Leanid Zlotnikau: In order to exert pressure on Belarusan authorities, they should be kept on hook

In 2014 Moscow will keep having Minsk on the oil hook. It makes it easier to exert pressure on the ally when it comes to many topical questions.

Belarus and Russia have endorsed oil balance for the first half of 2014. Minsk will get .5 million tons of crude oil in the first half of next year – exactly one half of what it has asked for the whole year.

On the one hand, Minsk can be happy about the good buy; on the other, it might not be for long, as there is no oil balance for the second half of year.

EuroBelarus Information Service together with the economist Leanid Zlotnikau tries to calculate the algorithm of the two countries’ behavior.

- How can Moscow’s decision be explained?

- This decision is dictated by the wish to have Belarusan authorities on the hook. Similar situation appeared in 2013: the amount of oil supply remained unknown up until December. In the total, less than 23 million tons of oil was delivered to Belarus.

On the other hand, Russian authorities don’t know for sure how oil and gas industry is going to develop. Russia has expected that Europe will use more fuel; but situation in Europe became stable, so Russia itself doesn’t know what to do next. So, it is Russian domestic problem as well.

However, the political aspect of the problem is also present. Indeed, why don’t have a Belarusan ally on the hook? Russia started inventory of its military-industrial complex. Belarus has a lot of military-industrial firms, too, which Russia would rather have in its own military-industrial complex. So the pressure on the side of Russia will continue. And in order to exert pressure on Belarusan authorities, they should be kept on the hook.

- Apparently, oil delivery depends on privatization rate. And it is timeframes for Russian companies’ planned link-ups with Minsk Wheeled Tractor Plant, chemical company Hrodna Azot and electronics companies Intehral and Pelenh, as well as the progress of talks on a link-up between Minsk Automobile Plant and Russian truck maker KamAZ that were discussed between Dvorkovich and Siamashka.

- Right, over the years Belarusan authorities have been promising to build link-ups; however, things still remain at a complete standstill. That is why Russia has Minsk on the hook: to make the opponent easier to manage.

- How earnest are the promises to privatize plants then?

- Much more earnest than before, as Belarusan authorities need money. However, the creation of Belarus-Russia link-ups doesn’t mean that Belarusan plants will be a property of Russia. Though it is the parent company that will command finance. However, government enterprises can also be a part of link-ups; no privatization is required for that.

Link-ups can be beneficial to Belarusan enterprises. For example, only Russia can give job to military enterprises.

- Why Lukashenka would need money now: people have their bread and butter…

- Gold and foreign currency reserves are dwindling; they will do for several months. After that the authorities will have to reduce the standard of living by 20-25 per cent. It can be done over the years, imperceptibly; however, the authorities cannot tighten people’s belts at once. It would result in the loss of rating and the loss of legitimacy.

- Experts keep saying that only several months are left before the devaluation. How serious is this problem?

- It is serious indeed. If there are no foreign currency earnings, the situation that occurred in 2011 will be repeated.

Minimum stock of gold and foreign currency should make up 8 billion dollars. And gold and foreign currency are reducing by half a billion dollars a month. Soon international financial institution will start lowering the country’s credit rating.

For almost a year Belarusan authorities have been trying to deposit Eurobonds in European banks, but failed to do so: the banks find it too risky.