Officials' Headache Now Is What to Do With Belarusian Oil Products

It will not work to redirect trade flows to the East.

Against the backdrop of EU sanctions, the Belarusian authorities are trying to redirect trade flows to other markets, as well as even more intensively cooperate with Russia and China. However, the main deficit in trade is formed precisely with the RF and the PRC.

Where did the negative balance come from and whether the officials will be able to implement the new plans, Filin asked Lev Lvovsky, a senior researcher at the BEROC Center for Economic Research.

- This is 2021, the local small Belarusian economic miracle began with a sharp increase in exports, and imports slowed down. Now it has leveled off and even exceeded exports.

There is nothing critical in the negative balance, it does not mean the end of the economy or the end of the country. Rather, it was not quite normal when our exports were up, and imports were lagging far behind.

Incidentally, exports this year have increased significantly compared to the previous year, and historical records have been broken for some product groups. Now Belarus has a very favorable external environment, exports to Russia and to the group of countries that are not part of the CIS have grown significantly. Many of them are just the European market.

Therefore, potential extended EU sanctions and potential new sanctions that the US could impose threaten exports to the EU. And redirecting trade flows to other countries that are less interested in human rights is always a golden idea - the government has been nurturing it for several years.

However, according to the expert, this is not so easy to do. After all, if special niches were opened for Belarus, where it is easy to redirect goods, this would have been implemented long ago.

- We have to understand that we have practically exhausted the depth of the Russian market. Russia is the most economically friendly market for Belarus, it is easy to supply goods there: there is no need to translate labels, we are in the same economic zone of the EAEU. In addition, we have special agreements with the Russian Federation. There are hardly any big niches left in Russia for us that have not been tried before or would not have been occupied.

The same goes for China. Belarus' cooperation with China is no worse than with Europe. Just farther in distance, but it's not a problem: there are rail freight routes.

I think it will be possible to redirect part of the export, but only a part and, probably, at lower prices. Again, economic laws tell us that, if conditions were better in China, we would have used it a long time ago.

The economist notes that there is always a separate issue about oil products.

- One of the main buyers of Belarusian oil products is Ukraine. It has not yet joined any of the sectoral sanctions of the European Union. Nevertheless, our relations with Ukraine are also deteriorating. Although Lukashenka tries to restrain his expressions, but, from time to time, some conflicts occur.

And President Zelensky is between two fires: on the one hand, he wants to show himself as a European leader, and, for this, he needs to adhere to EU standards and join sanctions. On the other hand, of course, Zelensky does not want to use Russian oil products as an alternative to Belarusian ones.

Officials' headache now is what to do with our oil products if Ukraine suddenly decides to reject them, at least partially. It will be a big problem. Of course, Russia does not need them, because Belarus buys them there. And China is not considered at all, because it is very far away.

We can say that there are some prospects for redirecting exports, but they are very limited and hardly promise compensation for all potential losses that Belarus will incur in the European direction, the economist concluded.