Russia will pay Belarus for ratifying Eurasian Economic Union treaty

Minsk has sustained its position and has ratified the Eurasian Economic Union founding treaty only after receiving assurance from Russia that she will enable Belarus to keep revenues from export duties and replenish Belarus’ oil refineries with Russian oil in 2015. In addition, the Belarusian government is attempting to ensure it has other sources of income in case Russia reduces her support. The authorities hope to reduce cooperation with the Kremlin within the Eurasian Economic Union (EEU) (just as they have done within the CIS and other post-Soviet integration projects) when the EEU loses its attractiveness in terms of gains and benefits.

Andrei Kobiakov, Head of the Presidential Administration, said that President Lukashenko signed the EEU treaty ratification law.

The Belarusian Parliament ratified the EEU treaty on October 9th, 2014. President Lukashenko signed the ratification law on the same day. The Parliaments of Kazakhstan and Russia have already ratified the treaty without any reservations.

The Belarusian Parliament has ratified the EEU treaty with a reservation, which, in fact, calls into question Belarus’ participation in the EEU if the Kremlin reduces its support to the Belarusian economy. “The Republic of Belarus states that it will perform its obligations under the Agreement in good faith and will implement other measures as required, provided that trilateral or bilateral agreements are reached on removing barriers, limitations and exclusions when trading some goods and providing some services, such as energy products, products of assembly plants, road carriage liberalisation and other sensitive issues”.

In exchange for ratifying the EEU treaty, Belarus has managed to win some benefits from the Kremlin, including an energy agreement for 2015 which allows Belarus to keep around USD 3.3 billion from export duties on oil products processed from Russian oil and receiving 23 million tons of Russian oil to fully fill Belarus’ refineries. In addition, Belarus has gained unlimited access to the Russian market to sell Geely, Chinese cars assembled in Belarus, and preserved the “food off-shore”.

Interestingly, the Kremlin is planning a ‘grand tax manoeuvre’ in the oil industry, mainly to neutralise Belarus’ claims to remove all limitations and exceptions within the EEU. According to Sergei Rumas, a member of the Ministers’ Council Presidium, such limitation and exceptions concern nine items, which make up about one-third of the trade between the two countries, and are sensitive for both Russia and Belarus.

The agreement between Minsk and Moscow will only be valid until late 2015, so after the presidential elections in 2015 Russia may reduce her support to the Belarusian economy once again. Hence, Belarus attempted to minimise her risk vis-a-vis the Kremlin and ratified the EEU treaty with a reservation that “the said agreements must include provisions that any deterioration of the terms and conditions [for removing barriers, limitations and exclusions] are not allowed in the future periods, until such limitations and exceptions will have been fully eliminated within the Eurasian Economic Union”.

President Lukashenko is not interested in having tensions in Russo-Belarusian relations ahead of the 2015 presidential campaign, as the Kremlin could put severe pressure on the Belarusian leadership, both economically and in the media. In 2010, the Russian media unleashed a media war against President Lukashenko, forcing him to make concessions when signing the Customs Union treaty.

The Belarusian government will continue to participate in the Kremlin’s integration projects. but only as long as it is receiving financial support. If the Kremlin cuts subsidies to the Belarusian economy and if the Russian market becomes less attractive for Belarusian producers, Belarus’ authorities would attempt to derail the integration process, forcing the Kremlin to cooperate by the example of the Union State of Belarus and Russia or the CIS.