Not rivals but partners
[b]Minsk hosted two important forums in March: a session of the Belarus-Russia Union State’s Council of Ministers and a meeting for Customs Union member states’ heads of government. Both resulted in interesting news. Minsk and Moscow signed an agreement to construct a nuclear power station and plan the simultaneous operation of our two states’ energy systems. Meanwhile, Belarus, Russia and Kazakhstan agreed to shift customs control to the external borders of the Customs Union, aiding free movement of goods within the Union of our three states[/b]Journalists who covered the events were interested to hear how these two huge integration projects (of the Belarus-Russia Union State and of the Customs Union of Belarus, Russia and Kazakhstan) will co-exist. Minsk gave a clear reply: the Customs Union, the Union State and the Single Economic Space (to be set up in the future) are not in competition. Rather, they complement each other, in synergy, bringing benefits through unification.
Journalists who covered the events were interested to hear how these two huge integration projects (of the Belarus-Russia Union State and of the Customs Union of Belarus, Russia and Kazakhstan) will co-exist. Minsk gave a clear reply: the Customs Union, the Union State and the Single Economic Space (to be set up in the future) are not in competition. Rather, they complement each other, in synergy, bringing benefits through unification.
Since the 1990s, Belarus has been advocating economic integration within the post-Soviet space. During his March meeting with Alexander Lukashenko, Russian PM Vladimir Putin noted the Belarusian President’s position. He stressed that Minsk’s enthusiasm for integration has helped prepare and adopt a package of conceptual documents regarding the interaction of Belarus, Russia and Kazakhstan within the Customs Union and the Single Economic Space ‘qualitatively and in a short time’.
Belarus was the first of the three states to ratify documents relating to the Single Economic Space (in December 2010). Mr. Putin noted, “I believe these are very important decisions which, no doubt, shall contribute to stabilisation of the economy and solving of complex social-economic tasks — especially under conditions of continuing crisis in many leading economies worldwide.”
Mr. Lukashenko, in turn, stressed that Belarus pins great hopes on the formation of the Single Economic Space, foreseeing huge prospects. “We are ready to do everything needed,” he assured Mr. Putin. “Here in Minsk, we always treat such promises seriously.”
Mutual turnover is a bright indicator of Belarus-Russia economic integration. Last year, our export-import operations reached $27.9bln. Belarus sells most of its manufactures to Russia, including milk, meat, refrigerators, furniture, bolster-type tractors, harvesters and tractors. Russia, in turn, fully meets the Belarusian economy’s needs for natural gas, while supplying raw materials to our petrochemical complex.
Against this background, Minsk’s co-operation with its other Customs Union partner, Kazakhstan, is just gaining momentum. Last year, Kazakhstan failed to join our major trading partners but the dynamics of the bilateral trade are inspiring. In 2010, our export-import operations rose 2.2-fold, approaching $1bln. Experts consider the Customs Union and the Single Economic Space to be opening great additional prospects for the Belarusian and Kazakhstani economies, as stressed by Mr. Lukashenko on meeting Kazakhstan’s PM, Karim Massimov, in Minsk. According to the Belarusian President, there is every chance to exceed the figure of $1bln. “You have what we need, while we have what Kazakhstan needs,” he emphasised. Those from Astana share his view. “Taking into consideration the large scale programmes being conducted in Kazakhstan, we are keen to enjoy deeper co-operation with Belarus,” Mr. Massimov said openly.
Belarus already participates in three dozen projects connected with Kazakhstan’s industrialisation. Judging by the March talks, our bilateral co-operation is to expand, with the Customs Union and the Single Economic Space aiding the process.
Energy of co-operation
The signing of an agreement to construct a nuclear power plant and arrange the simultaneous operation of our two states’ energy systems is a major breakthrough for Minsk and Moscow regarding energy collaboration. Belarus and Russia are forming a single market for electricity within the Customs Union, inviting Kazakhstan to join them as part of the Customs Union.
These initiatives have export potential. The closure of the Ignalina nuclear power plant in Lithuania has led to a lack of cheap electricity in the Baltic Region. Accordingly, the construction of a Belarusian nuclear power plant and co-ordinated efforts with Customs Union partners will allow us to ‘develop an energy bridge with the European Union’ — as Belarus’ PM Mikhail Myasnikovich has noted.
In addition to co-operation regarding electricity, Belarus is advocating close integration in the oil and gas spheres. Minsk hopes that Russia will keep its word in introducing equal-profit gas prices. From 2006 to 2011, the price of Russian fuel for Belarus rose almost 5-fold (from $46 to $223 per thousand cubic metres). The dynamics of gas prices within Russia’s domestic market have been smoother of late, leading to disparity and unequal conditions for companies working within our two states (a fundamental breach of the guiding principle behind the Single Economic Space). Minsk hopes to see the SES fully operational from 2012.
Simultaneously, Belarus is advocating the establishment of a single oil market, without artificial exemptions or restrictions. In 2010, Russia imposed an export duty on oil supplied to Mozyr and Novopolotsk refineries. This contradicted the principles of our Union State, so was lifted in January 2011; however, oil is yet to be supplied to Belarus at the same price as within the Russian domestic market. As the duty was removed, $46 was added to the price of oil (per thousand cubic metres), with money transferred to Russian traders’ accounts.
Despite some discord, Minsk and Moscow continue to develop their energy co-operation. The construction of a nuclear power plant in Grodno Region (by Russian State Corporation Rosatom) opens new horizons for the Belarusian energy sector. It’s worth mentioning that the project will be financed by Russia, which is allocating a $6bn loan, with another $3bn to be negotiated for infrastructure.
Naturally, money related issues have been pushed aside following the disaster at Japan’s Fukushima-1 nuclear power plant. “The major task and priority is safety and reliability of the future Belarusian nuclear power station,” Mr. Myasnikovich told Mr. Putin. He replied that the Belarusian plant will be much safer than that of Japan, since 40 year-old blocks were operational at Fukushima-1. Modern stations are equipped with extremely reliable technologies, making it impossible for a disaster to happen. Automatic protection systems kick in at times of emergency, regardless of external electricity supply or human participation. While moving towards a single energy market, Belarus and Russia are also shifting towards single security standards.
Another important aspect of co-operation within the Customs Union and the Single Economic Space is merging of our intellectual and financial potential and establishment of powerful corporations able to compete against Western and Asian manufacturers. “The President of our country and the Government are ready to facilitate the use of Russian capital in realising major innovative, high-tech projects in Belarus,” noted Mr. Myasnikovich, speaking to the Russian Prime Minister.
The union of Minsk and Kama automobile plants is a major integration project, as these two companies are the largest producers of cargo machinery within post-Soviet territory. “The establishment of such an alliance should enhance the competitiveness of Belarusian and Russian enterprises. Sustainable and well-paid jobs are to be created,” said Mr. Putin. It is supposed that MAZ and KamAZ could merge into a single holding — Rosbelavto. The latter would include plants manufacturing engines, starters, generators, drive shafts and other spare parts. In fact, this would be an association of our two states’ machine building complexes. Rosbelavto would enjoy a single sales network, increasing efficiency of sales.
Minsk has invited Moscow to set up alliances in other industrial branches. Belarus considers this to be the best path in the face of globalisation and increased competitiveness. “The merging of our assets in microelectronics, nano-technologies, machine building and other spheres — where partners from third countries are sadly unwilling to share technologies and expertise — could become a reality within the Union State,” believes Mr. Myasnikovich. “The move would help our states use their potential for industrial and technological integration. Of course, we plan to develop this within the Single Economic Space.”
The March negotiations have shown that Russia and Kazakhstan are no less interested in industrial integration than Belarus. We are stronger together.
By Vladimir Vasiliev