Russia-Belarus Trade Increases 18.4% in Q1 2021

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Op/Ed by Chris Devonshire-Ellis

  • Minsk trade position compared with Vilnius is at the opposite end of the multilateral spectrum
  • Belarus moves to Russia and China while Lithuania moves to Germany and Taiwan

Presidents Vladimir Putin and Belarus’s Aleksander Lukashenko met in Russia’s Sochi on Friday, the first since Belarus hit the global media headlines last week over the diversion of a commercial airline to Minsk. That was followed by the EU and United States placing sanctions on Belarus officials and energy trading.

In fact, Belarus has been in the process of diverting trade and exports away from the EU for much of the year, diverting oil and gas supply chains away from the EU’s Baltic Ports and replacing these with alternative routes through Russia, following sanctions placed on the country by Lithuania in March. That resulted in Belarus moving exports of its oil and gas reserves away from Lithuania’s Klaipeda Port, and relocating them to Russia’s Ports at Ust-Luga on the Luga River on the Gulf of Finland, and St. Petersburg. This has resulted in Lithuania’s Klaipeda Port losing an important transshipment client, actions its Foreign Minister has recently followed up by leaving China’s CEEC forum and opening a China trade office with Taiwan – a Lithuanian export hub worth just 10% of the countries China export volumes. It remains unclear how Lithuania will make back these revenues losses as a result of its sanctioning Belarus, Russia and now China.

Lukashenko in contrast seems prepared – Belarus trade with Russia increased by 18.4% in Q1 2021 as a result. Russian President Putin commented “It is a good trend. It is important to preserve it and keep the governments working actively.”

Vladimir Putin remarked that the first unit of the Belarusian nuclear power plant will be commissioned in June. “It is also another good example of our cooperation. There are good positive trends in other areas. All of it will surely be in the center of our attention,” he stated.

The Russian president noted that work on matters concerning the development of Belarus and Russia also continue. “We do it bearing in mind the need to secure interests of both Belarus and Russia. We are moving in this direction. I am convinced the work already produces concrete results for our citizens. We just have to take persistent steps, without hurrying it, without rushing ahead. We should act stage by stage while securing our interests. Each side determines what its interests are,” he stressed.

Lukashenko replied “You’ve correctly mentioned trade growth. We now calculate virtually every bit of a percent. We see that this year Belarus-Russia trade will exceed the pre-COVID level. We have a good pace in this regard.”

Lukashenko stated that Belarus’ GDP growth rate is virtually on par with Russia’s. “Do you know the EU went as far as to predict some stagnation in Belarus. The Russian economy grows. Naturally, our economy moves well because it is tied to Russia.”

Belarus is a member of the Eurasian Economic Union (EAEU), a free trade bloc that also includes Armenia, Kazakhstan, Kyrgyzstan, and Russia. The EAEU has free trade agreements in Asia with Singapore and Vietnam and has multiple others in varying stages of negotiation, including with China. Minsk’s stance towards Moscow and Beijing are the polar opposite to that of Lithuania, and it will be fascinating to see how each of the two countries develop given the opposing trade positions each are taking.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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