19 March 2024, Tuesday, 13:45
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Belarus as smuggling hub

Belarus as smuggling hub
Alexander Tytarchuk

Intermediary activity of Minsk resembles more and more a hub into which the Belarusian authorities are trying to turn the country in coordination with Moscow.

The article was prepared specially for charter97.org by a Ukrainian expert Alexander Tytarchuk, board member of the East European Security Research Initiative Foundation.

In the context of the deepening crisis between Russia and the West, provoked by the Russian aggression against Ukraine and the war in Syria, the attempts of modern Belarus to receive the maximum benefit as a state mediator are becoming more and more visible. This intermediary activity resembles a hub, into which, in coordination with Moscow, the current Belarusian government is trying to turn the country in search of additional means of subsistence, using it as a political, economic, military, technological and transportation hub with the necessary set of services.

But whether Minsk will be able to fully implement this project will depend on the degree of freedom of its actions, as well as interest in such mediation services, primarily of Russia, Ukraine and the West.

We should not forget about Minsk, the interests of its ruling regime, which, in view of recent events, conceded the superiority of authoritarian regime in Europe. The Russia's aggressive policy against Ukraine played an important role here, demonstrating to Minsk the clear prospect of strengthening "brotherly" ties with Moscow, with all the unpredictable consequences. This scenario clearly does not fit the present Belarusian leadership and is a direct threat to its existence.

Therefore, the option of mediation has become, under the circumstances, the only possible salvation for President Lukashenka and his team. The mediation hub, in its broadest sense, enables the regime to retain power and still be important both for the Kremlin and the West, including for supporting all sorts of peace initiatives in the so-called Minsk format, whether it is Nagorno-Karabakh, Donbas or Turkey.

Minsk and Moscow - allies or competitors?

During the years of integration with Russia, the Belarusian establishment has had a vested approach to Russia based on demands of multi-billion dollar energy and economic subsidies rooted in its mindset. Along with the repressive machine, the subsidies have been the basis for keeping relative peace in the country. Moscow, apparently, has adapted to this type of alliance behavior and peculiarities of the Minsk approach, gradually bringing it under control.

With regard to the general freedom of action, Minsk today is definitely a vassal of Moscow, which still has the ability to maneuver within a clear frame designated by the Kremlin on the basis of existing market conditions, both external and internal. The more difficulties and uncertainties there are in Moscow, the more leeway Minsk gets, which is left to cater for itself on its own. Still, Russia does not forget to periodically pull the leash. But as soon as the situation is more or less stabilized and the role of the Belarusian hub damper exhausts itself, Moscow puts its ally back to the hand, making it clear that freedom is over and it is necessary to strictly follow the "union" fairway. Therefore, the mediation peak happens in the period of uncertainty with an illusory sense of freedom when the Kremlin's grip weakens and it needs help.

The main feature provided by the Belarusian hub services is the transformation of "gray imports" streams into the legal supply by changing the technical and procedural regulations of border crossings and customs clearance, as well as creating a variety of logistics centers. At the same time, Moscow is often not averse to benefit from this hub by manipulating the sanctions mechanism, which, among other things, does not prohibit the importation of sanctioned goods to Belarus for the benefit of the republican entities.

Moscow has learned to quite successfully manipulate the actions of the Belarusian hub in a deepening crisis. A striking example of this is a significant increase in deliveries of Belarusian oil products, produced from Russian oil, to Ukraine. It is formally prohibited to export Russian diesel fuel to Ukraine. The increase in deliveries is happening against the background of the limitations on trade with Ukraine introduced by Minsk in accordance with the Russia's sanctions policy. These actions allow the Kremlin to exert pressure on Minsk and to diversify the sources of donations for the needs of the ally, allowing it to dispose of export duties, which should be directly released to the state budget.

The effectiveness of such manipulation is indicated by the Moscow's significant simplification of the approval procedures for the Belarusian hub functionality change. In addition, it seems that the "solvents" lesson was not in vain for both sides. The Kremlin has also decided to give the Belarusian authorities a break by taking off the agenda the issue of the so-called "integration projects", which involved the participation of Russian capital in the privatization of the most attractive Belarusian enterprises.

Given this situation, we are likely to expect a manipulation of the Belarusian hub capacity utilization in January 2016 due to the suspension of Moscow's Free Trade Zone Agreement with Ukraine and entry into force of the Free Trade Zone Agreement between the EU and Ukraine.

With regard to relations between Belarus and Russia in the military-industrial sphere, they increasingly resemble a business platform on which Minsk as a military-technical and military-industrial hub is trying to bargain for itself as many favorable conditions as possible. But this role has certain limitations, since Russia in any case will develop its own military production and search for possible ways to get past/remove Western sanctions, blocking the access of Belarusian enterprises to the Russian defense order and trying to put the military-industrial complex (MIC) of Belarus under its direct control. Such scenario can be confirmed by the virtual absence of Russian state orders for Belarusian enterprises, despite a long-term agreement and a lot of public promises from the Kremlin. Moreover, the Russian manufacturers have mastered the production of some of the special products, which previously were made in Belarus, forcing their colleagues to seek new markets in the difficult conditions of economic competition with the "big brother."

In general, Russia will try as much as possible to establish an independent production of military use goods. To do this, Russia is headhunting for highly qualified specialists from Ukraine and Belarus. However, the establishment of new military enterprises on the territory Russia takes time. Until they are created, the Belarusian defense hub may try to earn money in specialized areas. But Russia currently benefits from the format of the Belarusian defense industry as a technological appendage, unable to independently develop and implement a series of new types of weapons. If suddenly the interests of the Belarusian and Russian defense complexes clash, and not in favor of the latter, then any Minsk "tricks" will be stopped by the Kremlin on the vine, until the complete destruction of the Belarusian enterprises. All of this will result in the undesirable effect of further developments, clearly not for the benefit of the "friendly" Belarus and its leadership. And this scenario, given the unpredictability of the Eastern partners, is very credible.

The tactics of small steps of the West

Belarusian mediation in the settlement of the military conflict in the east of Ukraine in terms of helping to stabilize the situation in Eastern Europe and improving the dialogue with Moscow is rather positively perceived by the West. It is also one of the basic prerequisites for the suspension of sanctions against the Lukashenka regime. This option of political mediation is important for Minsk in the context of overcoming international isolation, international legitimization of the authoritarian rule, the resumption of economic cooperation with the countries of Europe, attracting loans and advanced technologies, as well as the deployment of transport and logistics infrastructure of the Belarusian hub.

But here can also be clearly seen a kind of conformism of the Belarusian authorities, examined in relations with Moscow. Minsk formally agrees with all the requirements of the Western creditors, trying to close the budget hole for the next year. At the same time the Minsk authorities are trying, though not entirely successfully, to stay at a visible distance from Moscow, as well as in every possible way to rehabilitate its, to put it mildly, tarnished authoritarian image before the West.

Given the apparent discrepancy in the strategic approaches of Minsk and Brussels, the parties in the medium term should not expect serious results from such cooperation. But in the absence of other alternatives, the West is ready to play with Belarus in the spirit of its favorite tactics of "small steps" towards a "great success", including finding the ways of rapprochement of the EU and the Eurasian Economic Union. Minsk, in turn, is surely counting on its services, bearing in mind the new format of trade relations between the EU and Ukraine, and considers appropriate the mediation proposals of the Eurasian logistics. But the scheme of "gray imports" developed by Minsk could also most certainly be useful here.

At the same time, the weakening of Russia's isolation dramatically reduces the demand for Belarusian hub not only for Moscow but also Brussels and, of course, reduces the political weight of the Belarusian president as a conciliator. Weak, partially isolated from the West, Russia allows Minsk to count on the possibility of prevailing in the Moscow's policy as an ally, contributing to the satisfaction of numerous financial and resource requirements of the country. Moscow has its sights on Belarus in its relations with the West, seeing them as an additional source of financing of the Belarusian regime in the face of the current crisis. Moscow uses Minsk, among other things, as a kind of showcase for the terrifying acts of the Russian military in response to the NATO "tricks" at the western borders of the Union State.

Neither friend, nor enemy ...

Preservation of the political and diplomatic balance of relations with Moscow and Kyiv is a formally declared slogan of Minsk, determining the limit of successful mediation. But a crucial role is in fact played by Moscow, whether Minsk likes this or not. The vivid example of this is the current Belarus-Ukraine trade confrontation initiated by Moscow against the background of the Minsk fuel expansion.

It would be unfair not to recall the direct supplies of Belarusian machinery and equipment to Kyiv in the difficult period of armed conflict in the east. But here is also seen a certain "brotherly" interest, which, as fighting intensified and turned into a full-scale war, forced Minsk to make adjustments in its actions.

In the same vein can be considered a military-technical cooperation between Minsk and Kyiv, which began to flourish with the start of the Russian aggression and entered into the most active phase after Kyiv decided to terminate the military-technical cooperation with Moscow. The resulting situation was branded by Belarusian experts as a "golden time" for the Belarusian defense industry, which could (and did ) earn hundreds of millions of dollars being let go by the Kremlin to fend for itself.

Initially, Minsk was aiming to mediate for the Ukrainian partners in the Russian market, as well as, whenever possible, to enhance the exchange of technology in the "muddy waters" of the crisis time, without losing the possibility to lure the necessary Ukrainian specialists. Further on it was planned to establish (or to revitalize the already existing) joint ventures with the completion of the production chain in Belarus. The ultimate goal, as before, was the transformation of Belarus into a de facto transit territory – a kind of export-technology hub – where , among other things, the goods origin would change. But here also, in the event of Minsk crossing the Kremlin-indicated "red" line, Moscow would readily show its influence. Especially vulnerable are the joint Ukraine-Belarus enterprises, as well as the interests of the top Ukrainian establishment associated with it and often acting on its own rules.

Passenger air transportation became the promising area for increasing the transit potential of Minsk at the expense of Ukraine, especially after the closure of air communication between Ukraine and Russia, as well as Russia and Turkey. Cooperation with Turkey became an active point of the Minsk agenda in the context of the further development of the Black Sea region transit potential together with Ukraine. But these plans are unlikely to come true, given the forced change of the rhetoric of Minsk against the Kyiv authorities and strengthening of the Russia-Ukraine trade confrontation.

In constant search for niches

A search for profitable niches is one of the most important components in the algorithm of all the Belarusian hub activities. The timely identification of such niche and its rapid development prior to the "regulatory" intervention of Moscow is a determining factor in achieving the goals which gives Minsk a formal occasion to show its imaginary independence.

Among the promising niches are the political neutrality declared by Minsk as well as expanding market of transportation of Eurasian energy resources, at which the country leadership became quite adept.

However, with the deepening of the crisis, the actions of the Belarusian hub are unlikely to be successful. The room for maneuver is shrinking further, and the Kremlin begins to demand clarity in the actions of Minsk, forcing it to follow Russia in the "union" fairway. The recent statements by the Belarusian president about the absence of disagreements with Russia on the assessment of the situation in Ukraine and the Middle East confirm the "compliance" mode of the regime, ready for anything in order to avoid Moscow forcing deferred "integration projects" in the broadest sense and forgetting the friendly nod to Kyiv and Brussels.

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