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Lukashenko kicks the wounded lion

Lukashenko kicks the wounded lion
Article by: Igor Karney
Translated by: Mariya Shcherbinina
The President of Belarus recently made several public attacks at the Russian government. According to Alexandr Lukashenko, Moscow is playing a dirty game by limiting Belarusian export and suspecting Minsk of the desire to gain from Russia’s difficult financial and economic situation. The Belarusian leader threatened Moscow with “adequate means of reaction,” first and foremost, excluding the weak Russian ruble from the mutual exchange system. 

At the meeting on economic issues on December 18, Alexandr Lukashenko demanded that the government of Belarus calculated the cost of goods that are exported to Russia in USD or Euros. According to him, if Belarus pays Russia for oil and gas using a solid currency, why are Belarusian milk and meat evaluated using Russian rubles exclusively?

“I hear more and more that the Russian ruble has fallen, we have 40 percent export there, we are losing money. What to do? This is out partner today, this is the situation in the Russian Federation, and in Ukraine, it is also our partner. But there are no dead-end situations: if we lose somewhere, we have to find it in other places. And if their ruble fell to, say, 70 per dollar, let’s lay down this price, work for advance payments. There is no other option. What is more, there is a task: trade not for Russian rubles but for dollars – just like we pay for Russian energy resources. Not in rubles, in dollars. This, by the way, is the government’s fault. We should have worked with Russia and demanded that they pay us in solid money – dollars or euros. And if in rubles, then in accordance with the current exchange rate.”

Why does Lukashenko not shy away from making such statements in regard to his strategic partners? Belarusian economist, deputy chairman of the United People’s Party Lev Margolin thinks that the reason is the current situation, and not courage.

“Before, starting 1998, the Russian ruble has been quite a stable currency, there was talk that it could become one of the reserve currencies, at least on CIS territory, or maybe even BRICS. The situation has changed now – and, naturally, every leader starts at the interests of their country, first and foremost. This is not an issue Russia will have complaints about.”

In light of the rapid decline of the ruble, Belarusian exporters lament their unfavorable position. Earlier, the Belarusian government claimed that the exporters were suffering significant financial losses due to their trade for Russian rubles. According to the Belarus National Bank, in January–October of 2014, over 87 percent of the currency revenue from Russia was received in Russian rubles. In the current year, the Belarus ruble became stronger in relation to the Russian ruble by about 20 percent, and if this tendency continues, all this may cause a great decline in Belarusian export to Russia. According to Margolin, this circumstance is what worries the President of Belarus, who now speaks of stronger currencies than the Russian one.

“Lukashenko is counting on this being a short-term situation, that two to three months will pass and the sanctions could be abolished, or something else would happen and the prices will return to their former level, and we will have contracts. But, this is quite a risky bet. There is no other way, however: it is not good exporting products to the Russian market without profit. In this situation, Lukashenko is absolutely right, it is better to suspend or reduce production for a couple of months instead of losing money.”

Despite the total dependence of the Belarusian economy on the Russian market, Lukashenko concluded that Belarus would not hasten to devalue its national ruble like Russia did. Lukashenko did not have nice things to say about Russia’s financial policies overall, making it clear that there is no systematic approach to rectify the situation now. The President of Belarus prohibited the government’s initiative to weaken the Belarusian ruble.

“Our position remains the same. We will not run after Russia, this is strictly prohibited, because it is unclear what is going on at the Russian market, who wants what and what will happen there. The volatility of the Russian market, the fluctuations cannot be grasped by any kind of logic. We have an obligation to the state, the people, we have to observe these obligations. Which is being done, according to what the government and the National Bank have been reporting to me. Everything else is in the people’s hands, as I’ve said before. If you want a decline, go to exchange points, or anywhere else.”

A day before, at the session of the country’s Security Council, Lukashenko made a more radical statement: that Minsk expects a clear position from Moscow in regard to Belarus. Lukashenko emphasized that for any country, the economy is a very dangerous target, especially when the national industry is expert-oriented. And the behavior of the “eastern brother,” Lukashenko said, cannot help but raise caution: “We are not making any conclusions so far, myself included, before talking to the President of Russia. But I want to find out why the Russian Federation is conducting such policies in regard to Belarus.” Lukashenko added that Minsk is not being dramatical, they just want clarity. Nonetheless, Lukashenko assured that nobody will be allowed to use force against Belarus, and the Belarus army is quite capable of responding to any threat: “And not just the army, but all the people – we will guard our land, our statehood and our independence.”

Translated by: Mariya Shcherbinina
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