Belarusian-Russian Relations: Mild split-off

Summary

Belarus and Russia entered the year 2017 with disputes virtually all across the board, but managed to resolve all major disagreements and substantially advanced in settling minor ones by the end of the year. The interdependence and, accordingly, interaction between Moscow and Minsk decreased in comparison with the pre-conflict period. Most likely, Russia’s autonomization and strengthening of Belarus’ sovereignty will continue in 2018, ensuring relatively stable consolidation of ‘regressive’ integration.

Trends:

• The allied states achieved a considerable progress in settling a number of serious conflicts and disputes;
• The bilateral trade turnover was growing amid the improving external situation;
• The trend towards ‘sovereignization’ and split-off continued. Belarus was falling behind Russia in this respect.

Peace phase

In 2017, the year of the 25^th anniversary of the establishment of diplomatic relations between Belarus and Russia, the countries entered the usual mode of ‘regressive’ integration, which suggests that any rapprochement is accompanied by a conflict and its subsequent settlement at the turn of a new ‘normality’, which means a certain revision of previously reached agreements. The past year is exemplary in this regard: the acute conflict over oil and gas supply terms and less intense disagreements on trade, foreign policy and the state border ended with resolution of all major disagreements and a substantial advancement in settling minor ones.

Tensions increased in the first quarter of the year. After Belarus introduced short-term visa-free regulations for citizens of 80 countries, Moscow’s criticism of Minsk’s visa policy was added to the list of disputes, and additional border crossing obstacles were posed. Upon the order of Russian FSB Director Alexander Bortnikov, control zones began to operate on the border shared with Belarus, and all flights between the countries were transferred to the international terminals of Russian airports. Also, Moscow suspended a loan from the Eurasian Fund for Stabilization and Development. Minsk, in turn, stalled the signing of the Agreement on the Customs Code of the Eurasian Economic Union and ignored EEU and CSTO summits.

In April, after several rounds of talks, the parties managed to resolve the energy dispute and restore the status quo in oil and gas supplies. After suffering significant losses and having failed to achieve advantages over the long period of confrontation, Minsk recognized and paid off USD 726 million of the debt for gas supplied during the conflict. Moscow resumed oil supplies in full. According to the reached agreements, which guaranteed oil supplies until 2024, Belarus will receive 24 million metric tons of Russian crude oil per year (18 million will be directed to Belarusian refineries in 2018, and 6 million will be subject to customs ‘re-clearance’ and Belarus will keep the customs duties). The gas agreement covers 2018 and 2019. The gas price will still be calculated according to the old disputed formula, but reduction factors will be applied that, despite the expected increase in gas prices, can partially compensate for the losses incurred in 2016 and early 2017.1

Once the oil and gas conflict was over (the longest one in the history of the Union State) and a number of less important issues were resolved, Minsk resumed participation in EEU integration processes and Moscow resumed the EFSD loan.

Trade: general indicators

Russia remains the largest sales market for Belarus, accounting for 43.9% of Belarusian exports and 57% of its imports. In terms of export diversification, little has changed over the past five years: only in 2015, the proportion of the Russian Federation in Belarusian exports fell below 40%. In other periods, its proportion in foreign trade in goods ranged 42% to 46% of Belarus’ total exports.2 Belarus is among Russia’s top five major trading partners.

Last year’s revitalization of bilateral trade (a 24.2% increase) was in many respects driven by the favorable external situation and recovery of Russia’s economy from recession. Analysts say that economic growth was more like restorative rather than structural and good indicators were achieved thanks to the low comparative base. Besides, the growth rate still does not correspond to the economic capacity of Belarus.4 Oil and gas agreements with Russia reached in April 2017 contributed considerably to the trade turnover increase.

Belarus mainly supplied Russia with trucks, agricultural machinery, dairy, and railway cars. Analysts also point at a 290% increase in supplies of potash fertilizers to the Russian market (in money terms), although Russia hosts one of the world’s largest producers of potash fertilizers Uralkali, a direct competitor to Belaruskali.

Not very good news is that Belarusian exports were growing slower than imports from Russia, resulting in a 50% increase in the trade deficit. The recovery of the Russian market does not automatically restore the position of Belarusian producers there, because ambitions of Russian competitors grow along with the economy.

Potential conflicts

Belarus and Russia resolved all conflicts by the end of 2017. However, disagreements were still there, as cooperation benefits were fading.

The talks on the terms of gas supplies to Belarus after 2020 lasted throughout 2017 and continued in the first half of 2018. By July 1, 2019, the parties agreed to draft an agreement with a formula for calculating a gas price for Belarus in 2020-2024. The work on the draft is anything but simple, which is understandable given Minsk’s aspiration to tackle an extremely difficult task: to achieve a gas price ‘equally profitable’ with the price for the Smolensk region of Russia from January 1, 2025. Today, the price for Belarus is almost twice the price for Smolensk.

Rosselkhoznadzor’s regular claims to Belarusian made foods and other restrictions on supplies of Belarusian products to the Russian market cause disputes as well. Russia can use the EEU Customs Code launched January 1, 2018 as an additional tool to limit supplies of Belarusian products to its market.

The status of the Belarusian-Russian border, visa policy and the Russian border control program signify new collision points.

Also, Moscow is intensely irritated by Minsk’s foreign policy relations with Kiev and the West.

Information and foreign policy disintegration

The growing confrontation between Russia and the rest of the world created an unfavorable foreign policy background that naturally affected the information sector. In 2017, Minsk was subjected to a series of information attacks. Some Russian media outlets claimed in February that Belarus was going to withdraw from the Collective Security Treaty Organization and the Eurasian Economic Union.

The media coverage of the joint Belarusian-Russian military exercise West-2017 (September 14-22) in Russia and Europe posed the most significant challenge to information security of Belarus. Minsk’s reputation was mainly damaged by the West-2017 scenario, which involved Belarusian and Russian forces (‘North’) facing a combined invasion by three imaginary nations Vesbaria, Lubenia and Veyshnoria (‘West’). Efforts of the Russian mass media and the critical attitude of Polish, Ukrainian and other countries’ observers had a negative effect, and many Belarusian experts began saying that Belarus lost the information war to Russia. The assessment of the war game was ambivalent, though. Many respected experts welcomed the openness of the exercise and effectiveness of press services. It helped strengthening the image of Belarus as a sovereign state.

Also, Russian media accused the Belarusian leader of ‘mild Belarusization’ of the country in December 2017. Lukashenko angrily responded, ‘What am I supposed to do here? Germanization?’

Anyway, the events of 2017 demonstrated the inertia of the Belarusian leadership in countering information attacks of the Kremlin. Information threats and risks became more obvious and led to a series of significant personnel reshuffles in the media.5

Conclusion

Beside the remaining contradictions regarding access to each other’s markets, Moscow’s conflict with the West and Ukraine adversely affects the dynamics of Belarusian-Russian relations. U.S. sanctions against Russia will require more cautious behavior of the Belarusian leadership in foreign policy maneuvering, because the sanctions weaken Russia as a political and economic ally. All this gets even more complicated since Moscow intends to determine Belarus’ foreign policy and restrict its sovereignty.

At the same time, the rise in oil prices, difficulties with financing of alternative oil and gas transit ways (Nord Stream 2) and Soviet legacy industry in Belarus generate a strong mutual interest of the parties in maintaining cooperation.

It is important that, although the degree of reflection of vicissitudes in Russia’s relations is still high, the methods of settlement of disputes have become milder than in previous years. This means that Belarus and Russia go through a period of adaptation to decreased expectations for mutual cooperation and are getting used to the new ‘normality’ in bilateral relations.