Economic cooperation between Belarus and Russia is expanding
Vice-Premier Vladimir Semashko talked about the new plans to expand economic cooperation between Belarus and Russia. They include: MAZ-KamAZ holding, nuclear power plant construction, transferring potash trader under Swiss jurisdiction, Russian natural gas supply price reduction, and others.
At the moment it is difficult to say which of the aforementioned plans could be implemented, which are being implemented already, and which serve only as a tool for successful trading in main spheres of interest. In any case, Vladimir Semashko, while negotiating with Russians about cooperation terms was playing his traditional role: was overloading the other party with information and conditions.
In early July Belarus will sign a principal agreement with Russia for the construction of the first Belarusian nuclear power plant. Currently, preliminary works on the Ostrovets site, where nuclear power plants will be erected, have been finished: roads and railways were built. On July 31st, works on foundation pit will start.
Belarus’ First Vice-Premier Vladimir Semashko said, while speaking in the Parliament on June 22nd that a Belarusian-Russian holding Rosbelavto, merging MAZ and KamAZ will be created on the parity principle. The holding’s headquarters will be located in Moscow. Belarus’ input will be 75% minus one share of the Minsk Automobile Plant (MAZ), and Russian - 49.9% of KamAZ. KamAZ assets market value is assessed at USD 1.6 billion, MAZ – at USD 1.1 billion.
It is noteworthy that the holding will have control over MAZ (75% minus one share), while the majority of KamAZ stakes will be owned by other shareholders: Avtoinvest Limited – 24.53%, Daimler AG (Germany) - 11%, KAMAZ International Management – 4.25%, the European Bank for Reconstruction and Development - 4%, Decodelement Services Limited – 2.73%.
Belarus also believes there is a necessity to create other industrial holdings with the participation of Russian companies. Thus, Vladimir Semashko said the Belarusian State Association Gomselmash and the Russian group of companies Rostselmash plan to create a single management company on equal terms. Another option under consideration is co-operation between Minsk Wheel Tractor Plant (MWTP) and Russian GAZ.
Belarus is also studying a proposal concerning participation of Russian investors in Gomel Chemical Plant and OJSC GrodnoAzot, where a construction of a new production sight worth USD 1 billion is planned.
Soyuzkaly, a Russian-Belarusian fertilizers trader, set up on equal terms has been registered in Switzerland and will start operations in February 2013. The existing trader Belarusian Potash Company, which delivers potash fertilizers from Uralkaly and Belaruskali will continue operating until some time and later, apparently, will be winded up. In fact, Soyuzkaly is BPC, but with offices in Switserland.
Speaking in the Parliament, Vladimir Semashko also said that in the future, with the CES agreements taking effect, Belarus anticipated to buy certain amount of natural gas from Russian independent producers (Novatek and Itera) at prices lower than Gazprom’s. According to Vladimir Semashko, the average price of natural gas for Belarus in 2013 may be reduced compared with the actual operating costs in 2012 to USD 165.6 per one thousand cubic meters.
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.