Artem Shraibman
Minsk and Moscow intend to deepen their integration once again by signing what used to be called road maps, and now – union programs. Nearly three years of painful negotiations seem to be approaching a denouement, and in the fall of 2021, the parties are set to sign 28 sectoral rapprochement plans in different areas.
The signing was first announced awkwardly by the Belarusian Ambassador to Moscow Vladimir Semashko. His statement was understood in such a way that Putin and Lukashenko will sign the documents on September 9, at their fifth meeting this year. But soon Dmitry Peskov advised not to run ahead, and Semashko himself said that his words were distorted.
Finally, Lukashenko softened the sensation even more: he and Putin will try to resolve all the remaining issues at the meeting, and then, if possible, the governments will approve the union programs. After that, the heads of state will meet again to solemnly sign them on behalf of the Supreme State Council of the Union State.
Reduced claims
Announcements in the style of “just about to sign” have become a tradition for negotiations between Minsk and Moscow on integration. But now it seems that the case is really nearing the end. Lukashenka needs new portions of Russian support, and there are no other, less serious concessions left.
It was two years ago that one could proudly refuse to sign roadmaps, start an oil war with Russia first, and then accuse it of meddling in elections. It would be rash to slam this door a second time – there are no other doors left nearby.
However, one should not overestimate the documents that the parties are preparing to sign. Both countries – each for its own reasons – are now interested in presenting them as an integration breakthrough, but over the years of negotiations, their content has noticeably emasculated.
Serious formats of integration, such as supranational bodies or a single currency, were removed from there back in 2019, as Lukashenka repeated many times. Even then, Minsk and Moscow stated that they could not take the ambitious bar of the 1999 Union State treaty, which described the creation of a de facto confederation with a common parliament, government and constitution.
Instead, what remains is a set of documents describing the trajectory of convergence in different industries. Moreover, the deadline for their implementation, according to the statements of the Belarusian Prime Minister Roman Golovchenko, also lengthened. If earlier it was about two or three years after the signing, now the implementation of some programs is stretched for six years – until 2027.
Judging by the statements of the parties, one, but significant, issue remained unresolved. The Russian ambassador to Minsk, Yevgeny Lukyanov, described the uncoordinated card in June as linked to “energy, prices and excise taxes.” And the Belarusian Ambassador Semashko said that the matter concerns disagreements over gas pricing.
Lukashenka has been demanding for many years that Belarusian consumers be able to receive gas at the domestic Russian price. Moscow, on the other hand, subsidizes its western regions with preferential rates for gas transportation, which reduces the final price several times compared to the $ 130 per thousand cubic meters that Minsk pays.
As a result, during the negotiations on integration, according to Kommersant, it was decided to exclude this issue from the discussion. If this is the case, then the single gas market will be created on Russian terms, that is, it will not differ much from the current one.
It is also unclear how exactly the allegedly already agreed issue will be resolved, how the Belarusian refineries will be compensated for the Russian tax maneuver in the oil industry, which became the reason for the dialogue on deepening integration back in 2018. By shifting the tax burden from export duties to oil production, Moscow is compensating its oil refining industry for the rise in the price of raw materials through a direct subsidy from the budget.
Minsk wants the same compensation for its refineries, but Moscow in response demanded the unification of tax systems up to a single tax code. But now it follows from Lukashenka’s statements that the parties are more likely to harmonize the monitoring and accounting systems in the tax area in order to “know who pays what taxes, what base they have, what we have”.
It remains to be seen whether Moscow is ready to give billions of dollars in compensation for such a superficial integration – rather a form of coordination – between the two tax services. But after the last meeting between Lukashenko and Putin in July, the parties spoke at length about compensation for the tax maneuver in the form of loans.
Given tough Western sanctions and closed European capital markets, new loans are better for Lukashenka than nothing. But this is a clear decrease in requirements compared to what was before when it came to direct transfers from the Russian budget by $ 10-11 billion until 2024.
Moscow also wants to reduce the volume of smuggling across the Belarusian-Russian border, and the Union programs are likely to make customs more transparent, including tracking the movement of goods within the Union State. At least, Lukashenka also hinted at this on September 1.
Binding mechanisms
The most important question, of course, is not whether Lukashenko and Putin will sign the integration cards, but whether the two state machines will carry out what they signed. After the approval of the union programs, a new bargaining will begin for the interpretation of what is written in them and who should be the first to take what step.
It is not yet known whether the documents will contain a detailed schedule for their implementation and some mechanisms for forcing each other to comply with this schedule, but it is difficult to imagine such a level of detail.
These union programs, if signed and implemented, will definitely bring the two countries closer together. This movement is not towards merging, but towards greater interpenetration of economies and the harmonization of their rules of operation. According to Moscow’s idea, the more closely real businesses and regulatory systems intertwine, the less chances that the future Belarusian government will want to repeat the path of the Ukrainian one.
However, given the history of Belarusian-Russian integration, framework documents are not the most effective mechanism for solving this problem. There are faster methods to strengthen the long-term peg of Minsk, and Moscow is actively using them.
One example is the recent deployment of a joint air force and air defense training center near Grodno with an unknown number of Russian military and military equipment, including aircraft. Another is the switching to Russian ports of the export of Belarusian oil products, and in the future – and part of potash fertilizers that fall under European sanctions.
And the union’s integration programs, even if judged by the announced deadlines, are a long and viscous process. In the future, interest in it may disappear from one of the parties or from both, especially if during this time the first persons change in Moscow and Minsk.
New challenges and opportunities
Now it seems that Minsk is more interested in negotiations on union programs than Moscow. Because the Belarusian side needs guarantees that Russia will continue to refinance its own loans. Lukashenka considered the signature of 28 integration plans to be the smallest concession available to him. As a result, most of the statements about integration programs since the beginning of the year come from Minsk.
On the Russian side, there is clearly less enthusiasm on this issue now than it was in 2019. The state of affairs in relations has radically changed since then, and Moscow now has much more reliable and quick ways to tie Minsk to itself. One can proclaim any success in negotiations on deepening integration, but everyone understands that Lukashenka will never agree to become the governor of a Russian province. And if you force him, it will not support the Belarusian people and will not recognize the West, given Lukashenka’s problems with legitimacy.
With the exception of the bureaucrats working on this topic, who have an understandable interest in bringing the matter to an end, the Kremlin is conducting an integration dialogue rather out of inertia or in response to Minsk’s requests for new money. We will sign – well, we will do something – even better, it will be possible to give a loan to Lukashenka, but not to bring it to default.
But if negotiations break down again before or after the signing of the papers, Moscow is unlikely to begin to worry that it is losing an ally. The Belarusian political crisis has created a new situation. As long as Lukashenko remains in power and daily digs a ditch near his western borders, time is in any case working for Moscow.
Courtesy: (Carnegie)
