The Anti-Crisis Funds tranche came just in time
On April 30th, the National Bank announced the immediate availability of the next tranche of the EurAsEC Anti-Crisis Fund at Belarus’ Finance Ministry accounts.
Belarus’ failure to comply with a number of the loan terms did not hamper the funds’ transfer. The tranche was received on the last day of April, enabling to demonstrate the international reserves’ growth on May 1st, 2013. To maintain the international reserves at USD 8 billion Belarus needs additional loans, due to continuation of the negative trends in the foreign trade in 2013.
The allocation of the 5th tranche anticipated certain problems for the Belarusian government. In a letter of intent to the EurAsEC Anti-Crisis Fund, Belarus assumed an obligation to sell state property worth USD 2.5 billion by late 2012. The fifth tranche was transferred on April 30th regardless of Belarus’ failure to comply with this clause, which while not being mandatory, reflects Russia’s greatest interest. One possible reason for the timely transfer could be a series of agreements on military cooperation, which is a sensitive issue for Russia.
In April 2013 gold prices dropped – price of gold per troy ounce in the international markets fell by USD 129.25 per 1 ounce, which devalued Belarus’ gold reserves by USD 175-180 million. In addition, in April the National Bank paid USD 280 million on external public debt. Taking into account the potential foreign currency net supply from individuals, the international reserves could reduce to the NBB indicative value USD 8 billion. Availability of USD 440 million and its inclusion in the gold reserves as of April 30th, will enable to demonstrate the reserves’ growth, compared with April 1st, 2013.
Belarus can get the last tranche of the Anti-Crisis Fund not earlier than November 2013. Foreign trade balance is negative and the upwards trend is not observed. Monthly international public debt payments make at least USD 200 million. Stable and lasting net foreign currency supply from individuals should not be anticipated due to lower interest rates on ruble deposits. Domestic market borrowings are feasible, but their volume is not sufficient to maintain the national gold reserves at the desired level. Belarus needs new loans to support the economy amid certain crisis in the global economy.
Thus, Belarus once again found a way to convince Russia to allocate the necessary funds, allowing Belarus to show economic stability in Q1 and Q2 2013. But the country needs to find new credit sources, because there are no foreseeable incomes in the next six months, and she will hardly manage to maintain the international reserves at USD 8 billion without additional revenues.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.