Belarus likely to join Burma as EU trade pariah

By Andrew Rettman

EUOBSERVER / BRUSSELS - Belarus is on the way to joining Burma as the second country in history to get kicked out of the EU's Generalised System of Preferences (GSP) on trade, with the European Commission dropping hints it will recommend the move to member states in June or July.

"We can expect in the weeks to come that the commission will convey a recommendation to the council," a commission official told EUobserver on Tuesday (13 June), adding "We are lacking at this stage satisfactory evidence that Belarus is in compliance with ILO [International Labour Organisation] commitments."

The decision hinges on Belarus violating ILO rules on workers' rights such as freedom of association, with an ILO report on 12 June and an International Confederation of Trade Unions' report in May stating things "changed for the worse" in the past year despite an ongoing EU probe.

Any commission recommendation would have very strong chances of approval in the EU council - the member states' decision-making body - with the clarity of GSP and ILO rules making it hard for EU governments to block the suspension without looking weak on the Lukashenko regime.

Under the GSP process, the suspension would enter into force six months later and could only be reversed by a fresh council decision.

The suspension would see higher EU import tariffs on Belarusian minerals, textiles, clothes and wood products worth ?390 million a year. But it would not cover EU imports of petrol and gas worth almost ?1.9 billion a year.

The EU was Belarus' second largest export destination after Russia last year, buying ?3.3 billion a year of goods and providing 37 percent of Minsk's foreign income. It is set to become the largest destination this year.

Being put on a par with Burma, which lost its GSP privileges in 1997, could also deal a fresh psychological blow to president Lukashenko's authority.

Belarus NGOs say the EU's recent visa ban and asset freeze on 37 Belarus officials is already helping undermine the government's credibility in ordinary people's eyes.

The US-funded NGO Freedom House also attacked Belarus in its latest review of democratic standards in the post-Soviet area.

The study ranked Belarus as the third worst country in the region, coming ahead only of Turkmenistan and Uzbekistan on standards such as free press and fair elections.

"The [Belarus] government has fully resorted to totalitarian methods of repression and has openly declared its commitment to defending the status quo by all means necessary," the report - Nations in Transit - said.

Double whammy

Belarus' economy officially grew by a robust 9.2 percent last year, with financial stability and lavish projects, such as the new golf ball-shaped library outside Minsk, forming the crux of president Lukashenko's political image.

But Belarus analysts such as Jaroslav Romanchuk and western diplomats based in Minsk say the country's outdated factories only generate money due to sweetheart deals with Russian buyers, while cheap Russian oil and gas keeps the economy afloat.

The ?390 million GSP blow is threatening to hit Minsk at a time when Russian supplier Gazprom is calling to quadruple gas prices from $47 per thousand cubic metres to $200 from January 2007 onward.

The move would "tear a hole of around $2 billion [?1.6 billion] in the Belarusian budget," Russian agency Ria Novosti reports.