Belarus and developing countries: South Asia in priority

Summary

The trend towards the intensification of foreign contacts observed in 2011–2014 was over in 2015. The stagnation in relationships with Middle East countries (except Turkey and Egypt) continued. Foreign policy contacts with African and Latin American countries were fairly limited. At the same time, the Belarusian diplomacy succeeded in arranging visits of the Chinese chairman and the president of India during the pre-election period and Alexander Lukashenko’s working visit to China to attend events timed to the 70th anniversary of the end of World War II.

In general, all last year’s high-level visits were made to or from Asian countries, Pakistan being the leader in terms of the number of contacts.

Trends:

• The reducing number of foreign contacts with developing countries;
• A shift of foreign policy and economic priorities to countries in South and Southeast Asia;
• The benefiting from the cooperation with Morocco, Ecuador and Turkey, bypassing Russian food anti-sanctions with the use of forged phytosanitary certificates;
• The further deterioration of the trade and economic cooperation with Venezuela, Nigeria and a number of other partners in Latin America and Africa due to the deteriorating economic situation in those countries.

In 2015, the intensity of the political and diplomatic cooperation between Belarus and developing countries decreased in comparison with the previous two years.1 Apparently, a certain ceiling of foreign policy activity of the Belarusian diplomacy in relations with developing countries was hit in 2014 (see Figure 1).

Pakistan: the year’s leader in foreign policy contacts

Belarus was actively developing political relations with India, Bangladesh and Sri Lanka in 2013, and Vietnam, Laos and Cambodia in 2014. Among the largest countries of South and Southeast Asia, Pakistan was the only one out of this list before 2015. The past year saw three high-level visits at once: Alexander Lukashenko made an official visit to Pakistan in May, Pakistani Prime Minister Nawaz Sharif made a reciprocal visit to Belarus in August, and Prime Minister Andrei Kobyakov was on an official visit to Islamabad in November. Also, the Belarusian and Pakistani presidents met in China. The diplomatic and business communities of Belarus and Pakistan exchanged visits during the year.

An endorsed Road map for bilateral cooperation in 2015–2020 envisages the establishment of joint ventures to assemble Belarusian tractors and motor vehicles in Pakistan, and a joint venture to produce textiles from Pakistani raw materials in Belarus. Pakistan is among the few developing economies, which procures a significant amount of Belarusian engineering products (mainly tractors). However, the country is neither among the top ten importers of Belarusian products in the third world, nor among top 10 largest exporters.

The relations with Pakistan stand out. The two countries formed a joint military-technical commission. A meeting between Foreign Minister of Belarus Vladimir Makei and the Minister of Defense of Pakistan Khawaja Muhammad Asif during the Munich Security Conference in 2015 was one of many Belarusian-Pakistani contacts.

Belarus hopes that economic benefits of the cooperation with Pakistan will increase as the implementation of China’s international infrastructure project Silk Road Economic Belt progresses.2 In spring, China and Pakistan agreed on a large-scale investment project: Beijing promised to invest US$ 46 billion in the development of Pakistan’s energy industry and infrastructure.

The Chinese-Pakistani economic corridor is supposed to connect Pakistan and Gwadar seaport near the Iranian border with Kashgar in the Xinjiang Uyghur Autonomous Region of China for the future transport feeder of the new Silk Road from Kashgar to the west and farther through Central Asia, Russia and Belarus that will connect China with the European Union.

So, in due course, Pakistan and Belarus can have an efficient transport link through China, Kazakhstan and Russia as a result of the major Chinese infrastructure project. However, it is doubtful that Belarusian-Pakistani trade will undergo significant changes even in the case of a reduction in transport costs. Lukashenko’s requirement to increase the trade turnover with Pakistan 10-fold to USD 1 billion a year looks unrealistic.

Asia and Latin America: imports pegged to potash; cooperative ties develop poorly

As before, the list of major importers of Belarusian products among the developing economies only contains countries of Asia and Latin America, which procure large amounts of potash fertilizers. In 2015, the list of the importers is as follows (highest to lowest in terms of Belarus’ export amounts): China, Brazil, India, Indonesia, Turkey, Bangladesh, Malaysia, and Vietnam. Venezuela finally dropped out of the ranks of Belarus’ main trade partners. In recent years, Belarus’ exports to Venezuela contracted 10-fold to only about USD 30 million last year.

Belarus attempts to set up assembly facilities in several developing countries (and has achieved some progress in talks with Pakistan, Indonesia, Bangladesh, Brazil and Ecuador in 2015) and promote its industrial commodities. Decisive successes were few last year.

Firstly, Belarusian OJSC Promagroleasing entered into a fairly big contract on supplies of 50 million dollars’ worth machinery and equipment manufactured by Amkodor to Bangladesh.

Secondly, Belarus reached an agreement on an increase in supplies of mechanical-engineering equipment to India, and negotiates the joint production of buses, trucks, municipal and road-building vehicles. India declared the readiness to lend USD 100 million for joint projects.

Thirdly, the Eurasian Economic Union signed an agreement with Vietnam on a free trade zone that can boost exports of non-energy commodities from Belarus.3

In Latin America, Belarus stepped up the relations with El Salvador, Nicaragua, Argentina and Mexico, and continued expanding contacts with Brazil and Cuba. Cooperation with Ecuador shows the highest dynamics: Belorusneft expands its presence in seismic exploration and oil extraction projects, and plans to set up the production of Belarusian engines.

Africa and the Middle East: the intractable area

There were no breakthroughs in the political and trade relations with the countries of Africa and the Middle East, except for skyrocketed imports from Morocco (see below). According to Deputy Foreign Minister Alexander Guryanov, Africa is an intractable area for Belarus.4 Successes in trade with the Middle East are also modest, not as much due to the instability in many countries of the region, as due to a negative trend in economic relations with Iran.

To date, Belarus has actually created four diplomatic centers in Africa – in South Africa, Nigeria, Egypt and Ethiopia–responsible for the promotion of relations in the southern, western, northern and eastern parts of the continent, respectively. In 2015, the diplomatic centers continued developing previous agreements with Mozambique and Nigeria on supplies of mining equipment and trucks, and negotiate the construction of a plant to manufacture Belarusian tractors in Ethiopia.

The preliminary agreement on the procurement of Belarusian machinery worth USD 150 million by Zimbabwe was perhaps the most media featured episode of Belarus’ trade cooperation with African countries in 2015. Belarusian delegations met with President of Zimbabwe Robert Mugabe twice, and the vice president of Zimbabwe visited Belarus. Exact terms of the contract are not known. It is likely that installments in several years were agreed upon. However, given Zimbabwe’s weak credit standing, no one can be sure that this contract will be fully executed even on soft terms.

Also, Belarusian delegations headed by Deputy Foreign Minister Vladimir Rybakov went to Algeria, Angola, Egypt and Mozambique. There were no highest level visits to the African continent, though. Alexander Lukashenko met with his Egyptian counterpart Abdel Fattah al-Sisi during a UN Summit in New York. They agreed to work out a road map for bilateral trade and economic cooperation.

Economic relations with Iran have been stagnating for years: in 2015, Belarus’ export turnover halved against 2012. During a visit of the Iranian foreign minister to Belarus, Alexander Lukashenko publicly admitted “a slowdown in the implementation of [joint] projects.”

The results of the April visit of the Iraqi foreign minister to Belarus were also minimal. Minsk is trying to put an emphasis on the trade relations with Iraqi Kurdistan as a relatively stable region of Iraq. Vladimir Makei visited Syria where, among other things, met with President Bashar al-Assad, but the future of the cooperation is very vague given the years-long civil war and the extremely difficult economic situation in the country.

Belarus maintains contacts with Turkey as a major political and economic partner in the region. After the incident with the Russian bomber shot down by the Turkish air force, Belarus took a neutral stance and tried to offer its peace-making services to the parties. Egypt and Turkey are the two Middle Eastern countries, with which the trade turnover has substantially increased in recent years.

Russian sanctions and the effect of the fictitious boost of trade with some developing countries

In late 2015, Morocco outstripped Lithuania in terms of total imports to Belarus (USD 300.1 million) and moved up to the top ten foreign importers. Among the developing countries, Morocco is only behind China and Turkey in this respect. Ecuador is surprisingly among the top ten importers too (see Figure 2).

These metamorphoses in foreign trade occurred because of the numerous cases of bypassing Russian sanctions against Western foods. Belarus massively imported fruits and vegetables from Western countries with forged phytosanitary certificates of Morocco, Ecuador, Turkey and other developing countries, and then supplied them to Russia.

For example, last year, Belarus became the world leader in the trade in peaches. According to the National Statistics Committee, Morocco, Turkey, Egypt and Ecuador supplied Belarus with 48,500, 31,100, 13,500 and 13,000 metric tons of peaches, respectively.5 The Russian Federal Veterinary and Phytosanitary Monitoring Service (Rosselkhoznadzor) found hundreds of forged certificates used by Belarus to issue re-export certificates.6

An investigation revealed that according to the Belarusian statistics, in 2015, Ecuador supplied 25,000 tons of apples to Belarus worth USD 16 million, which is twice as much as Ecuador actually harvested. According Ecuador’s foreign trade statistics, in 2015, exports to Belarus only totaled around 3 million dollars, mainly through the supply of roses.7

Conclusion

The year 2015 can be called a turning point in the relations with the European Union and the United States (a thaw in the relations and the lifting of most of the sanctions), while the relations with the developing countries8 can be described as a little step forward. The relations with Latin America and the Middle East kept slacking (except for Ecuador, Egypt and Turkey). It was uneasy to deal with African countries. South and Southeast Asia, particularly Pakistan, India and Vietnam, were chosen as a priority direction in 2015.

Technically, the Foreign Ministry of Belarus quite successfully followed Alexander Lukashenko’s instruction to develop relations with new partners among the developing countries. The problem is that stepped up political relations not always produce a positive effect on the economy. Lead-footed state-controlled enterprises fail to seize all the opportunities provided by numerous bilateral agreements.

Belarus intends to divide its exports between Russia, the EU and other countries in equal proportions.9 It should be noted that although the supplies of mechanical engineering products to the developing countries show some positive dynamics, but the progress is still inconsiderable. The same concerns the attempts to set up joint ventures and knockdown assembly plants. The Belarusian leadership tried to apply methods of cooperation they once used with Venezuela to other countries on the same scale but did not achieve much.

Meanwhile, Belarus is developing a legal framework for research collaboration with a number of developing countries. This progressive strategy is long-run and more sustainable but less profitable in the short to medium term than the simple expansion of trade relations.

Statements on the possibility for developing countries to approach the Eurasian Economic Union markets through Belarus are as realistic as the repeated statements on giving China a foothold for entering the EU market. Belarus could be an area of prime interest to India, Pakistan and others in search of approaches to the EEU market only if it secured a much better investment climate and less corruption than in other EEU member states, but this is not the case so far.