Why Alexander Lukashenko quarrel with Russia

The President of Belarus at his big press conference, made several critical statements against Russia. He accused Moscow of violating international agreements in connection with the restoration of border areas, instructed to open a criminal case on the head of the Rosselkhoznadzor Sergey Dankvert “for damage to the state,” and also said that Belarus can do without Russian oil. According to the Belarusian leader, the deterioration in bilateral relations occurred due to the fact that “Russia has a suspicion that Belarus will go to the West”.

“There’s a bribe for you all”: Lukashenka told reporters on Russia

Why Russia strengthens the border with Belarus?

1 Feb Internet-portal of legal information was published three order of the FSB Director Alexander Bortnikov on the establishment of the border zone on the borders of Smolensk, Pskov and Bryansk regions of Belarus. In these areas there will be points of entry and warning signs.

Such zones between the two countries has not been since 1995 when Russia and Belarus formed the Union state. They appear to “create the necessary conditions for the protection of the state border of the Russian Federation”, – stated in the documents. The FSB initiative is a preventive measure against possible border crossings by third country nationals, told journalists on 2 February, the Ambassador of Russia in Belarus Alexander Surikov. Russia, according to him, alarmed by the decision of the President of Belarus Alexander Lukashenko on the introduction of a visa-free regime for citizens of 80 countries.

About Lukashenka’s decision to do this for those who arrive to Belarus for tourism purposes for up to five days via Minsk airport, it became known on 9 January this year. In this order Bortnikov was signed on 29 December last year. First Deputy Chairman of the Duma Committee for CIS Konstantin Zatulin (“United Russia”) said that the decision of the FSB is fully justified: “And what counted Lukashenko, allowing visa-free entry in your country? Persons whose stay in Russia is undesirable, could just cross the border by car?”. The head of the Duma Committee on CIS Affairs, Communist Leonid Kalashnikov also linked the resumption of border checks with national security.

On 3 February, the press service of the Kremlin assured that the border zone regime will apply only to third country nationals, and for citizens of Russia and Belarus will not change anything. In the comments emphasized that the initiative of the FSB, “not innovation” because in September 2014 Lukashenka himself directed to establish a border area with Belarus.

The former head of the Federal migration service Vyacheslav Postavnin pointed to the fact that in the border area, checking documents can be total, thus, the citizens of the Union state may have to show documents when crossing the border. Still this was not required.

Problems crossing the Russian-Belarusian border started in 2014 after the introduction of Russia restrictions on the import of products. Because Minsk refused to take similar measures, supply of banned products to Russia via Belarus has become a profitable business.

In November of that year, Russia tightened border controls — all trucks, including transit, were checked at the Russian checkpoint, even after inspections by Belarusian customs officers. Prior to that, trucks were examined only at the external border of the Union state.

At the end of 2016, problems have arisen from citizens of third countries: in September, a bus with Austrian tourists were not allowed from Belarus to Russia through the checkpoint on the M1, they had to find alternate routes, wrote “Kommersant”. The official representative of Russian foreign Ministry Maria Zakharova at the end of the year, said that for many years the aliens freely crossing the border without going through passport control, but the world situation has changed dramatically. Now foreigners can enter Russia only through special checkpoints, Zakharov pointed out.

For Alexander Lukashenko wants to put Sergey Dankvert?

The public conflict between the Belarusian President and the head of Rosselkhoznadzor Sergey Dankvert began at the end of 2016. In an interview with the Russian official said that Belarusian suppliers of products to the quality which the Agency Dankvert regularly have questions behave “unfair” and “I want to take advantage of the situation when the Russian market closed for deliveries from the EU, from the Ukraine.” A few days later, Alexander Lukashenka gave an assessment of such an application. “We have, even if everything will be fine, such figures as Dankvert and other, spit upon, belie and obgadit, as it was recently. It was a piece of meat from Belarus or a glass of milk, or a piece of bread stuck products are not the same. And the government is silent”, — he said at the December meeting on the draft Treaty on the Customs code of the EAEU.

February 3, Alexander Lukashenko said that the Rosselkhoznadzor is detrimental to Belarus, preventing the import of Belarusian foodstuffs to Russia. On the same day announced that from the 6th of February, the Rosselkhoznadzor stops the supply of beef and beef offal from the Minsk region of Belarus.

How to change Belarus ‘ relations with the West?

“The deterioration [in relations] is because Russia has a suspicion that Belarus will go to the West <…> It is an agreed position, which has pushed me my friend Vladimir Putin”, — said on Friday Lukashenka.

For the first time sanctions against Belarus for violation of human rights and democratic procedures of the EU introduced in 1998, then the visa restrictions were imposed on 131 Belarusian officials, including Lukashenko. But in recent years, Belarus was slowly drifting towards the European Union. In 2015, Alexander Lukashenko agreed to pardon political prisoners. In February 2016, the EU lifted sanctions against the President, government officials and companies.

The economic effect of the lifting of sanctions has not given, reported on Friday Lukashenka. Haven’t managed to finalize and the International monetary Fund.

In the beginning of the year, Minsk agreed with Brussels on the construction of centres for migrants, including trying to get from Russia to Poland via Brest. The European Commission will allocate for the construction of centres €7 million.

The strengthening of the position of Belarus on the international arena contributed to the conflict in the Donbass. Although official Minsk does not recognize the joining of Crimea to Russia, the Belarusian capital became the main negotiating forum of the international contact group on Ukraine. In 2014, the capital of Belarus for talks with the presidents of Russia and Ukraine first came the Supreme leadership of the European Union, and in February 2015, French President Francois Hollande and German Chancellor Angela Merkel. Although Lukashenko at the negotiations on Ukraine was not involved, the rights of the owner of the site, welcomed the guests.

“Well, I don’t have already the latest [dictator]. You just said that there are dictators even worse than me. No? I have the lesser evil?” — ironically, the President of Belarus in an interview with Bloomberg in March 2015.

What is happening with the Belarusian economy?

The Belarusian economy is in prolonged recession: according to the national statistics Committee, in 2015, the Republic’s GDP declined by 3.8% in 2016, by 2.6% in the current year’s growth is not guaranteed, wrote in the January review, the experts of the Higher school of Economics (HSE). Belarus — the only CIS country, whose economy in 2017 will be reduced, analysts said Moody’s Investors Service.

The situation with the recession in the country, “stuck”, and affect not only her external environment and oil prices, or potassium chloride (fertilizer accounts for 12% of the Belarusian export. — ), said Dmitry Kruk, researcher at the Belarusian economic research and educational centre (outreach, a joint project of the Stockholm Institute of transition Economics and Economic education and research consortium). According to him, the main factor of the crisis last year was the “structural compression”: many Belarusian enterprises in the current environment is not competitive, because of what they have is not just to limit production, but to stop working. To grow the economy will start only if the improvement in the external situation “overpower” the “structural compression”, says crook. The government of Belarus is configured much more optimistic — predicts GDP growth of 1.7% in 2017, said last autumn, Prime Minister Andrei Kobyakov.

The unresolved oil dispute with Russia carries the risk zone of Belarusian trade, lending, transit and social stability in General, experts say the HSE. To assess its impact on the production of enterprises, it is difficult, specifies the crook, however, according to him, large-scale reduction of oil supplies from Russia may lead to declining domestic supplies in other industries, which are defined “top-down” manner, and to the reduction of benefits. With regard to trade, the situation in it because of a dispute with Russia will worsen, but “not dramatically,” large-scale threat to financial stability is not here, he said.

The country’s budget remains in surplus in 2016, the excess of income over expenditure amounted to 1% of GDP (data from the Belarusian Ministry of Finance). “The surplus will be fully applied towards the repayment of public debt and the execution of government guarantees”, — said the Deputy Minister of Finance Yuriy Seliverstov. To achieve a positive budget balance of Belarus helped improve the macroeconomic and, as a consequence, the budget parameters at the end of last year, noted in the review of February 2, 2017 Sberbank CIB analysts. They attributed this to the weakening of the Belarusian ruble against the Russian, which “have contributed to intensifying trade between the two countries and a significant increase in export-oriented industries [Belarus], such as the food industry”. The Belarusian ruble for the last year (to 3 February 2017) fell to the Russian 15%, from the data of the Bank of Russia.

According to the forecast of Sberbank CIB, the weakening of the Belarusian currency to the Russian will continue and this will help the budget, which is suffering due to the reduction of revenues from export duties. According to the official plan, the budget surplus in 2017 should reach 1.5% of GDP, analysts of Sberbank CIB — 0,8%.

Budget surplus in Belarus does not reflect the excess income, and the need to strictly economize on costs in order to accumulate financial reserves in conditions of high foreign debt-service costs. So, in January—September 2016 the government paid about $2 billion external debt and almost a third of these payments have been financed by budget surplus, according to a review of the world Bank for the Belarusian economy for December 2016.

Budget surplus “is achieved by transactions such as directed lending through the banks or the budget and operations of the national Bank,” write economists from the HSE. “In the absence of significant external funding, these operations can not continue because their ultimate effect on the budget deficit or balance of payments deficit,” — said in their review.

Duties on oil products, which are credited to the Belarusian budget in agreement with Russia, though considered income, but go directly to pay off foreign debt, so the “economic fact” of surplus there is, “roughly speaking, zero,” says Kruk. The emergence of a surplus, he said, affects “implicit fiscal rule”, which includes cuts in capital expenditure over the last five years, they decreased from 8 to 3-4% of GDP.

In Belarus high inflation: at the end of 2016, prices rose 10.6% (previous year was 12%). The national Bank of Belarus aims at the reduction of consumer prices to single figures (9%). The controller declares a “neutral” monetary policy as a warning about the risks in its easing (devaluation) and stiffness (braking business initiatives and economic growth). Now the size of the refinancing rate in the country is 17%, but subject to the “slowing down of inflation and the stability of the balance of payments” the national Bank is ready to reduce the rate to 14-16%.

As to the attacks of the President of Belarus will Russia react?

The Kremlin press service, on the one hand, stressed that Moscow attaches great importance to the development of the Union state of Russia and Belarus, on the other — reminded that Russia continues to provide massive economic and political aid to Minsk. In the presidential administration said that from 2011 to 2015, Belarusian partners were delivered duty-free from 18 million to 23 million tons of oil annually, which the Russian budget has received less $22.3 billion, in addition, the Eurasian Fund of stabilization and development of the Belarusians has provided loans of $2.5 billion.

In the Federation Council and the Duma cautiously reacted to the attacks of Lukashenko, but agreed that the Kremlin does not take dramatic responses.

A source in the Federation Council hopes that Russia and Belarus does not expect a sharp deterioration in relations: “I Think that we will not allow”.

As said the Deputy Zatulin, “test period” in Russian-Belarusian relations began in 2014 when Russia was under sanctions, the Belarusian leadership has decided that it is possible to increase the pressure on Russia, “embossing thus their preferences in economic terms.” The MP recalled that Lukashenko has not recognized the annexation of Crimea and has stated publicly “about the threats of the Russian world”. However, the Deputy believes, so to please the Western partners of the Belarusian leader will not succeed: “In the West, he mil never will be.”

The MP Kalashnikov does not see any threats to the Union state of Russia and Belarus in the words of Lukashenka, because he “knows what it may lead to consequences.” Kalashnikov said that the two countries still live in “fraternal peoples, but between the brothers there are disputes and quarrels”. Belarus “is tied to relations with Moscow is very deep,” agreed Zatulin.

Vladimir Zharikhin, Deputy Director of the CIS Institute, says that there is no conflict of Lukashenka and the Kremlin is not, and “there is an annual dose of sharp statements from Lukashenka, which is usually preceded by negotiations about the cost of oil and gas for Belarus.” According to him, Lukashenka’s speech — “standard stroke”: “He excites the Russian public, and then come to Russia and meet it knocks the price of energy, and yet another debt restructuring”.

When and why the deteriorating relations between Moscow and Minsk

Trade dispute between Russia and Belarus erupted in 2006, when it became known that under the guise of Belarusian sugar beet in Russia and imported sugar cane from Latin America. Sugar produced in Belarus from imported raw sugar were subject to duty at $340 per ton. Russia has restricted the import of this product from Belarus, one of the customs post. In response, Minsk stopped the import of alcohol and confectionery from Russia. In early 2007, the trading restrictions were lifted.

In January 2007, Russia imposed duties on oil supplied to Belarus. In response, Minsk introduced the duty on oil transit from Russia, after which Moscow stopped deliveries. After the phone talks between the presidents of the two countries Belarus has canceled the transit restrictions, agreeing with the Russian conditions.

The head of Rospotrebnadzor and chief sanitary doctor of Russia Gennady Onishchenko 6 Jun 2009 announced the ban on the importation of hundreds of dairy products, explaining this step by the Belarusian authorities ‘ failure to technical regulations on dairy products. Minsk responded to the ban by the strengthening of the customs control. Deliveries of Belarusian milk to Russia resumed only in the second half of June after the talks.

In June 2010 Russia cut gas supplies to Belarus because of debts. Belarus repaid the debt by Azerbaijan of the loan.

In September 2015, Vladimir Putin instructed to sign an agreement on the establishment of a Russian airbase in Belarus. In response Alexander Lukashenko said that this topic was not discussed. Later, Lukashenko softened his stance and promised to discuss the issue of establishing a base with the head of the Russian state. As reported the press Secretary of the President of Russia Dmitry Peskov, Putin and Lukashenko have discussed this topic in October 2015. In April 2016, the foreign Minister of Belarus Vladimir Makei said that the question is currently closed.

In may 2016 between Belarus and Russia dispute arose due to the untimely and incomplete payment for gas supplied to Belarus. In June 2016, the two presidents instructed the heads of energy departments to resolve the dispute about the price of gas. On 10 October President of Belarus Alexander Lukashenko said that Russia and Belarus had resolved the issue. Despite this, by January 2017, the debt for the gas supplied has reached $550 million in August 2016, Russia has cut oil supplies to Belarus, after which the official Minsk increased the tariff for the transit of Russian oil (by 20.5% on average).