In November, Gorki-9 residence, near Moscow, hosted a session of the Supreme State Council of Belarus-Russia Union State — for the first time in two years. Belarusian-Russian integration had seemed to be on hold but the Gorki-9 meeting and its adopted decisions prove that our two countries have a serious future. Minsk and Moscow are moving towards their goal of fully-fledged unionPrior to Alexander Lukashenko’s meeting with Dmitry Medvedev and the session of the Supreme State Council of the Union State, documents relating to the Single Economic Space of Belarus, Russia and Kazakhstan were signed. Minsk, Moscow and Astana also agreed on the establishment of the Eurasian Economic Union. Accordingly, in Gorki, the Belarusian and Russian presidents had to discuss ‘the role and place of the Union State within the common architecture of integration’, which they did successfully.
Mr. Lukashenko noted that, in recent months, integration processes within the post-Soviet space have been strongly activated, owing to the Russian Federation. He recalled PM Vladimir Putin’s article in Izvestia (dedicated to Eurasian integration). “After it was released, we were ready to sign those documents leading to the establishment of the Eurasian Union in just a few months,” the Belarusian President said. “I can proudly assert that much has been done in this direction [Eurasian integration] while building the Union State.”
Experts and journalists wondered whether the Union State would preserve its practical sense, avoiding dissolution within the Single Economic Space. The Belarusian and Russian presidents had an answer. “We won’t destroy the Union State; rather, we’ll develop it,” announced Mr. Lukashenko, adding that he and Mr. Medvedev had principally agreed on this. “Meanwhile, we need to be sincere: this is not just an economic union of Belarus and Russia; it is a military-political union as well,” the Belarusian Head of State asserted, noting the difference between the Union State and the Single Economic Space. “We are also focusing on issues of defence, foreign policy and social protection of our citizens.”
At present, Minsk and Moscow co-ordinate their foreign policy, jointly discussing external challenges and threats. According to Mr. Lukashenko, Belarus and Russia are acting as a single state regarding issues of defence. Integration in the social sphere has also reached new heights: Belarusians and Russians enjoy almost equal rights in each state (as the Kazakhs do not yet). As Mr. Lukashenko stressed, the Union State has more aspects of integration than the Single Economic Space. It is the focus for all integration projects within the post-Soviet space.
“We need to follow this path, strengthening it further,” Mr. Lukashenko stressed, admitting that ‘the further we travel, the more difficult the path will be’. “However, we are fully ready to follow this path,” he added. Mr. Medvedev was equally decisive, noting, “Symbolically and importantly, the process of Belarusian-Russian integration has been recently activated.” Statistics confirm the trend: our bilateral turnover may reach a record $40bn by the end of this year.
Mr. Medvedev added that there is more to life than trade figures. He emphasised, “It’s vital for our two states’ citizens to enjoy a better standard of living, feeling more confident!” As members of the Supreme State Council of the Union State believe, the package of documents signed at Gorki-9 aims to enhance people’s wellbeing.
Gas alliance
At the Gorki meeting, important decisions were made in the fuel-energy sphere. Gazprom, JSC and Beltransgas, JSC signed contracts for the supply of gas to Belarus and its further transportation through the country’s territory in 2012-2014. In addition, the Russian gas company and Belarus’ State Property Committee signed a purchase-sale agreement for 50 percent of Beltransgas’ shares — giving Gazprom 100 percent ownership of the Belarusian gas-transport system. In line with the contract, in 2012, Belarus will buy Russian gas at $165 per 1,000 cubic metres — against the average European price of $400. Meanwhile, in 2013-2014, its price will be calculated under a special formula based on gas prices for Russia’s Yamalo-Nenetsky Autonomous District (fixed by the Federal Tariff Service of Russia) and the price of gas transportation from the place of its extraction in the Yamalo-Nenetsky Autonomous District to the Russian-Belarusian border.
Minsk and Moscow have also agreed that a minimal discount on gas — which Gazprom will sell on the Belarusian market through Beltransgas — will be given: $16 in 2012. The figure is set to be readjusted after 2013 — depending on inflation.
Experts note some advantages to the gas deal for Belarus. Firstly, Minsk receives $2.5bn for selling 50 percent of Beltransgas’ shares, with the money replenishing the country’s gold and currency reserves. In addition, Russia has agreed to re-structure Belarus’ gas debt, due to the difficulties being experienced by the Belarusian economy. Secondly, Belarus’ gas price of $165 per is the lowest among neighbouring countries. This fact is significant for the Belarusian economy, taking into account the huge volumes of annual gas consumption (reaching 21bn cubic metres). Thirdly, Belarus is receiving guaranteed transit volumes through its territory. In line with the contract, transportation of each 1,000 cubic metres via Beltransgas’ gas pipes will generate an income of $2 per 100km. Importantly, the launch of ‘Nord Stream’ won’t reduce the volume of gas transportation through Belarus; accordingly, gas transit related tax revenue will remain steady. Fourthly, Gorki agreements offer a guarantee that Belarus won’t face problems with Russian gas supplies. As the Russian Energy Minister, Sergey Shmatko, noted, the ‘gas wars’ between Belarus and Russia are a matter of the past. A line is being drawn beneath them.
Belarus’ Deputy Prime Minister, Sergei Rumas, in turn, stressed, “Belarus is fully satisfied with the documents signed in Moscow.” It’s especially important that Belarusian and Russian gas prices are coming closer, as Minsk believes that equal conditions for legal entities are a basic principle of the Union State and the Single Economic Space.
The Chairman of Belarus’ Statistics Committee and the Head of the Entrepreneurship Development Council under the President, Vladimir Zinovsky, notes that the reduced gas price of $165 (against $270 in 2011) will help ‘enhance the competitiveness of our economy on the Russian market — and within the Single Economic Space in general’. He adds, “Belarus and Russia will benefit from this move — as will Kazakhstan I think.”
Energy related expenses will fall in industrial production, lowering prime costs. Moreover, Russian and Kazakh partners — who use Belarus-made products in their manufacturing chains — could also obtain indirect profit. According to Mr. Zinovsky, gas related agreements will aid people’s standard of living as, in 2012, state run factories will gain additional funds to pay staff productivity bonuses.
Schedule for station
Another important energy related decision was made in Gorki: Russia confirmed its allocation of a $10bn loan to Belarus for the construction of a nuclear power station in Grodno Region’s Ostrovets District. Belarus’ Finance Ministry calls this credit ‘profitable, while the Energy Ministry adds that the station may be ready by 2018 if the money arrives in the coming months.
Of course, any construction of a nuclear power station is a capital intensive project, requiring the participation of a strategic investor. EU states bordering Belarus also plan to build new nuclear power stations. French Sociйtй Gйnйrale Bank is to finance the first Polish nuclear power station (being constructed with French technology). Meanwhile, it was recently mentioned that American Westinghouse and General Electric are to fund Lithuania’s Visaginas nuclear power station (built on the site of the former Ignalina station). Belarus has also made its choice. Ostrovets station is to be built and, logically, funded by Russia: the AES-2006 project.
A $10bn loan is significant, asserts the Finance Ministry’s Head of the State Debt Department, Yelena Zhukova. She notes that the money will cover 90 percent of the total construction cost, with the remaining ten percent covered by Belarus. The loan is only to be repaid after ten years — with repayments given over 15 years; accordingly, the total loan period is 25 years.
The Finance Ministry adds that the Russian loan is tied, being allocated for realised work and supplied equipment and materials. According to specialists, inter-state procedures are soon to finish, making it possible to open the credit line. Meanwhile, the Energy Ministry’s Director of the Nuclear Energy Department, Nikolay Grusha, believes it’s possible to stay on schedule if financing is allocated in early 2012. The first block would be ready by 2017, with the second following a year later.
Infrastructure for the future station is already being prepared in Ostrovets, paid for by Belarus. A road and railway have been laid, while three apartment blocks are ready for builders and engineers. In future, three residential districts and the necessary infrastructure are to be constructed in Ostrovets, to accommodate the station’s employees and their families.
In spring, the foundations for the first reactor are to be dug. “Building will begin with concrete foundations for the reactor complex, in late 2012-2013,” explains Mr. Grusha, adding that dozens of Belarusian companies have voiced their desire to take part. “We are now assessing them, selecting the best proposals,” he notes.
2012 budget
The 2012 Union State budget was also outlined at the session of the Supreme State Council of the Union State, with Mr. Medvedev noting that funding matches that of 2011, despite complicated economic conditions. Revenue stands at 4,872,000,000 Russian roubles, including Russia’s share of 3,167,000,000 roubles. Belarus will contribute 1,705,000 roubles. The money aims to finance 13 programmes and 26 events, with half of the budget going to fundamental studies and assistance to sci-tech progress, industry, energy, construction, agriculture, transport, communications and informatics.
11.5 percent of the budget is being allocated to military-technical co-operation, law enforcement and security. Meanwhile, 17 percent is to be spent on the social sphere: health protection, dealing with emergencies, education, culture and mass media. In 2012, Union State programmes dealing with modernisation and sci-tech progress will receive special attention. Our two countries plan to jointly develop resource saving and ecologically friendly technologies, in addition to space related projects.
It was announced at Gorki that the modernisation of our economies and the creation of new jobs are at the core of all Union State programmes. Their efficiency is to be supervised by a new State Secretary — the former Plenipotentiary of the Russian President in Privolzhsky Federal District, Grigory Rapota. He is to drive forward Union State bodies’ work. Politologists consider that the appointment of this highly experienced manager as the State Secretary of the Union State shows serious intentions of Minsk and Moscow.
By Vitaly Volyanyuk
