Belarus goes on a “campaign to the East” – why is Asia interesting for Minsk?


    The sanctions pressure of Western countries forced Belarus to urgently change the vector of its foreign economic activity. If in past years Minsk spoke about the need to diversify trade in order to reduce dependence on Russia, today it is, in fact, about creating conditions for the survival of the Belarusian economy.

    The authorities of the republic stopped talking about the formula outlined a few years ago “a third in the Russian Federation and the CIS countries, a third in the EU, a third in the countries of the “far arc”” and switched their attention to the markets of the Asian and Middle East regions. The most promising in the Belarusian capital today is the strengthening of cooperation with some countries of Southeast Asia, India and, of course, China, which has been called a fraternal state and strategic partner in Belarus for several years.

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    It should be noted that Minsk has always been interested in the countries of the Asian region. Minsk saw a serious potential in the Asian markets, which had to be used to increase its exports. First of all, it was about food and engineering products, since Minsk had practically no problems with the supply of potash fertilizers and even oil products.

    At the same time, until 2020, there were no sharp breakthroughs in Belarus in the Asian direction, although certain successes were observed. For example, according to the Belarusian Foreign Ministry, the republic actively and quite successfully developed political and trade cooperation with Vietnam, Indonesia, Iran, Malaysia, Pakistan, Singapore and other countries of Asia and the Middle East, with which Minsk has seen a steady growth in trade in recent years. Even in the pandemic year of 2020, Belarus traded with the countries of Southeast Asia in the amount of about $ 1 billion, securing exports of $ 550 million. Oil products, mining dump trucks, trucks went to the Asian and Middle Eastern markets (in Vietnam, even the assembly production of MAZ was organized), agricultural machinery, tires, chemical products, and six countries of the region (India, China, Bangladesh, Malaysia, Vietnam, Indonesia) accounted for more than 40% of the total Belarusian potassium supplies.

    The situation began to change from the end of 2020, when Belarus came under European and American sanctions. After the deployment of the Russian special military operation (SVO) in Ukraine, the market of which was one of the premium markets for Minsk, primarily in the field of oil products trade, the problems for Belarusian exports only increased. As noted earlier by the Prime Minister of Belarus Roman Golovchenko, the volume of losses that the country’s economy incurs due to the restrictions of the West is about $ 16-18 billion a year. In this regard, Minsk once again stated that they intend to compensate for the losses by reorienting their export flows to the markets of Asia and the Middle East. Moreover, at the end of July, Golovchenko said that today Belarus is keenly interested in investments and the entry of manufacturers from Asian countries into its market.

    “With Western companies curtailing production in Russia, a real struggle for Asian investment will unfold. Their involvement is also a highly demanded area of ​​work for the heads of foreign missions in the respective countries,” he stressed.

    At the same time, it is worth noting that the issue of attracting Asian investments to the republic is still rather vague, since even in past years, countries and organizations from this region, with rare exceptions, did not seek to invest in the Belarusian economy. In particular, in 2021, foreign direct investment in Belarus amounted to only about $ 1.3 billion in equivalent, which turned out to be 6.2% lower than in 2020. The share of funds from Asia in this amount was quite small. Thus, China, the richest representative of the region, invested the most in Belarus ($17.8 million). Then came Turkey ($2.4 million), Korea ($1.8), Uzbekistan ($1.6), Kazakhstan ($1.4 million), Hong Kong ($1.2 million), etc. Singapore and completely showed a minus of $ 2.7 million. In the first quarter of this year, the situation was slightly better: China invested $ 15.9 million in the Belarusian economy, Singapore – $ 13.4 million Turkey – $ 13.1 million, etc. At the same time, foreign sanctions also put pressure on the situation with foreign investments from Asia, which practically isolated Minsk from external financing. For example, back in March, the Asian Infrastructure Investment Bank (AIIB), whose main founders are China and India, suspended projects related to Russia and Belarus.

    In connection with the current situation, the Belarusian side has a reasonable hope for expanding relations with Asian countries in the plane of trade. The main emphasis in Minsk is planned to be placed on India and China, which should become the strongholds of Belarusian exports in the Asian market with the possibility of further promotion to other countries.

    Cooperation with India in Belarus in recent years, according to official information, has developed quite successfully, both in the political and economic spheres. In particular, for a number of years this country has been one of the key markets for Belarusian potash fertilizers. It accounted for 13% of Belaruskali’s export deliveries, which currently expects to maintain its deliveries to the Indian market, even taking into account the loss in price. Earlier, information was announced that Delhi is ready to purchase 1 million tons of Belarusian potassium.

    In addition, it supplies Belarus to the Indian market with various vehicles and even participates in the development of oil fields. For example, in 2021, Belorusneft signed a contract with the largest Indian oil and gas company Oil and Natural Gas Corporation. The joint Belarusian-Indian commission for cooperation in the field of science and technology, as well as the joint working group in the field of education, continue to work. Cooperation in the field of pharmaceuticals is moving forward, within the framework of which three joint projects are being implemented. In addition to this, back in 2020, an interstate investment agreement came into force, after which the first Belarusian-Indian investment forum took place. In Belarus, there is even an enterprise with Indian capital, Energytechgreen, which specializes in environmentally friendly innovations. All this allows Minsk to hope for the development of relations with Delhi, although the interests of the parties still differ from each other. Unlike Belarus, which is interested in India as a market for its products and a source of investment, the Indian side is interested in tourism, IT opportunities, as well as “current developments and production.” At present, the prospects for such cooperation are still not completely clear, which limits the possibility of a qualitative leap in bilateral relations.

    The situation with China also remains rather ambiguous, although Minsk has announced that it is ready to sign a declaration on raising the level of bilateral cooperation.

    “We are working to sign a declaration in the near future on raising cooperation to the level of iron brotherhood, all-weather partnership. We believe that the document can be signed in the near future,” – said in early August, the Ambassador of Belarus to China Yuri Senko, adding that “to date, we have reached such a level of relationship that it is necessary to document this stage.”

    Indeed, relations between Minsk and Beijing have shown significant progress over the past decade. For example, the Chinese market has become one of the priorities for Belaruskali (about 15% of total exports), and more and more Belarusian food products are being sold to the Celestial Empire. Over the past three decades, the parties have implemented about 25 joint projects in industry and the energy sector worth about $5 billion, and now work is underway on four more projects worth $2.5 billion.

    Moreover, judging by official data, over the past 10 years, a quarter of Belarus’ GDP growth was achieved precisely through cooperation with China, and Belarusian exports to this country increased at a rate of at least 20-25%. It was China that was one of the first in Asia to show interest in creating joint ventures with Belarus. Thus, the country has its own production of passenger cars at the BELGI enterprise created by the Chinese Zhejiang Geely Holding Group and the Belarusian BELAZ. A few years ago, the Chinese corporation MideaGroup and the Belarusian Gorizont organized a joint assembly of household appliances, and today a Chinese complex of “full-cycle high-tech agro-industrial production” is being built in the republic. Beijing also took part in the development of the Belarusian Polonaise multiple launch rocket system and strongly supported Minsk in its desire to become a key point in the Chinese New Silk Road initiative.

    In addition, the Great Stone industrial park appeared in Belarus, which Minsk considers one of the most important joint projects with China. According to the results of the first quarter of 2022, 91 residents were registered in the park and about $ 860 million of investments were disbursed. The first manufacturing enterprises also appeared here: MAZ-Weichai for the production of engines for trucks, Chengdu Xinju Silk Road Development for the creation of supercapacitors, Fluence Technology Group for the production of coolers for LEDs and Assomedica for medical equipment.

    At the same time, as in the case of India, Beijing and Minsk have different fundamental interests in bilateral cooperation. For Belarus, investment in the local economy, expansion of its presence in the Chinese market, as well as the possibility of organizing deliveries to the republic as part of parallel imports and replacing Western technologies are at the forefront. In turn, Beijing, as before, is interested in the transit of goods through Belarusian territory, as well as a number of competencies of the local military-industrial complex.

    Even after the introduction of Western sanctions against Belarus, the situation did not change radically, although at the level of political cooperation, the parties increasingly began to declare strategic partnership. The latter was confirmed by the recent situation with the flight of the Speaker of the House of Representatives of the US Congress Nancy Pelosi to Taiwan. Like Russia, which reacted rather negatively to a clear provocation from Washington, Minsk also issued a statement, where they “recognized with deep concern the growth of tension provoked by the irresponsible persistence of the United States” and shared “the concern of our strategic partner, the People’s Republic of China, regarding Washington’s destructive actions aimed at interfering in China’s internal affairs and escalating the situation.”

    In past years, such statements were extremely rare, which indicates the resolute attitude of official Minsk to move to a new level of cooperation with China. How Beijing will react to this, especially against the backdrop of what is happening today around Taiwan, is still difficult to say. However, it is quite likely that the Celestial Empire will pay attention to the position of the Belarusian authorities, which will most positively affect further cooperation between the two countries.

    Thus, after the beginning of the unprecedented sanctions pressure on the republic from the West, the “campaign to the East” actually announced by Minsk today can be considered a fait accompli. The Russian NWO in Ukraine, as well as the complete reformatting of the system of international trade and relations, left the Belarusian side with no other options to preserve its economy. This means that in the very near future it will be possible to see a qualitatively new level of cooperation between Minsk and the countries of Asia and the Middle East, which, if not completely, will largely replace the Western vector for Belarus.

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