BELARUS NEWS AND ANALYSIS

DATE:

14/12/2006

Belarus - Russia: The Future Of The Union State

Andrey Kazakevich,

Editor-in-chief of "Palitychnaya Sphera" magazine, Minsk

Abolition of the preferential taxation on the Russian oil exports to Belarus should be interpreted as a part of the political game between Minsk and Moscow. It seems that the Kremlin is trying to exert pressure on the Belarusian government hoping to get benefits during the negotiations on the Union State budget that will take place in Moscow on December 15.

I don't think that Russia will stick to its guns refusing to make a compromise with Belarus. Most likely, the parties will manage to find a win-win solution. Both Vladimir Putin and Aliaksandr Lukashenka reckon on this.

Let us suppose that Russia's pressure leads to the bilateral statement about dissolution of the Union State. But as a matter of fact, the Union State has never existed. Since 2002 the Union State bodies have not made any important decisions, they have not achieved any serious breakthroughs. All the issues have been addressed on bilateral basis with the Union State bodies proving totally invalid.

So, the official recognition of the Union State's demise would be nothing but a mere statement of fact. But this will hardly happen in the nearest future. Firstly, despite the fact that Russia ceases to be the significant factor of the Belarusian politics, the Belarusian authorities need the Union State ideology. Secondly, in the medium term the development of the relations between the two states may require supranational bodies.

Belarusian President Aliaksandr Lukashenka, while being under Russia's pressure, may try to draw Western investments. But one can scarcely believe that now. EU's position towards Lukashenka is tough. Therefore, once the European companies enter the Belarusian economy, the EU will start bringing pressure on them for cooperating with the Lukashenka's regime.

Apart from that, the European business is unlikely to invest in the Belarusian enterprises. The investment climate in the country is not stimulating for that, since the government demands too much and tends to control the economic actors.

At any event, it will be very difficult for Lukashenka to raise investments from the West.

Probably, that's why Lukashenka is doing his best to improve relations with China, Iran and Venezuela - countries that might invest in the Belarusian economy without criticism the President's policy.

Source:

http://www.eurasianhome.org/xml/t/expert.xml?lang=en&nic=expert&pid=898&qmonth=0&qyear=0

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