Belarusian road: from the River Bug to the Amur
[b]It may be that no other language in the world boasts such a meaningful and beautiful word as ‘gastsinets’. In Belarusian, it means the same as the English word ‘present’ or German ‘Geschenk’. However, it does have another meaning: a major trading route, as used by ‘gostsi’ (guests) in old Belarusian language. This shows much about our mentality, as our ancestors welcomed merchants, arriving from remote countries, as honourable guests[/b]Today, we retain a similar attitude towards trade, the attraction of foreign investments and creation of joint ventures. Situated at a crossroads of the world’s major trade routes, we offer a strong trade ‘gastsinets’ from the River Bug to the Amur.Recently, this topic was tackled at the traditional summer session of Belarusian Ambassadors and heads of diplomatic missions abroad. The results of this brainstorming discussion were summed up by Andrei Savinykh, an official representative of the Belarusian Foreign Ministry, speaking to an international observer of Belarus magazine.
Today, we retain a similar attitude towards trade, the attraction of foreign investments and creation of joint ventures. Situated at a crossroads of the world’s major trade routes, we offer a strong trade ‘gastsinets’ from the River Bug to the Amur.
Recently, this topic was tackled at the traditional summer session of Belarusian Ambassadors and heads of diplomatic missions abroad. The results of this brainstorming discussion were summed up by Andrei Savinykh, an official representative of the Belarusian Foreign Ministry, speaking to an international observer of Belarus magazine.
How would you characterise today’s major task of implementing the foreign economic interests of our country?
Think of a classical formula: foreign policy is a continuation of our domestic policy. It’s not for nothing that President Lukashenko’s election campaign motto was: ‘For a Strong and Flourishing Belarus!’ It reflects two mutually inter-connected ideas, prosperity and independence, as the basis for the country’s development. Our political and economic strategies, dictating our priorities, proceed from this.
Belarus is probably the only country within the post-Soviet space which has managed to preserve its production potential and highly educated staff. However, we understand that, to preserve our position as a developed state in the 21st century, we must modernise our industries and enterprises, focusing on innovative development.
This explains our enhanced interest in resolving the systemic economic problems we are facing today. Like any other European state, we’re trying to reduce our dependence on energy imports. I should mention that we’re applying common European approaches to solving this issue. Belarusian enterprises are encouraged to use more actively the local energy sources, with energy saving becoming an unbreakable rule of production discipline. Moreover, we are developing plans and ideas to start bio fuel production. We also aim to construct our own nuclear power station. In this way we’re trying to diversify our energy supplies. and searching for new energy suppliers. These are major trends in Belarus’ economic policy, which I’ll discuss later in a more detailed way.
Continuing our conversation about systemic problems, I’d like to draw your attention to the extraordinary role of heavy industry in our country’s economy. At the same time our service sector is less advanced compared to the developed countries level, and constitutes only 42 percent of GDP. Accordingly, we’re implementing mid-term national and state programmes to develop tourism, making efficient use of transit opportunities and building up the supply of professional services.
Moreover, we seriously lag behind in our rate and volume of innovative development; our level of commissioning of new and innovative technologies is a top priority for the country’s development, in addition to the structural reorganisation of the economy. The latter should rely on the creation of high-tech production facilities and output of high added-value products.
We need additional resources to implement our plans and we’re giving special priority to further improvement of the country’s investment climate and business environment. I believe that the task set by the President of Belarus – to enter the top 30 countries for favourable business terms – is vital to our country’s development.
One of the consequences of the global economic crisis is the narrowing of sales markets, which is especially painful for such export-oriented states as ours. Which measures taken by the Belarusian Government to promote our exports are most important?
I’d like to mention that Belarus’ foreign trade policy has always been multi-vector and diversified. Over the last 15 years, we’ve been supplying our goods to over 150 countries worldwide. In 2009 – the most difficult year of the continued global financial and economic crisis – our exports were delivered only to 141 countries.
The crisis has inspired Belarusian enterprises to strengthen their position at the traditional markets and expand into new export destinations. Last year, our Belarusian manufacturers sent delegations to Zimbabwe, Angola and Sudan. In early 2010, the same visits took place to Code d’Ivoire, Togo and Mali. These countries are new markets for us, where Belarusian products are not yet widely represented.
New opportunities for co-operation have opened with Brazil following the visit of the Governor of Goiбs State to Belarus in February 2010 and the Belarusian President’s visit to Brazil in March 2010. Visits to Malaysia, Indonesia, Lebanon, Algeria, Morocco, Tunis and Australia have also been scheduled.
The creation of our own trade distribution networks is of primary importance in strengthening our position in the new markets, in addition to the establishment of assembly production facilities and service centres to offer post-sales services. We’re ready to develop gradually our presence in Northern European markets, where no Belarusian foreign diplomatic missions yet exist: in Denmark, Norway and Finland.
In diversifying our export deliveries, we are not reducing the level of our involvement in traditional markets; rather, we’re simply extending. Last year, we began negotiations with the European Commission, aiming for the EU’s acknowledgment of the status of the Belarusian economy. On December 10th, 2009, a new 2010-2013 EBRD strategy for Belarus was adopted, envisaging the expansion of collaboration. To our great satisfaction, this document includes the possibility to finance state sector projects.
How has the position of Belarusian exporters changed regarding the traditional markets of the EU and Russia? Will our participation in the Eastern Partnership programme expand our opportunities in Europe?
Russia and the EU are our major markets, accounting for the greater part of our trade. However, I believe that our enterprises can further strengthen their market positions there.
Of course, the EU’s ‘Eastern Partnership’ initiative opens up definite opportunities to deepen our relations with European markets. Our country accepted the invitation to join this programme for pragmatic reasons. I’d like to note, with reserved optimism, the creation of a specialised working party which aims to develop contacts between business circles of partner countries and EU member states. This will operate within the ‘Economic Integration and Convergence with EU Policies’ programme.
While we are trying to ensure favourable and non-discriminatory conditions for entering the EU market, we understand that we need to be competitive to be successful. We are working hard to bring our national standards and technical norms in line with those in the EU, while also enhancing the competitiveness of our goods in price and quality.
I’d like to stress that, although the ‘Eastern Partnership’ initiative is very attractive, it can hardly be considered as a main tool for bilateral Belarus-EU co-operation. According to the pattern approved by the EU for Belarus, the ‘Eastern Partnership’ is an instrument to unite the efforts of Belarus, other partner countries and EU states to solve regional problems.
We fully support this target. It meets our own desire to develop relations with European partners, not only taking but giving. We’re sharing our opportunities with others while contributing to significant European projects.
However even intensive ‘Eastern Partnership’ programme cannot take our relationship to a whole new level. To achieve this, we must change our legislation to comply with that of EU. Unfortunately, today our relations are guided by the old and mainly outdated cooperation agreement between the EU and Belarus, signed back in the Soviet days of 1989. We believe it is crucially important for both sides to finalise the process of ratification of our 1995 Partnership and Co-operation Agreement (PCA), which has signed and already partially ratified by some EU members; bringing the PAC into force would be a serious and persuasive signal of the EU’s readiness to begin new relations with our country.
How do you assess the potential of the recently set up Customs Union of Belarus, Russian and Kazakhstan?
Undoubtedly, the removal of tariff and non-tariff barriers to trade, alongside the simplification of foreign trade procedures and many other issues within the Customs Union, creates great advantages for mutual trade, primarily for member countries of this union.
However, I’d like to underline that our integration format has aroused great interest from a range of other states keen to establish preferential – free trade – regimes with us. We’ve received proposals for free trade zones from Vietnam, Egypt, New Zealand, Syria and Iran.
For the first time, western members of the European Free Trade Association (EFTA) – have invited us to set up a free trade zone. EFTA unites the highly developed countries as Norway, Switzerland, Iceland and Lichtenstein.. Taking into account that the EFTA and EU are working within an almost identical economic space, this step is a good signal for the liberalisation of trade relations.
In Belarus, we view the Customs Union as an important step forward, forming the basis of the whole EurAsEC. At the same time, this is only a transitional period for a more profound form of integration – our Single Economic Space. This will enable us to ensure free movement of goods (terms are being set within the Customs Union), as well as free movement of capital, services and labour force.
Is it realistic to diversify into the markets of Latin America, Southeast Asia and Africa? Why does our country believe it can gain a foothold in such remote locations?
I think you are slightly late in asking this question, due to the systematic and well-consideredt steps we have already achieved a remarkable progress in our presence in the Latin American region, primarily in Venezuela. Economic collaboration with other states from this region has been thoroughly studied during the visit of the Belarusian delegation, headed by the Assistant to the Belarusian President, Victor Sheiman; they travelled to Cuba, Bolivia, Ecuador and Venezuela.
Work is also underway to expand the geography of Belarusian supplies to Asian and African markets. Of course, we use a variety of tools: from competent management to political mechanisms. One tool is our interaction with large regional economic groups, such as the Economic Community of West African States (ECOWAS), the Southern Africa Development Community (SADC) and the East African Community (EAC). In Asia, the Association of Southeast Asian Nations (ASEAN) is the most influential and promising within the Asian-Pacific region. From 2010-2011, we plan to organise a number of visits to the most promising countries while trying to cover major regional groups.
Much has been spoken recently of Belarus’ innovation development, which aims to promote high-tech, science-intensive projects to foreign markets. Can you specify what is this about?
As you know, Belarus has few raw resources on which to build a long-term export strategy. We can only boast of having potassium salts and a lot of forest and agricultural land. Most other raw materials are imported. Accordingly, we need to generate profit from added value we are able to generate ourselves; we must apply our hands and heads. The more high technologies and scientific achievements we contribute, the greater the added value will be.
Our ambassadors met recently to particularly focus on this topic, discussing how to tackle the situation in the most efficient way. We have serious capacities and plenty of work to do. I can bring concrete examples of successful innovative Belarusian enterprises; however, I believe that a clearly outlined trend is more vital than separate examples. We still have much to do to develop this direction.
Alongside innovations, Belarus is focusing on tourism. Which niches could we occupy?
Our country has no sunny seaside, ancient architecture or exotic culture. However, we do possess beautiful and, sometimes, untouched countryside, hospitable people and a convenient geographical location.
I believe that nature tourism is the most promising: agro-ecotourism, fishing, hunting and active leisure. The Lithuanian Prime Minister recently cycled through Belarus, providing a good example to foreign tourists.
Cultural and historical tourism also has prospects; moreover, we share much history with our neighbours. Let’s not forget that we are a country with very rich and ancient history. We were the first country worldwide to constitutionally forbid any inter-confessional disputes and disagreements during medieval times. We were part of the Grand Duchy of Lithuania. Charles XII crossed the territory of Belarus, as did Napoleon on his way to Moscow and back. He suffered overwhelming defeat here. Most of his Swiss guard died in battle by the River Berezina. The death of these people army created a strong psychological effect and in some way led to adoption of the neutrality policies at the state level. These facts are of great historical importance for the region and I believe that, if we use them reasonably, they are enough to allow us to compete for tourist attention.
Today, spa tourism is also very popular in Belarus, especially among CIS residents. We speak about our great potential but we shall be able to benefit from it only if we develop a first class infrastructure. Western tourists may be keen to relax on the bank of a beautiful lake in the forest, with every possible comfort, as they are accustomed to. Moreover, remote locations, perhaps in the middle of a dense forest, are perfect for training, seminars and meetings organised by western companies. Such events are held around the globe and Belarus being the centre of Europe can become part of these activities. .
The most vital aspect in achieving this goal is creativity, in addition to training qualified personnel and developing infrastructure.
The Belarusian Government is now seriously involved in attracting investments and creating highly efficient work places. How is this work conducted at diplomatic level?
I won’t go into the details of the work of our trade missions, such as the organisation of visits and negotiations and the search for business partners. However, I’d like to mention major events run to promote our image. For instance, recently we’ve organised six investment and business forums in Germany, Kazakhstan, Poland, Turkey, Switzerland and Finland. These ‘demonstrations’ of our country’s potential enable us to ‘show ourselves and see others’. Analysis shows that potential investors are keen to implement investment projects in Belarus: in logistics, road infrastructure, construction, wood processing, extraction and the processing of natural resources.
The National Investment and Privatisation Agency has been set up in Belarus with the aim to create and maintain a single database on investment activity, including a register of investment projects to attract foreign injections.
How would you define Belarus’ role in the international division of labour?
According to ‘Forbes’, we are among the world’s leading IT outsourcers, alongside India in terms of IT export per capita. We have long outstripped Russia and Ukraine, which also claim remarkable rankings in this sphere.
Services, especially in IT, are a very interesting niche for Belarus on the international market. We can develop high potential in offering design, architectural, engineering, medical and laboratory services and many more. Many services and especially IT doesn’t require considerable capital investment or expensive infrastructure. We need favourable conditions and political support, as seen from the work of the High-Tech Park, which is successfully operating in Belarus.
We shouldn’t forget our traditional areas of industry and agriculture, of course. We account for around 8 percent of the world’s tractor market and about 30 percent of the market for heavy vehicles. We have also long occupied strong positions on the world market for potash fertilisers and dairy products. We’ll continue to build on this while switching to production of new and more innovative products.
Thank you for the interview!
By Nina Romanova