BELARUS NEWS AND ANALYSIS

DATE:

28/10/2008

Window to Europe Opened Wider for Belarus

Minsk sees the West as a savior from friendship with Moscow

Yesterday representatives of the International Monetary Fund (IMF) and the Belarusian Government launched talks in Minsk about giving Belarus a $2 billion reserve loan. Minsk applied to the IMF after attempting in vain to get a loan from Russia and to seek gas prices reduction. With a lack of impetus in relations with Moscow, Belarus' President Alexander Lukashenko decided to make friends with the West, which is glad to welcome him.

Mission possible

The IMF mission, headed by the Fund's Resident Representative in the Russian Federation Neven Mates, arrived in Belarus on Sunday and yesterday conducted a series of negotiations with Belarusian officials. The IMF representatives are going to meet with Deputy Prime Minister Andrei Kobyakov, the National Bank's leadership, as well as the Economic and Finance Ministers. The IMF experts are planning to stay in Belarus until November 6 - by that day they are to decide whether to give Minsk a $2 billion loan.

Last week Kommersant reported that the National Bank announced it was going to apply to the IMF for a $2 billion loan, which Minsk plans to spend on replenishing its gold and currency reserves. The statement was made at the time when Minsk negotiated for a similar loan with Moscow. Money had been pledged to Alexander Lukashenko back on August 20, during his meeting with Russian President Dmitry Medvedev in Sochi. Minsk had been offered reduction in gas prices and a $2 billion loan in exchange for recognition of Abkhazia and South Ossetia. But Belarus has got neither so far. It need be added that the two Caucasian republics, whose leaders Sergei Bagapsh and Eduard Kokoyty applied to Mr Lukashenko for recognition, have received no answer as well.

Under such circumstances, Belarus decided to appeal to western financial institutions, namely the IMF. However, prior to the current negotiations with the Fund, Alexander Lukashenko paid a visit to Moscow: last Saturday he held a three-hour meeting with Dmitry Medvedev. Official press releases about the talks' outcome by the Russian and Belarusian leaders' press services contained little relevant information and boiled down to the fact that "the Presidents discussed in detail various issues of bilateral relations".

Such wording is usually used when parties are unable to boast concrete results. Experts presume that Mr Lukashenko once again failed to get the cherished billions and reach agreement on Russian energy carrier prices. The latter was yesterday confirmed by Russian Ambassador in Minsk Alexander Surikov, who said that in the first quarter of 2009 Russian gas price for Belarus won't be below $200 per thousand cubic meters. It need be noted that the Belarus Government had hoped for the present $127.9.

Belarusian observers are sure that, against this background, Mr Lukashenko was prompted to demonstratively make friends with the West. Moreover, from experts' viewpoint, Minsk is likely to get the funds it has applied for. "I was surprised to see Lukashenko turn to the IMF - he used to call them swindlers. But he might feel that it's time to stock up state coffers with money," Leonid Zaiko of the Belarusian think tank Strategy told Kommersant. "Appealing to the IMF sends the Kremlin a clear message - Belarus is now treated differently in the West. The game between Russia and the West where Belarus is at stake is cynical; it is based on the sticks and carrots policy. I am sure that the IMF will give the loan."

The wind of change

Alexander Lukashenko seems to have mastered the art of maneuvering between Russia and the West. When hard times settled, he took advantage of the fact that the oil pipeline Druzhba and the gas pipeline Yamal-Europe cross his country. For example, in spring he openly threatened the European Union with transit sanctions in case Brussels followed the U.S. toughening its line on Minsk. However, since that time Belarus and the EU have demonstrated mutual understanding, at least in public. Especially after Mr Lukashenko's consent to release several political prisoners, including his worst adversary Alexander Kozulin, ahead of the recent parliamentary elections.

Since the elections, the relations between the EU and Belarus have resembled a bed of roses. For instance, despite the OSCE's criticizing the Belarusian voting, the EU lifted a ban that denied a number of high-ranking Belarusian officials (including Mr Lukashenko) access to Europe. Last week Czech First Deputy Foreign Minister Tomas Pojar visited Minsk, where he promised that starting from January 1, 2009, Prague, which is going to hold the EU rotating presidency, will begin organizing the EU-Belarus summit. However, talks may be held earlier. According to the information of Kommersant, Belarusian diplomats are preparing their President's visit to Brussels, which has been scheduled for late next month. Prior to it, Alexander Lukashenko may attend the Belarusian investment forum in London, which has been planned for mid-November.

The rapprochement between Minsk and Brussels is fostered against the background of cooling in relations with Russia. In September Alexander Lukashenko complained that relations with the strategic ally are not duly developed. "Look, Saakashvili couldn't have done anything worse than what he did to the U.S., himself and the world. But Americans haven't let him down, after all. Rather, they supported him in the media, and with funds: they openly stated that they are going to give him a billion dollars. That is the way you should treat allies," Mr Lukashenko briefed the Russian press.

"Lukashenko's policy suggests an ability not to fall between two stools. He keeps on receiving dividends from the East: investments in the energy sector, media support and recognition of elections as free and fair. Meanwhile he is showing Russia that if it doesn't side with him, he will turn his back on Moscow," President of the Minsk-based Mizes think tank Yaroslav Romanchuk told Kommersant. According to the expert, every move of Mr Lukashenko has "monetary" grounds. "Lukashenko's latest visit to Moscow will allow him to state during the talks with the IMF that Russian gas price for Belarus will grow and that Minsk urgently needs money for reforms. On the other hand, reaching an agreement with the IMF, he will acquire an argument for bargaining with Russia, implying that he can find money wherever. The ideal variant for him is getting loans from both the East and the West," Mr Romanchuk opines. He adds that the West might also benefit from it since it will be able to make Belarus more dependent on it.

Nevertheless, Moscow has an effective leverage to make Alexander Lukashenko more compliant. And it is going to use it on November 1. The thing is, Rosselkhoznadzor, Russia's agricultural watchdog, plans to impose a ban on exporting the production of 30 Belarusian farms to Russia. If the threat is fulfilled, Belarusian farmers will suffer from both the sanctions and the current economic crisis. "Russia accounts for 95% of Belarusian milk and 80% of meat export, respectively. There are farms throughout Belarus. A blow on them will be very painful," Leonid Zaiko says. "After it, Lukashenko will have to articulate his stance: he will either seek reconciliation with Moscow or develop the closest relations with the West ever."

Vladimir Solovyov

Source:

http://www.kommersant.com/p1048475/r_527/IMF_mission_arrived_in_Minsk_for_talks_about_a_loan/

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