Discovering America anew
[b]Belarus is medium-sized by European standards, situated between two geopolitical giants: Russia and the European Union. No one is likely to imminently replace these two huge markets. However, summing up the results of his Latin American tour, President Lukashenko noted ‘there are other fish in the sea besides Europe and Russia’. He explained, “There is an issue of Belarusian state security and independence. Following the USSR’s collapse, the situation has developed in such a way that we have a serious dependence on one or two countries in several fields. Years have passed but, however hard we try to build equal relations within the Union State, EurAsEC and CIS, the trend of ‘senior and younger brother’ becomes ever more evident. We need to talk about this sincerely. We’re searching for new sales markets and trying to trade with other countries.” In this respect, the Belarusian President’s visit to Brazil and, especially, to Venezuela, is exemplary[/b]
Small Venice drowning in oil
Venezuela was called ‘small Venice’ by Italian sailor Amerigo Vespucci, after whom this part of the world is named; in marshy areas, native people built their houses on stilts. Today, Venezuelans live not on water but on oil — so to speak. According to British Petroleum’s annual report on the world’s energy, it occupies fifth position for proven reserves of ‘black gold’ (about 8 percent of global reserves).
The major result of talks between Alexander Lukashenko and Hugo Chбvez is that, by late 2010, Belarus should have received 4m tonnes of Venezuelan oil — a fifth of the volume planned for import from Russia this year. “This is not a one-time deal but a long-term agreement,” commented Mr. Chбvez. We are now setting up legislation to govern this avenue of trade. A joint Belarusian-Venezuelan oil delivery company is to be set up in the coming months, with 75 percent of its shares owned by Venezuela, and Belarus holding the remaining quarter.
The first tanker is to arrive in Odessa’s port in May, with oil transported on to Mozyr Refinery. Having returned to Minsk, the President held a special meeting to report on the results of his visit. He clarified the issue of deliveries, saying, “At present, the major issue regarding Venezuela and other avenues of our foreign policy is the delivery of oil to our refineries. Taking this into consideration, I want to receive a clear answer on logistics over the first six months of the year. By late 2010, we are to establish a pipeline delivery of oil. This year, we should reach the upper limit of 4m tonnes of oil; next year, the figure must reach 10m tonnes.”
Tackling the oil and gas question during an interview with Argentinean newspaper Diario La Nacion, Mr. Lukashenko explained that Belarus is inviting Venezuela to process oil at Belarusian oil refineries, for further sale to Europe. “In future, we plan to privatise our enterprises, including our oil processing companies, attracting Venezuelan capital,” he noted.
The first reactions of international observers regarding oil-related agreements were contradictory. However, most believe it’s possible and could be profitable. Sea states bordering Belarus are now vying to gain contracts for transportation, understanding that this project could be economically profitable for them, while changing the geopolitical situation in the region.
The First Deputy Prime Minister, Vladimir Semashko, admits that pipeline transportation is far more profitable than using the railway. The closest sea to Belarus is the Baltic — rather than the Black Sea. “Logistics are being debated,” he notes. “However, these decisions take time. We need to consider everything thoroughly.” Oil from Venezuela is romantically called ‘Santa Barbara’ — a name known by early 1990s soap opera lovers. The delivery of ‘black gold’ from the South American continent to the centre of Europe relies on a multi-staged process.
“Ukraine is interested in realising and developing this project,” confirms the Ambassador of Ukraine to Belarus, Igor Likhovy, adding that his country is ready to offer tariff privileges to Belarus for the transportation of oil by railway. However, most Ukrainian experts believe that transit via the Odessa-Brody oil pipeline will be the best route. This was built in the early 2000s to transit Caspian oil to Central Europe, focusing on the ports of the Baltic Sea. However, the pipeline stood idle for some time due to lack of demand; later, Russia agreed to use it in a reverse regime.
Last year, one of the Odessa-Brody lines came into use as originally planned, with Azerbaijani oil pumped via Odessa to a Ukrainian refinery. Mr. Likhovy assures us that no design changes or monetary injections are needed for the full-scale relaunch of the Odessa-Brody pipeline. “We only need guarantees for oil supply from Belarus; the project can then begin,” he stresses.
There are plans to extend the Odessa-Brody pipeline in the future, to join the Polish Plock- Gdańsk line. Kazakhstan has recently been showing interest in this project, which is crucial; the European oil pipeline would fail to work to its full capacity without Kazakh oil. It’s feasible to realise plans by autumn 2011, when the Baltic pipeline opens. Russia is establishing the latter to rid dependence on transit countries. Belarus and other transit-states — which could be deprived of Russian oil flow — are, naturally, seeking alternatives.
Answering questions relating to the President’s tour of Latin America, Foreign Minister Sergei Martynov stresses that expansion of co-operation with Venezuela is not ‘an attempt to change our main, natural ally for an important strategic partner situated at the other end of the world’. “However, we cannot leave our country without oil,” he notes, adding, “Accordingly, we are searching for oil where it is found and where we have the chance to access it. Belarus’ leadership and the President have, primarily, stressed that we wish to extract oil in Russia. We’d like to extract gas on the territory of our neighbour. However, the situation is sometimes far from ideal.”
Belarus has been many times invited to participate in creating a new route to transport Caspian oil to Europe, bypassing Russia. It particular, there is a proposal to build a ‘bulkhead’ between the Odessa-Brody and Druzhba pipeline (which passes through Belarus). This would enable deliveries from Venezuela and other extracting countries.
Seen from a distance
This was the President’s second trip to Venezuela, after visiting the country in 2007. Meanwhile, Mr. Chбvez has been to Minsk four times. I was fortunate enough to cover both visits and it’s evident that, in these years, bilateral relations have come a long way… 10,000km separate Minsk and Caracas.
Our two politicians (with help from businessmen) have managed to convince sceptics to change their minds; many scoffed at the idea of relations between such distant countries. Anyone who denies our progress as partners lacks an objective view of reality. Just a few years passed, turnover with Venezuela has risen dozens of times (from $5m to $231m in 2009, despite the crisis). Importantly, Belarus has a positive trade balance.
Of course, no one rejects the notion of trade, especially if it brings profit. Until 2007, we really only exported potash fertilisers to Venezuela; by 2009, there were 100 Belarusian exports being shipped, with tractors taking the largest share. Moreover, many other opportunities are possible. We help Venezuela develop its mining, build houses and are ready to share our experience in vehicle construction. Many experts say that relations with Venezuela are one of the most significant successes of recent Belarusian diplomacy. Mr. Lukashenko’s visit confirms that Venezuela is a priority in our foreign policy.
Those in Caracas share a similar view of Belarus. Our journalists arrived a few days before the President’s visit — to ‘orient’ themselves — and it wasn’t necessary to know Spanish to understand that, in his speeches, Mr. Chбvez had often mentioned Belarus. The Venezuelan President appears on TV every day and usually speaks for many hours. Those who speak Spanish learnt from his speeches that Belarus is perceived in Venezuela as a developed state with experienced specialists and modern technologies.
Preparing for Mr. Lukashenko’s visit, Mr. Chбvez gave a video geography lesson to millions of his countrymen, during a live television broadcast. He took a map of Europe and said, “Look where Belarus is situated. Its strategic location is in the centre, in the heart of Europe. Huge Russia is nearby. Many are keen to have influence in this region. There, our vessels of oil are sailing…” Agreements between our two presidents on oil supplies — which are to become a new stage in mutual relations — haven’t, surprised anyone there.
Mr. Chбvez is building Venezuela to be independent of the USA, with full sovereignty. The Monroe Doctrine of the 19th century defined this region as a US exclusive interest zone, leading to Venezuela being influenced far more by America (or ‘North America’, as they like to say in South America) than we might imagine from the western media. This covers every aspect of life, from sockets to television broadcasts, which apply American standards of free speech — sometimes with provocative interviews. Even the US oil corporations — nationalised by Mr. Chбvez in Venezuela during the first years of his presidency — are now gradually returning to work without fuss. We shouldn’t exaggerate Venezuela’s anti-Americanism; here, people are keen to have their own opinions, spending their incomes as they see fit. Mr. Chбvez opposes wild capitalism, but not the market economy as such…
“We’ve come to Venezuela with modern knowledge, technologies and production. In the proper sense of the word, we gave a hand of friendship to the Venezuelans. We’ve come not as some western corporations — to pump out resources and leave with full pockets — but to work jointly, for the benefit of our people,” said Mr. Lukashenko in Caracas. The results of such an approach are that Belarus is now recognised in the region, and is allowed to participate in projects relating to natural resources and energy — projects which are viewed as sacred in any country.
Some of the resources which our country plans to purchase are already being mined in Venezuela by Belarusians. During two years of its existence, joint venture Petrolera BeloVenezolana has extracted about 1.5m tonnes. The net profit of Belarus has reached $105m and, at present, about 15 000 barrels are being extracted daily. Eventually, 20 000 barrels are to be mined, with the total annual increase reaching 1m tonnes; volumes should rise as new deposits are mastered.
Foreign Minister Martynov said, “We work in Venezuela not because of our good political relations with this country. We offer competitive services in the field of oil development and extraction, as well as services relating to oil extraction.” Gas assets are also important, with Caracas granting a license to allow the development of six gas deposits by Belarus. Mr. Chбvez admits that Belarus’ development of ‘blue fuel’ ‘greatly influences the strategy of developing the gas industry in Venezuela’. “It will enable us to increase gas production,” he stressed. “We are re-evaluating all gas deposits and are searching for reserves in the Atlantic Ocean and in the Caribbean. We’ll double gas production and, in just a few years, will occupy the fourth position in production — behind Russia, Iran and Qatar.”
“Of course, these are all commercial projects,” asserted Mr. Lukashenko during his visit to Venezuela. “The economics of these projects should be considered. However, we’ve also act as close friends. We’ll do more than help you extract natural gas and oil, and build cities and villages. Most importantly, we want to teach our Venezuelan friends to do this.”
An agreement has been reached for the launch of gas supplies to Caracas’ residential districts, set up by Belarusian specialists. About three million people reside in the city’s Sucre district — which has been chosen for this long-term project. Until recently, Venezuelans have not regarded ‘blue fuel’ as something worthwhile. However, their ideology is changing. Mr. Chбvez plans to introduce gas technologies into the country’s economy, reducing oil consumption, while allowing greater exports to the global market. Belarus is to actively participate in the state programme to allow public transport to run on gas (currently being developed in Venezuela). In particular, a pilot contract has been signed to deliver 2,000 sets of gas equipment for automobile transport in Venezuela, where petrol costs just a few American cents. Local people leave their engines running even while they are parked! The task set by the Venezuelan President is, of course, complicated; it can hardly be solved without outside help. Nevertheless, the country has realised the necessity of these steps; with this in mind, the project seems very promising.
The Venezuelans have also realised that it’s unwise to rely only on hydro-energy. Fast-flowing rivers generate almost 90 percent of electricity in the country. However, water flow is deteriorating, due to global warming; in Caracas, power cuts are common. Belarus can significantly help Venezuela in constructing thermoelectric power stations using natural gas. A Venezuelan delegation is to visit Belarus this summer to study our experience in the field.
Solid basis for bilateral relations
Mr. Lukashenko and Mr. Chбvez did not spend all their time in the capital. One day, they visited the small city of Maracay (80km from Caracas) to lay the first stone of a residential complex being built by Belarusians. The contract was signed during the President’s first visit to Venezuela. Comfortable four and three-storey houses are being built, in addition to apartments, a school, a police station and a sports ground. This is a pilot project and, if all goes well, more such ‘Belarusian’ towns will be built in Venezuela. In Maracay, 5,000 apartments are to be constructed while, in Barinas, 10,000 are planned. Work is due to be finished in three years’ time.
In total, 22 documents were signed in Caracas — in the fields of petrochemistry, industry, construction, energy, science and technology. The total sum of projects in the construction field alone exceeds $1bn, including an existing contract to construct plants to produce MAZ cargo trucks and tractors in Venezuela. The enterprises are to launch by summer 2011, with Belarusians building every aspect. “I’m dreaming of the day when we’ll be able to produce trucks,” admitted Mr. Chбvez.
Our specialists are to build a factory to assemble road, construction and communal machinery in Venezuela. Moreover, a brick mfactory is to be built, making up to 100m bricks annually (launching next year). An agro-town is also planned. Belarus’ long-term intentions towards working in Venezuela are confirmed by plans to open a service centre next year, to service and repair heavy machinery. The project is due to cost from $5m to $10m.
The Deputy Architecture and Construction Minister, Anatoly Nichkasov, also visited Caracas, signing several agreements. He called the decision ‘strategically well-timed’ as ‘the volume of Belarusian machinery supplied to Venezuela is increasing, alongside technical maintenance and repair services’. At present, our machinery in Venezuela is serviced by Belarusians on business trips to this country. However, the volume of the required services is becoming difficult to satisfy; a new approach is needed. The new centre will be able to service up to eight vehicles a day while a warehouse of common spare parts is to open. Belarus aims to share its experience, training local people to take over servicing in due time.
In recent years, Venezuela has purchased over 4,000 units of road and construction machinery from Belarus, primarily tractors, MAZ trucks, BelAZ heavy duty dump trucks and Volat special machinery. Additionally, the country has ten mobile facilities by Gomel’s Seismotechnika, and several Mogilev hydraulic self-propelled cranes are operational there. There is no doubt that such work will continue and expand… In October, Mr. Chбvez is to arrive in Belarus and, next summer, Mr. Lukashenko plans to visit Venezuela again — to launch a number of enterprises.
From Venezuela, Mr. Lukashenko headed for Brazil where, in Rio de Janeiro, he met Brazilian President Luiz Inбcio Lula da Silva for the first time. Brazil’s potential is well known and, in recent years, Belarus established its presence in the southern part of America. With this in mind, the presidents promptly began to discuss areas of bilateral co-operation, with the two states’ leadership keen to participate in creating a metaphorical ‘river of progress’ in which we can jointly sail (Rio de Janeiro’s name translates as ‘January River’).
We’ve established exports of potash fertilisers and cane sugar, with turnover exceeding $1.2bn in 2008. Brazil has been a firm economic partner in Latin America but, due to the crisis, turnover almost halved last year. To avoid such fluctuations in future, Minsk now plans to diversify its economic relations with Brazil. Already, tyre production is being negotiated and many other prospects are being discussed.
The First Deputy Prime Minister, Vladimir Semashko, noted after his trip to Brazil, “Brazilians are showing great interest in Minsk Tractor Works manufactures, including assembly and direct supplies. Tractor sales could reach several thousand, as Brazil annually purchases about 45,000-50,000 tractors.” According to Mr. Semashko, by summer, the first Belarusian tractors will be tested in Brazil; a contract is due to be concluded in autumn. Brazil is the largest, most densely populated and most economically developed country in Latin America, where people speak Portuguese. Despite a certain language barrier (Spanish and Portuguese are similar in the same way as Russian and Ukrainian), the country is striving to become a leader in the region, representing it in the international arena — at the G20 or, even better, at the UN Security Council.
BRIC countries (Brazil, Russia, India and China) are set to rival the seven top economically developed countries in the near future. Accordingly, Belarus is acting foresightedly; Minsk already boasts close contacts with Moscow, Beijing and Delhi.
For two hundred years — until the mid 20th century — Rio de Janeiro was Brazil’s capital. It then moved to Brasilia, where we are yet to open an embassy (although there is a Belarusian General Consulate in Rio). The Brazilian President supports Mr. Lukashenko’s proposal to open a Belarusian embassy in Brasilia, while Brazil plans to open its own embassy in Minsk, following the principal of reciprocity. This is a serious sign of mutual interest.
By Igor Kolchenko
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