On February 12th, Russia’s Deputy Prime Minister Dvorkovich visited Belarus.
Modernization plans and foreign debts payments require significant financial resources. Russia remains the only major potential creditor. Russia links loans to implementation of joint projects. Investors from other countries will be directly or indirectly limited by requirement to provide loans.
The State Programme for Belarus’ Industrial development until 2020 envisages, that the economy requires USD 10 billion annual net profit for industrial modernization. Belarus’ economy net proceeds in 2012 were USD 8.6 billion. Foreign investment is needed. In 2013 it is planned to attract USD 4.5 billion net FDI.
Economy Ministry compiled a list of 800 companies, which can be sold to domestic and foreign investors. The State Property Committee plans to make USD 5 billion from the sale of minority stakes in 103 enterprises, including Belaruskali, Naftan, GrodnoAzot.
The State budget cannot be used due to the high foreign debt payments: in 2013 the state has to pay off USD 3 billion. Russia can provide loans, but only for implementing joint projects.
On December 12th, Deputy Prime Minister of Russia Dvorkovich visited several companies in the country’s three regions. Formally, the countries are talking about joint ventures, but the example with Rosbelavto demonstrates that Russia will insist on having a controlling stake in joint ventures and will acquire shares needed control a company. It is planned to establish two joint ventures for the potash fertilizer production: one based on GrodnoAzot, and another joint venture based on Integral and Gomselmash. A signal of Belarus’ compliancy was closure of the issues regarding establishing of a joint trader Soyuzkaly – negotiations lasted for a long time.
In late February fulfillment by Belarus its commitments to the EurAsEC Anti-Crisis Fund will be considered. Privatization condition (USD 2.5 billion annually) was not fulfilled. Belarus has received a clear signal that failure to implement this condition will result in delays with the allocation of the loan’s next tranche – as it was with the 4th tranche.
An additional incentive for the government is the situation on the currency market. The fourth tranche was spent entirely to reimburse the outflow of foreign exchange reserves.
Thus, Dvorkovich’s visit has identified the “first round” companies, the management of which could be taken over by Russia through joint ventures. Belarus will still attempt to negotiate the price, but unlikely will be able to delay the privatization process indefinitely. In any case, negotiations on long-term project MAZ-KAMAZ are moving to their final stage, and the harmonization of the conditions to establish a joint venture Soyuzkali is almost complete. In the meanwhile, the deal with establishing a joint venture based on MKZT could be finalized sooner than others.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.