a single emission center. Given that Russia has the upper hand in the Union State merging process, it is not very probable that a common currency, once introduced, will be printed in Minsk.
Finally, it remains to be seen if all points of the deal made between the Russian and Belarusian leaders will actually be implemented. As an experienced leader who has been in power for 27 years, Lukashenko will likely try to find a way to significantly slow down the transfer of competencies from Belarus to the Union State institutions.
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Is Russia Making Moves to Absorb Belarus?
Photo by Adobe Stock.
September 13, 2021
Western economic sanctions against Belarus are pushing the small Eastern European country to turn increasingly toward Russia. This could accelerate Belarus' integration into the Union State of Russia and Belarus, writes Nikola Mikovic.
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elarusian President Alexander Lukashenko has just agreed to deepen the country’s economic ties with Russia. In the past, he persistently tried to preserve as much of Belarus’ sovereignty as possible, but now that the Eastern European nation faces Western sanctions, Lukashenko hardly had another option but to agree on the Kremlin’s conditions. What did Moscow demand from the Belarusian leader?
Over the years, Lukashenko and Russian President Vladimir Putin have held numerous meetings to discuss the future of the Union State of Russia and Belarus. This federal-type state entity formed in 1999, but has existed only on paper. Originally, the idea was to create a supranational entity that will have a common parliament, government, currency, judicial and tax systems, as well as a common political, economic, military, customs, legal, humanitarian, and cultural space. Now, more than two decades later, the two countries seem to have made some progress regarding the integration into the Russia Belarus Union State. But why did it take so long?
“We argued for a long time,” said Putin after the meeting with Lukashenko in Moscow on September 9. “Our Belarusian partners are difficult negotiators.”
Indeed, before the West imposed sanctions on Belarus due to the crackdown on anti-Lukashenko protests the summer of 2020, the Belarusian leader was determined not to make any significant concessions to the Kremlin. He was relatively successfully balancing between Russia and the West, but now his “multi-vector” foreign policy is over.
After neighboring Lithuania joined anti-Belarus sanctions, and decided to impose restrictions on the export of Belarusian potash through the Lithuanian port of Klaipeda, Minsk was forced to reorient its exports to Russian ports. It was a clear sign that Russia was the main beneficiary of the post-election turmoil that hit the former Soviet republic in 2020.
While he still had relatively good relations with the West, Lukashenko strongly opposed closer military ties with Moscow. Now that his space for political maneuvers is rather limited, he had to agree on building a joint combat training center for the Air Force and Air Defense near the city of Grodno, in Western Belarus. In addition, he accepted the integration roadmap which paves the way for closer economic ties between Moscow and its only ally in Europe. For the Kremlin, on the other hand, the energy aspect of integrations remains the top priority vis-à-vis Belarus.
"It is envisaged to conclude an agreement on the unification of markets of oil and oil products, as well as an agreement on a single electricity market," Putin stressed at the September 9 meeting.
The deal will undoubtedly keep Belarus in Russia’s geopolitical orbit, but will also help Minsk to bypass Western sanctions. For instance, Belarusian oil products can now be supplied to the single Union State market, and then exported to Europe. The only way for Brussels to prevent Belarusian products from reaching the European market is to impose additional sanctions to Moscow. Still, given the EU’s dependence on the Russian energy it does not seem very probable that the EU leaders will take such radical measures.
Russia, for its part, will continue supplying gas to Belarus at the price of $128.50 per thousand cubic meters through the end of 2022, which is far below the current price in Europe—about $650. At first glance, Lukashenko seems to have got a concession from Putin. However, it is worth noting that in May 2020—three months before the controversial presidential election—Lukashenko accused Moscow of selling natural gas to Germany under $70, while Belarus had to pay $127 per thousand cubic meters. Now that natural gas prices have doubled this year and are expected to continue to rise, Lukashenko’s energy deal with Putin will likely prevent Belarusian sanction-hit economy from sinking into deep crisis. That, however, does not mean that Belarus’ President got what he wanted.
Before the meeting with Putin, he reportedly insisted that Belarus should pay the same price for natural gas as Russia’s Smolensk Oblast. In addition, he demanded from Moscow to compensate Minsk for the so-called tax maneuver—a move that provides for a step-by-step reduction of Russian oil export duty from 30% in 2019 to zero by 2024, and a simultaneous increase in the mineral extraction tax. Also, according to reports, Lukashenko was hoping to receive a $3 billion loan from the Russia-dominated Eurasian Union’s Fund for Stabilization and Development. Instead, Russia agreed to provide Belarus with “only” about $630 million.
In order to keep receiving loans and subsidies from Moscow, Lukashenko will likely have to agree on other aspects of integrations into the Russia Belarus Union State. For now, he skillfully managed to avoid signing a deal that would approve the introduction of a single currency and a single emission center. Given that Russia has the upper hand in the Union State merging process, it is not very probable that a common currency, once introduced, will be printed in Minsk.
Finally, it remains to be seen if all points of the deal made between the Russian and Belarusian leaders will actually be implemented. As an experienced leader who has been in power for 27 years, Lukashenko will likely try to find a way to significantly slow down the transfer of competencies from Belarus to the Union State institutions.
