Lukashenka loses potash war

Attempts of blackmailing the Kremlin by taken Uralkali's CEO hostage have failed.

The Belarusian leadership didn't reach the target and completely lost the potash battle. Only one thing was achieved – taking revenge upon Vladislav Baumgertner by blaming him for Belaruskali's losses and the refusal to cooperate with the former common trader Belarusian Potash Company, Deutsche Welle reports.

No happiness after enemy's defeat

Minsk will listen to the echo of the potash war for a long time. Results of the war are sad. Lukashenka's hope to get 100 million for the extradition of Vladislav Baumgertner to Russia didn't come true. The main thing is that taking him hostage neither helped restore the volumes of potash trade nor improved Belarus's economic state.

The production of potassium in Salihorsk was only 110,000 tonnes in October. Workers worked four days a week, and one of the mines had to stand idle from time to time. Belarusian managers turned out to be unable to trade without Russians. The damage is estimated at millions of dollars.

Uralkali, which produces one fifth of the world's potash fertilisers, reported in October about selling 900,000 tonnes. The company expects the demand for potassium, which declined in prices, to grow next year.

It would have been profitable for Minsk to restore the Russian-Belarusian export potash union. But Belarus showed it as a conflict partner able to use forbidden tricks. The change of the main shareholder of the Russian potash giant, on which Belarus insisted so much, won't necessarily lead to the restoration the cartel, or Uralkali will have to set tough conditions to the scandalous Belarusian partner for resuming the cooperation.

Where money is kept

Minsk opened a criminal case against Uralkali's top managers hoping to attract attention of the Kremlin that was ignoring Lukashenka's signals to get financial aid. He counted to exchange Baumgertner for 23 million tonnes of Russian oil and another 2-billion loan the Belarusian president has been asking from Moscow since last year.

It's more appropriate now to discuss what the Belarusian authorities haven't received. There are neither prospects for getting a new credit nor framework contacts for Russian oil that Minsk used to sign for a period of one year, but now has to sign every quarter because the Belarusian party doesn't now fulfil its obligations regarding privatisation in favour of the Russian capital. The signing of the agreement on the oil supply to Belarus was delayed again.

Belarusian refineries will get in the fourth quarter only 3.1 million tonnes of oil instead of expected 5.75 million tonnes. It will further increase the deficit of foreign currency in the country. November is almost over, but Minsk hasn't received 440 million dollars of the last tranche of the EurAsEC loan. The Belarusian government can't hope for other financial institutions.

Zero kilometre

Belarus remains with the same economic problems it had in August 2013, when Lukashenka made a decision to arrest Baumgertner at the airport in Minsk. Another reason why the eternal Belarusian question about money remains unsettled is that Putin more worries about the situation of Ukraine and the EU than about financial problems of the Belarusian ruler.

If Kyiv takes a decision to have closer ties with Moscow and refuses to sign an association agreement with the EU, Minsk will have to tame its appetite for the financial aide from Russia. The Belarusian authorities cannot avoid integration processes due to the energy dependence on Russia. But the country must be ready to fill its budget not only with the help of Russia, but also through privatisation, the move that the Belarusian president resisted so desperately. The topic of privatisation was suddenly raised by Belarusian PM Mikhail Miasnikovich at a meeting with Russian prime minister Dmitry Medvedev.

But who will risk investing money in the country with such an terrible investment image? So, Belarus was defeated in the potash row that had only negative effects for the country. It is becoming more and mode dependent on the decisions made by the Kremlin.