Minsk demonstrates readiness to make concessions to the Kremlin
On March 15th, Presidents Lukashenko and Putin will meet at the Supreme Council of the Belarus and Russia Union State meeting.
In the upcoming talks with Putin, President Lukashenko aims to agree on exchanging energy trade preferences within the Eurasian Economic Union, an important project for the Kremlin. Signals, sent by Belarus, indicate that Minsk is ready to waive at least part of the oil and oil products sales proceeds.
Belarus’ the most pressing economic issue to be discussed at the Supreme State Council meeting is the signing of the 23 million tons oil supply agreement for 2013. Belarus’ readiness to compromise is demonstrated by the replacement of the longtime negotiator - First Deputy Prime Minister Vladimir Semashko, known for his non-compromising negotiating style – with more diplomatic and pliant Prime Minister Myasnikovich. The replacement was signed by the President on March 4th.
Also, on March 6th, Belneftekhim management said about its readiness to cooperate with five selected Russian oil suppliers. This de facto monopoly of oil supplies to Belarus has already been criticized by the Belarusian government, but the President Lukashenko’s decision recognized Russia’s rectitude.
Thus, Belarus has demonstrated readiness to sacrifice part of its oil refining profits in exchange for requested oil supply volumes and preservation of the Eurasian integration links. In the given circumstances, this strategy is the most beneficial for Belarus since it does not require privatization of the Belarusian enterprises and envisages only reduced profits from crude oil refining, supplied on commission.
However, Russia’s response suggests that the Kremlin may not agree with this proposal. In particular, on March 4th, Union State Secretary Grigory Rapota said that the oil supply agreement was not likely to be signed at the Presidents’ meeting, because of the Union State Council of Ministers’ capacity in these issues.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.