Russia and Belarus: The “Post-Soviet” Interaction Model Is Exhausting Itself

Russia–Belarus relation have taken a permanent place at the top of news feeds over the past few years. On the one hand, the crisis in neighboring Ukraine has whipped up interest in Belarus. On the other hand, discussions between Minsk and Moscow have become more open and imaginative. Fake news stories have also become more frequent: recently, the media was abuzz with rumors of Belarus possibly being made part of Russia. These rumors were fuelled by several foreign media outlets following the WEST 2017 joint strategic military exercises held by Russia and Belarus. It got to the point where Vladimir Putin had to refute the myths.

Without confining ourselves to the media agenda, we should note that deep economic and social trends have developed in Belarus and Russia over the last two decades that will certainly have a powerful impact on the future of the union between the two countries.

If Russia and Belarus aim to develop allied relations, it is important to start working out the cooperation platform at a new stage. It is important to fill the institutions of the Union State with specific and relevant content that is based on the development of joint projects. The “post-Soviet” resource will soon be exhausted unless integration receives a powerful new impetus.

Russia–Belarus relation have taken a permanent place at the top of news feeds over the past few years. On the one hand, the crisis in neighboring Ukraine has whipped up interest in Belarus. On the other hand, discussions between Minsk and Moscow have become more open and imaginative. Fake news stories have also become more frequent: recently, the media was abuzz with rumors of Belarus possibly being made part of Russia. These rumors were fuelled by several foreign media outlets following the WEST 2017 joint strategic military exercises held by Russia and Belarus. It got to the point where Vladimir Putin had to refute those myths.

Without confining ourselves to the media agenda, we should note that deep economic and social trends have developed in Belarus and Russia over the last two decades that will certainly have a powerful impact on the future of the union between the two countries.

Trends in Trade and Economic Cooperation

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Today, Russia–Belarus relations operate in two main formats: the multilateral Eurasian Union, where Belarus will assume the presidency in 2020; and the “bilateral format” under the auspices of the Union State. In 2019, the Treaty on Establishing the Union State of Russia and Belarus celebrates its 20^th anniversary. For a long time, it has unquestionably been the most in-depth integration format in the post-Soviet space. Today, the Eurasian Economic Union (EAEU) lays claim to leadership in economic integration.

Moscow and Minsk have established a governmental working group to determine the roadmap to further integration within the Union State. This initiative appears timely for several reasons. During the Soviet era, Belarus emerged as an “assembly floor” with good infrastructure and developed industry. The Union State, which opened access to the Russian market and ensured cheap energy sources, made it possible to preserve and improve this “specialization model,” extending its lifetime for two more decades.

An analysis of the foreign trade statistics for Russia and Belarus demonstrates that there have been no major shifts thus far. The parties remain crucial strategic economic partners. At year-end 2018, Russia accounted for 49.5 percent of Belarus’ foreign trade ($35.4 billion, a growth of 9.4 percent compared to 2017). Contrastingly, Ukraine is second (7.6 percent), while China is third (5.1 percent).

The cumulative trade turnover of Belarus with all the EAEU countries was $36.5 billion at year-end 2018, while its trade turnover with the European Union was $17.3 billion (24.2 percent of the state’s total trade turnover). At the same time, Belarus sells mostly raw materials and semi-finished products to the European Union, while it mostly sells high added-value goods to Russia and EAEU countries – engineering, MIC and agricultural products.

Russia is the principal investor in the Belarusian economy. Rosatom is finishing construction of the first Belarus NPP in Astravets (financed through a Russian loan of over $10 billion). The Belarusian government estimates that it will cut purchases of Russian gas by 5.5 billion cubic meters annually.

Belarus traditionally points out its negative trade balance with Russia. At the same time, at year-end 2018, crude oil accounted for 30.1 percent of all commodities imported from Russia in value terms. Belarus purchases Russian oil at an exclusive price, partially processes it at its own oil refineries and sells it to the West, bringing in roughly one-third of the country’s foreign currency revenues on average.

In this regard, Minsk is concerned about the tax maneuver performed by Russia that promises a gradual increase in Russia’s domestic oil prices because the tax burden will be transferred to oil production. This means that there will be an automatic hike in costs for Minsk, which has included export duties from the resale of Russian oil in its budget revenues in recent years. The parties thus far have failed to settle the issue.

The international sanctions against Russia, which are designed in such a way that they hot the country’s trade and economic relations with its allies, are a significant factor in bilateral relations. The counter-sanctions imposed by Russia against the European Union have created barriers in the implementation of the customs union within the EAEU. Due to the geography of international transit corridors, the common Russia–Belarus customs space has felt the brunt of the blow.

Another sore spot in bilateral relations is the “sanitary and trade” disputes that are taking place against the background of Russia’s statements that goods manufactured in the European Union and Ukraine that fall under Russia’s counter-sanctions are re-exported to Russia via Belarus.

Searching for a New Model of Economic Collaboration

Today, Moscow is busy developing its domestic market and strengthening self-sufficiency in strategic areas. The sanctions acted as a catalyst, but the process is rooted in the fact that, over the last decade, the essential assessment of the development of the international situation has changed – from hopes for an “integration of integrations” to an understanding of the long-term “fight of integrations.” Russia has repeatedly made proposals to merge Russian and Belarusian enterprises operating on the Russian markets, although mutually acceptable terms have not been achieved in negotiations thus far. A logical market trend is thus developing: Russian and Belarusian enterprises are competing for the Russian market. Belarus has a similar situation – specifically, the emergence of “duplicate” enterprises in Russia, which prompts serious concerns. There are suspicions that the rights of Belarusian manufacturers are being infringed. In this regard, the Court of the Eurasian Economic Union merits closer attention, since it has already rendered judgments on customs disputes between Belarus and Russia.

In the current situation, the Belarusian authorities have set a programmatic diversification task that envisions the following distribution of foreign trade turnover: 1/3 with Russia, 1/3 with the European Union and 1/3 with non-CIS countries. Since Russia accounts for 1/2 of Belarus’ foreign trade turnover today, the task involves diversification through expanding the country’s presence on the markets of the non-CIS states and the European Union. The results have been mixed so far. In particular, in the first four months of 2019, Belarus’ trade turnover with China grew by 94.7 percent (6.2 percent of the country’s total trade turnover), while its trade turnover with EU countries fell by 10.4 percent (23.3 percent of the total trade turnover).

It is important to note that this “foreign trade maneuver” does not solve the task of ensuring predictable markets for Belarus’ industrial products and purchasing energy sources at advantageous prices. The main risk lies in the fact that concentrating on entering new markets will weaken the focus – and, consequently, the positions – on the traditional markets. On the other hand, the potential of the Belarusian industry, labor force and infrastructure (including the transit of energy sources) appears strategically significant for developing the common Eurasian market, and it is also necessary for Russia to enhance its standing in the global competition. It is not trade disputes and complicated negotiations that pose the main threat to bilateral economic relations, but rather the potentially different vectors of the emerging economic development paradigms of the two countries. Specifically, Belarus is gearing towards expanding its presence on the markets of third countries, while Russia is geared toward domestic import substitution.

It is important to find an effective way of making full use of Belarus’ labor and industrial potential in import substitution and re-formatting the Russian economy. For instance, in the format of a joint anti-sanction strategy or a common economic security strategy.

In the medium term, the inertial functioning of trade and economic ties will result in the natural erosion of the interaction platform that has emerged in the post-Soviet period. As a result, cooperation between Russia and Belarus may transition from the privileged format of the Union State to a format that is common for all the EAEU allies. This will exacerbate the problem of the shortage of investment for modernizing Belarusian enterprises, make the threat of the de-industrialization of Belarus very real, and mean lost opportunities for Russia in utilizing the industrial potential of Belarus in modernization.

The Defence Dimension within the Union

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Russia and Belarus have developed deep cooperation in defense as well, and it has several dimensions. First, there is the functioning Regional Forces Group of Belarus and Russia. The air defense forces of Russia and Belarus forces are on joint military duty as part of the Unified Regional Air Defence System, which, according to existing estimates, increases the effectiveness of the air defense of the two countries by 1.4–1.7 times. Also, joint military exercises are held regularly.

Second, according to official data, a total of 99 Belarusian enterprises sell 1880 types of components and arms parts to 255 enterprises of Russia’s defense military complex. Belarus accounted for approximately 15 percent of all commodities purchased under Russian defense contracts in 2015.

The Ukrainian crisis has had a serious effect on military-technical cooperation between Russia and Belarus. On the one hand, Belarusian enterprises joined the process of replacing Ukrainian imports in Russia. On the other hand, Russia began to abandon foreign purchases of components for its strategic weapons. In particular, the decision was made to gradually replace the Belarus-made chassis of the Topol-M and Yars intercontinental ballistic missiles with alternatives produced in Russia, a process that will take ten years. One possible solution to this could be to localize Belarusian production of some weapons components in Russia.

On the whole, the defense union gives Russia strategic depth on the East European Plain. It is also important for Russia to ensure security of its western exclave, the Kaliningrad Region. Belarus, in turn, receives Russia’s defense guarantees, and the Russian “nuclear umbrella” makes it pointless to attack Belarus with conventional weapons. This allows Belarus to pursue a multi-vectored policy and feel relatively at peace next to Poland, whose armed forces are double those of Belarus.

At the same time, in 2017–2026, Poland’s annual re-armament expenditures will increase more than tenfold. The total “cost” of the technical modernization program for Poland’s military will be $48.8 billion.

Belarus is increasingly concerned with the growing U.S. military presence in the Baltic states and Poland. Minsk has called these plans “profoundly erroneous,” claiming that they “upset the balance of power in the region.” Clearly, the issue of retaliatory measures on the part of Russia and Belarus will arise, up to and including a return to the idea of opening a new military base in Belarus. If Russia is forced to take independent measures to ensure the security of its western borders, this will “devalue” the significance of the Union State.

A new development in the story was the June 12 signing by Poland and the United States of an agreement on the deployment of a squadron of US MQ-9 hunter-killer drones in Poland, as well as 1000 U.S. troops in addition to the 4500 troops already deployed there. Chairman of the Defence Committee of the State Duma of the Russian Federation Vladimir Shamanov said that these drones were “comparable to intermediate-range missiles in their characteristics” and “may be equipped with nuclear weapons.”

The collapse of the Intermediate-Range Nuclear Forces Treaty (INF Treaty) that started with the withdrawal of the United States, as well as the possibility of the further erosion of the weapons control system, will have a significant impact on the security of Russia and Belarus. It would be wise to consider launching a strategic Russia–Belarus security dialogue. The work of such a dialogue, including in the expert format, would make it possible to carefully compare the approaches of the two countries to responding to the changing military situation in the region. The dialogue would make it possible to harmonize positions in advance and construct a coordinated response to the new security challenges.

The International Context

Given the current situation, the peace-making initiatives of Belarus (for example, re-launching the Helsinki Process) have been constructive, albeit not wanted by Western elites. Additionally, certain western NGOs attempt to use the topic of a “neutral negotiating venue” in Belarus to advance the idea of distancing Belarus from Russia and transforming the country into a neutral “buffer.”

The change in the European Union’s approach to Belarus against the background of the Ukrainian crisis from “isolation” to “engagement” nevertheless retained its political one-sidedness. The initiatives of Minsk are disregarded. Conditions are put forward, primarily concerning the re-formatting the legal and political system (abolishing the death penalty, expanding the rights of western NGOs and media, increased influence on the public and political sector and the electoral system). The United States did not abandon its long-standing course to isolate Belarus. On June 14, 2019, President of the United States Donald Trump submitted a proposal to Congress to extend the sanctions against Belarus noting that the “policies of certain members of the Government of Belarus […] pose an unusual and extraordinary threat to the national security and foreign policy of the United States.”

Nonetheless, there have been certain changes in the rhetoric of the United States. In 2018, Assistant Secretary of State for European and Eurasian Affairs A. Wess Mitchell presented a report at the Atlantic Council putting Belarus (together with Ukraine and Georgia) on the list of the so-called “frontier states” that “offer the surest bulwark against Russian neo-imperialism.” It seems odd to include Belarus, the only Russian ally among the states mentioned, as one of the countries oriented towards the United States, and testifies to Washington’s “confrontational” view of the role of Minsk in the region.

Credibility and Common Values

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The Russia–Belarus union is dictated by the fundamental national interests of the two states. It is unquestionably useful for participants from the point of view of political stability and security, as well as in terms of economics. However, preserving the Union and ensuring its development through “objective interests” only is problematic. Credibility and “shared meanings” are required.

Given the specifics of the geography and economy of the two countries, governmental institutions and “long-term investment” play a systemic role in the Union’s development. Long-term projects are impossible without strategic confidence, and it is becoming increasingly rare in a time of balancing and uncertainty in Eastern Europe.

In the twenty years that have passed since the establishment of the Union State, a new generation has grown up, and for them, integration values are not self-evident. According to the Eurasian Development Bank’s Integration Barometer 2017, the majority of the population in Belarus and Russia are still positive in their assessment of integration. However, people under 34 are significantly less likely to approve integration than people over 55 (48 percent and 73 percent in Belarus, and 67 percent and 82 percent in Russia, respectively). According to the study, the generation gap in Belarus is similar to the figures for Moldova and Ukraine.

There are grounds to expect integration to become less attractive as generations change. The number of “fakes” and provocations promoted by the media and officials of neighboring countries in the information space of Russia–Belarus relations is growing. For instance, attempts to represent WEST 2017 exercise as an attempt to invade one of Belarus’ neighbors, or depicting the Belarusian NPP as a “non-conventional weapon.”

In this regard, the practical measures in economy and security outlined above will not live up to expectations unless attention is paid to developing humanitarian cooperation and building public confidence. A number of successful Russia–Belarus projects have been launched in this area over the past three years. However, these initiatives will not produce any radical changes unless they are bolstered by systemic measures. It is important to establish a fund that provides grant support for border projects and interregional initiatives; set up a multi-level dialogue at the expert, business and public levels; launch an academic mobility programme; create common educational programs; and align educational standards. The humanitarian dimension of the Russia–Belarus union is of critical importance from the point of view of the security of the two counties. It is no accident that Vladimir Putin and Alexander Lukashenko held a special meeting in Sochi in February 2019, the first meeting in many years to focus on developing humanitarian ties.

If Russia and Belarus aim to develop allied relations, it is important to start working out the cooperation platform at a new stage. It is important to fill the institutions of the Union State with specific and relevant content that is based on the development of joint projects. The “post-Soviet” resource will soon be exhausted unless integration receives a powerful new impetus.